Too bad it wasn’t just a simple apology.  For Netflix members like myself, the email informed members, they are going from a single price video service to a dual purpose video service with streaming video and DVD on two different sites with two credit card entries all outlined in one apologetic letter.  Oh yeah, and don’t forget about the recent price hike. Ugh.

I imagine many Netflix members are left wondering what is the benefit to continue their relationship with Netflix, because the letter was primarily about Netflix business.  For example, Mr. Hastings explains in the email, “So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.”  Why does a member care about a company’s cost structure?

In a consumer-centric society that desires instant gratification this is a confusing move.  Think about the primary benefit for a video service: the latest movies conveniently accessed for a low price.  The email not only does not speak to delivering this benefit, in fact it confuses the issue by stating members will have to maintain two different profiles on different web site to continue their membership with Netflix, er, Qwikster.

Autonomous to this email, Netflix already aggravated members by delaying the latest movie releases for weeks past their release date.  In addition to the delay, members rarely found new releases available for streaming.   So instead of dealing with some latent issues, Netflix decided to add to member’s aggravation without citing a customer benefit driving their decision (It is hard to believe the company needs to split to offer gaming downloads, which is one of the few reasons listed in the email).

Netflix lacks a consumer-centric conscious — if they do it is not evident with their actions over the past several months.  While I appreciate they don’t want to go the way of AOL Dial-up or Borders, they need to reflect on their roots on why they were successful in the first place: consumer focused benefit differentiating them from the competition.  Their mail service redefined the industry and nearly drove Blockbuster out of business.  I do agree streaming is the next logical step.  A step that is already available from my cable provider at about $5 to $6 per movie.  So if I can download the latest releases from U-verse or Comcast, how is Netflix streaming better through a Wii?  It’s not.  And while cheaper it is of a lower quality and lacks the latest releases.

Word of mouth may be Netflix’s Achilles heal.  Netflix has made their company the topic of conversations. I have had discussions with Netflix haters who will never go back.  Blockbuster members touting how their service.  Redbox lovers talking about the simplicity of the ubiquitous kiosk.  An with other members who are questioning the value of Netflix’s decisions and current service.  Will members quit the service?  Some will.  Some (like myself) may reduce their membership to one service, until something better comes along.  For many the the future membership lies with Netflix’s next move: will it be industry defining or member frustrating?

Usually it starts with the funnel conversation.  You know the funnel is a spiral, dead or in some cases a Yellow Brick Road (see Making the Purchase Funnel Fixation Personal).  To be honest I am tired with the funnel debate.  It seems to have turned into some zealous endeavor to find the next consumer thing — like digital people incessantly talking about Web 3.0.  Okay, enough of the funnel. 

My focus lately is on the path to purchase.  For the sake of this blog, let’s call it the consumer journey.  The theory I am working under has several dimensions:

• Not all purchase paths are created equal.
• It starts with the consumer’s shopper mindset.
• Shopping scenario affecting the mindset.

For brevity purposes of this blog entry, I am focusing this blog just on the first dimension: not all purchase paths are created equal.  This seems logical — shoppers  will take more time researching a high-consideration like a large screen TV for the man cave, a new car for yourself, or remodeling your home than a low consideration purchase like a restaurant to eat dinner, an oil change place for your new car, or can of pork and beans in aisle 3 at the nearby Kroger.  And from a macro perspective this is somewhere between “duh” and a “no-brainer”.

Even though this is obvious, it doesn’t explain why some people will go up and down the aisles at Kroger tossing items into their cart until they reach a certain food category where they pause and contemplate their purchase — say choosing a cut of meat for family dinner, a personal care product like deodorant or shampoo, or in my case a nice six-pack of beer. 

The same “pause” can be found for your daily life.  You may find yourself on auto-pilot when you fuel your car, drop of your dry cleaning, or getting a morning cup of coffee.  However, you may deliberate with the family on where you will go to dinner on Friday night. 

Predisposition drives your auto-pilot.  This predisposition is a built in mechanism we have in our purchase behaviors to avoid revisiting every purchase decision throughout the day.  While you can consider it “loyalty” to a product or service (it is), it can also be a routine.  Many are choices that  conveniently fit into our daily routine.  For example, I like Caribou Coffee better than Starbucks, however, the Starbucks is on my way to work, and I am not willing to exert the extra effort to be loyal to Caribou and drive 2 miles out of my way.  

Breaking a person’s predisposition or routine is difficult.  They aren’t looking for a reason to switch and therefore are not seeking out information to rethink their predisposition.  Therefore a marketer is limited to intrusive methods.  The most obvious one is media — promoting a compelling reason why their current decision is incorrect (i.e., my product is better so you need to try it).  This may work but the product differentiators better be pretty damn compelling.

Another popular intrusive method hits the wallet — giving them a deal.  Coupons, deals, sweepstakes, and group buying are pervasive (just ask Groupon) and a compelling deal has the potential to induce trial.   The objective of the deal is to disengage someone from their predisposition and establish a new predisposition — a new routine.   

The interesting aspect of product trial, is if you remove the stimulus will the behavior persist.  For example, Shell has partnered with Kroger to offer a cross brand loyalty program — if someone spends $100 at Kroger the shopper will get 10-cents off per gallon on their next fueling at Shell.  The program is a great example on how to redirect one loyalty program (Kroger’s) to another brand (Shell).  The question at hand for Shell is: will people frequent Shell without the 10-cent per gallon incentive?  If the program goes on perpetually, this is a non-issue.  However, Shell is normally priced higher than nearby stations, and removing the 10-cent per gallon incentive may result in a reduction in fuelers as they go back to their previous routines.

For me it is not a surprise, and a little of apples and oranges comparison.  For example, comparing fans to visits is incorrect.  Facebook fans are not all active on the page, in fact I would argue the majority of fans are not active on a marketer’s page in a given month.

If we want to truly make it an apple to apple comparison, Facebook fans are more analogous to an marketer’s email list — people who opted in to stay in touch with the brand.  For comparison purposes let’s assume Kraft had an email list equivalent to their facebook fan volume.  The exposure rates would be similar if a message was sent out in email and facebook.  While we know the exposure volume, we don’t know how many people acknowledged the message.  We only know the response rate (e.g. likes, comments, postings).  Comparing facebook to email, in a given email blast a marketer would expect a 25% to 35% response rate or about 2.6 million responding.  I doubt that 2.6 million people are active on Kraft facebook communications.

“Digital Direct Math” aside, there is several data nuggets in the article.  One is the extreme drop in web site traffic for Kraft.  The article points out this may be a function of marketers shifting email lists to facebook fans.  Logically, it makes sense.  If my email list declines (or becomes more passive) the number of people going to the site would drop with each blast.  

While we could micro-analyze each digital experience we need to take a macro view the online experience.  We need to stop assessing a brand/consumer presence by one destination or domain (e.g. facebook, website, YouTube Channel). This is so 2003.   The online brand presence should be measured as an aggregate of all content, all experiences, all conversations.   Kraft is probably looking at their online presences in totality, understand the purpose of each channel within the brand / marketing strategy.

From a consumer perspective this makes sense too.  Marketers are smarter to integrate their brand experince into the consumer’s online experience, instead of brand-centric view expecting consumer’s to come to the brand destination.  A marketer’s online investment strategy should not be restricted to one destination, rather it should assess opportunities holistically, and determine the best places to intercept the desired target, at the right time, right relevance, and right mindset.  This may be facebook, search, email — or all the above.

“The Elephant is the emotional side of motivation, while the Rider is the logical side.  Perched atop the Elephant, the Rider holds the reins and seems to  be the leader.  But the Rider’s control is precarious because the Rider is small relative to the Elephant.  Anytime the six-ton Elephant and the Rider disagree about which direction to go, the Rider is going to lose.  He’s completely overmatched.”

The authors examine how these two internal motivations play together (or not).  The most obvious examples we most can relate to are sticking to a diet, staying on an exercise program, or quitting smoking.   We know it is the right thing to do (Rider) but we have a difficult time sticking to it (Elephant).  The Elephant and Rider are the yin and yang of our psyche.  The Rider is the planner (getting thin on a diet), while the Elephant is attracted to the short term payoff (enjoying an ice cream cone). 

“Changes often fail because the Rider simply can’t keep the Elephant on the road long enough to reach the destination.”

As marketers we advertise to induce change.  A change in brand choice.  Getting people to rethink their brand selection is about motivating them away from what they do today.  Getting them to take a different path — a new path.  The question is are we talking to the Elephant or the Rider?

Educating the Elephant
I have a friend who frequently fuels his two cars at Sam’s Club.  This fueling behavior requires him to travel 15 miles or about 20 minutes each way from home.  Seems illogical to most people.  However, in a recent study I completing on fueling behaviors my friend is not alone.  About five-percent of  people share this fueling behavior.  There are different reasons why, but primarily these people spend time to save money.  They believe by watching their pennies they will save dollars — thousands of dollars in the end.  It is what drives them. It is their elephant.

The  elephant drives many marketing decisions, because it is our DNA – it is who we are.  It is our natural approach to the world, so why would marketing be any different.  Many times the elephant will drive the consumer to choose our product, sometimes the competition.  We need to be careful to just talk to the rider.  Some marketers believe we can logically change behavior.  We love our products, and logically we see reasons why people should choose our product over the competition.  These logical “why buys” may appeal to the rider, but may be meaningless to the elephant. 

• A car’s high Miles Per Gallon may appeal to the rider, but the elephant likes the roominess of a full-size vehicle.
• Saving the environment may appeal to the rider, but the elephant does not want to pay a premium for green products.
• A quality cup of coffee may appeal to the rider, but the elephant does not want to drive four miles out of the way to get it.

You get the idea. 

I am not suggesting we suspend logic.  Rather I recommend building campaigns based on our core target’s motivations.  In order to get the consumer to change their behavior, we need to understand their internal inertia — the motivation within their current choice.  We then need to architect a path — a message — an experience, that will get them to rethink their choice, and redirect their behaviors.

The apps outlined in the article were interesting.  I could see the appeal how the apps would appeal to certain shoppers.  However, I do believe there is a bigger idea out there.  Albeit not an easy idea to execute, but if successful the application could define the category. 

Before I paint a vision of what that could be, let’s first briefly review the mobile apps discussed in the article.  I grouped the mobile apps based on perceived shopper benefit: saving money, knowledge, and convenience.  Note that some apps may fit into multiple benefits.

Saving Money
Some people spend time to save money, others spend money to save time.  When a person is driven to save money, they view their time as an investment to get the best deal.  The lowest price, coupons, rebates, are priorities.  These shoppers are willing to drive out of their way to get a deal.  So it is not a question of ”if” they will drive out of their, rather it is a question of “how far” they will.

•  Yowzadelivers coupons to nearby stores based on GPS-ing the shopper’s location. 
• ShopSavvycompares store prices (through scanning the bar code) with  online and at nearby retailer pricess.  Also includes coupons and allows users to make online  transactions.
•  The Find will locate retailers, both online and offline, that carry desired products, will compare prices of the product, and even calculate the cost to drive to each store.

Shopper Knowledge
Making an informed decision is a desired benefit for many shoppers, especially on a high-consideration purchase.  Achieving this goal is not always easy.  It is not for lack of information — the internet provides an abundance of information on products, pricing, and product reviews.  No the issue isn’t information.  The issue is gathering knowledge to determine what is the right product.  What product meets the shopper’s needs.

• RetrevoQ uses texts and tweets to provide shopper with information about electronics equipment including pricing information, reviews, and whether it is a good buy.

Convenience
Sometimes it is a manner of getting in and out quickly.  For many shoppers going to a mall is an experience.  A social journey where they explore stores and take in the ambiance of the mall.  For others it is a task.  They prefer not to waste time. Get in. Get out. Or get to where their desired location as quickly as possible. 

• Fastmall provides interactive maps displaying the quickest route to stores and it can remember where their car is parked.
• GroceryIQ (now owned by Coupons.com) allows consumers to create grocery lists, organize them, access coupons and share lists with others.

By reviewing the list of apps one can see the inherent benefits of each app.  However, I do think there can be more benefit.  The true killer apps will get more personal.

Get Personal
Right now the apps listed are rather impersonal, and a bit pushy.  Pushing coupons to the phone.  Pushing prices to the phone.  Pushing reviews to the phone.  We need to be a little less pushy, and take a more empathetic view of the shopper.  Make it more about them.  Make it personal.

Mobile phones are digital wallets. Potentially, they have reams of personal data.  Mobile phones know who we know.  They carry our contacts, our social groups, our trusted advisers.  Mobile phones also know where we have been.  They can capture visually a place or the specific GPS location.  Mobile phones can learn our tolerances.  They can record how far we are willingto travel for certain items like shopping or dining.  Mobile phones can learn our time-value relationship.  By combining these factors and more we can match shopping information with our personal code will generate knowledge.  If the app can fuse  our personal information the shopper environment think of the possibilities. 

My Meals
We don’t eat ingredients, we eat meals.  We all have favorites meals. So, imagine GroceryIQ with a taste layer – finding and recommendingfood and recipes based on personal or family food genres like ethnic flairs (e.g. Thai, Italian), and then incorporatingthe recipes into your shopping list. Also, imagine a time layer – accessingyour calendar to determine how much time you have to cook and making meal recommendations (then pullingrecipes, coupons into the list).  There are sites on the web that do aspects of this today.  The challenge is combining the elements together in a seamless experience for the shopper.

My Money, My Time
Some people save pennies, some save dollars, some just spend. The variance is mostly explained by how we valuate our time.  As stated prior some people will spend time to save money, others prefer to spend money to save time.  There can be an app for both.  Apps like Shop Savvy and The Find could be fine tuned to understand a shopper who is willing to wait a week (for shipping) to save ten dollars, while another shopper may willing to spend $30 to buy the product today.  The Find is headed down this path with the ability to calculate the driving cost to each store.

 My Purchase
Many marketers (and tech people) think what people need is information.  This is a misconception.  People do not need information, the internet, publications, and retail environment offer an abundance of information.  No, what the shopper needs is knowledge.  In the case of shopping, knowledge is the synthesizing of personal needs  with product information to determine the appropriate fit. 

Think about a high-consideration purchase like an HDTV.  The mobile app can combine electronics advise from experts with your friends with your personal needs and home environment.  The goal of the app is to not push the information, rather synthesize the information by fusing the data points into knowledge.  Think of this as a three step process.

The first step would be to create a personal foundation.  The app could capture a picture(s) of where the television is to be located including room lighting, distance from viewing area, and accessibility to cable, stereo and internet/wi-fi.  The app would also ask the shopper questions like budget, primary television usage (e.g. movies, sports, gaming), and brand preference.

The second step would be to fuse this information with product data (e.g. specs, pricing, product availability) and expert reviews.  This overlay would inform the shopper about product fit with their needs, product reliability through expert reviews, and where the television can be purchased (and for how much).

The final step is to fuse it with social information.  Mobile phones are a gateway to our social network.  For important purchases, most shoppers seek advice from someone in their social circle.  Maybe the person is a tech geek or fashion savvy or just a friend whose opinion matters.  From the shopper’s perspective the social circle could provide first-hand experiences from people who either bought the product recently or knows someone who has.  Based on this first or second hand experience, the shopper would receive additional input.

It is not about My Phone, it is about My Life
Based on the last example, you get the idea of the depth and breadth of an app.  However, the complexity of the app brings up a final point: the best apps should be integrated into our life – accessible from multiple access points and not limited to just our mobile device.   Think about facebook, YouTube, or Twitter — they began as experiences to accentuate different aspects of a person’s life.  Each began by fulfilling a need.  Each has multiple touchpoints including a mobile app.

Generating an app solely for a mobile device is limiting.  While there are merits of mobile, there are also restrictions.  The more complicated the application, the more cumbersome the application usability within the limited screen realestate.  The more visual the application, the more difficult it will be to shrink it to a mobile screen without compromising visual aesthetics.  That is why the best mobile apps will transcend the device - the best apps will emanate from the shopper within the shopping experience.

I never was a big fan of major retailer sites (e.g. Walmart, Kmart, Sears). A few years back, my wife and I were trying to buy a hard-to-find toy box for Christmas. The only store that carried it was Kmart … online. Although the toy box only cost about $125, we ended up paying about $70 in shipping, due to bulkiness, inability to stock in the store, and they had us over a barrel (Merry Christmas!).

This holiday season I noticed while Kmart was pushing layaway, Walmart is offering free shipping to participating stores. I’m intrigued. But how good is it? As a comparison I searched for large bulky items on both Walmart and Amazon. When comparing dinette sets it was a push. Both retailers offered free shipping on some items, but the majority of dinette/kitchen sets had a separate charge for shipping (e.g. about $100 on a $500 set). Amazon offered free shipping on items they stocked, while Walmart offered free shipping online items stocked in their store.

Another comparison was on a 52″ 1080p Sony HDTV. Both had free shipping, but that is where the similarities ended. It occurred to me getting an HDTV to the local Walmart still left a span of 4.56 miles from the shipping dock to my living room. Checking the dimensions I noticed my Ford Explorer does not have the clearance inside, and strapping it to the roof rack is probably not the best way to transport a $2,000 television. On the other hand, Amazon had a wonderful shipping value proposition: Free White Glove Delivery. The White Glove delivery entails:

When you purchase this TV from Amazon.com, it receives our special white-glove delivery service. After your purchase, an agent will call you within five days to arrange delivery. At your home, delivery experts will: carry your product to any accessible room in your home — including upstairs rooms — provided the package will fit; unpack your product and place it on assembled furniture; provide a setup checklist; and remove all packing materials from your home if you wish.

Not bad. Ironically, while Walmart is trumpeting its ability to get your holiday gift most the way home, Amazon’s White Glove treatment could be this holiday’s best kept secret.