Voices: the CMB Blog

What can B2B companies learn from Black Friday and the Holiday Shopping frenzy?

The Holiday 2011 Shopping season got off to a strong start over the weekend.  Black Friday was the biggest ever for brick-and-mortar retailers; and there was an even bigger increase for online retailers.  Overall, the weekend was a huge success when compared to the start of the 2010 holiday shopping season.

The fact that Black Friday saw an increase in retail sales this year should not come as a surprise.  Much research (including our own) foretold strong buying intentions, with a continued shift to online shopping. The sheer size of the increase, however, is quite a surprise.  Many analysts predicted a 2-3% rise in holiday shopping activity, so the big jump this weekend has brightened the prospects for American consumers and retailers.

So, does this mean all of the Black Friday deals and hype worked?  The midnight store openings?  The door-buster deals?  The incessant advertising and promotions?  Is there any way we can do something like this in the B2B space? 

Let’s put the holiday shopping activity into perspective.  We are at the end of the year and consumers are looking at their bank accounts and budgets, and assessing how much is left to spend, and looking at the bare walls where the flat screen TV should be hanging.  We find a great deal of pent-up demand in the US market, as US consumers have been through another difficult year and pulled back on spending.  This cutting back has left people with more money to spend (whether from their bank accounts or credits cards).  

So, it looks like we are finding a strong convergence of:

• The Supply (retailers going out of their way to make it easy for consumers to shop and buy with longer hours and lower prices)

• The Demand (a rather strong need to refresh the cupboards), and

• The Financial Support (to make it all come together)

Much of the same can be said for business.  Budgets have been trimmed for several years, resulting in the need for investments and purchases to lead and support growth in the future.  As on the consumer side, cutting back has created strong profits for many companies, which means they have money to spend. 

What is the supply in this B2B equation?  Are companies making the necessary effort to match pent-up demand and the ability to spend?

First of all, B2B can’t replicate door-buster deals and midnight store openings.  But, B2B firms can:

• Make it easy for companies to spend:  Look at the holiday deals for shoppers, and you will see promotions for items priced from $25 to $2,500 (and even higher).  If for no other reason than “spend-it-or-lose it,” companies approach the end of their budgetary year with the need to purchase – when selling to other businesses, you need to be prepared with products and services in a range of prices to meet their budgets.

• Address the need to invest, and communicate it repeatedly:  The theme of Holiday Shopping 2011 has been the consumers’ need to purchase many of the new technologies and new fashions that they’ve been unable to buy over the past year.  The same can be said for business, but instead of the latest tablet or gaming console bringing joy to the consumer and her/his family, the product or service will bring opportunity to grow and advance the business.

• Know your customer’s budgetary cycle:  Retailers have it easy in this area – personal budgets follow the calendar years, so December represents the rush for consumers to spend within their annual budget.  However, companies have unique fiscal years, often tied to industry business cycles.  If you sell to businesses, it is smart to know when your customers may be looking to spend leftover cash.

• Clearly understand customer needs and wants:  This should go without saying, but retailers greatly prepare for this time of year by deeply analyzing what consumers need and want.  They tailor product offers, pricing and communication to meet them and remain focused on the key aspects driving purchases.   

Posted by Jeff McKenna, Jeff is a Senior Consultant at CMB, and the creator and host of our Tools and Techniques Webinar Series.

Black Friday is nearly upon us.  For Americans under 30, the Friday after Thanksgiving has always been “Black Friday,” and the madness of doorbusters, riots, and people camping out in front of major retailers defines the day.  But this hasn’t always been the case, and a brief walk down memory lane reminds me that great opportunities exist to prepare and define the next phase of this holiday tradition…

A nice summary of “Black Friday” history shows the day after Thanksgiving has marked the start of the holiday shopping season for over a century.

Just a few interesting facts…

• It wasn’t until recent years (mid-‘00s) that Black Friday actually became the busiest shopping day of the year.

• Philadelphia police officers dubbed the day “Black Friday” around the mid-1960s because of the massive traffic in the city brought on by the start of the shopping season and the annual Army-Navy football game, which was hosted in Philadelphia.

• Black Friday was not given the name because it was the date when retailers’ balance sheets went from being in the red to being in the black.  This myth arose in the mid-1980s as the name became part of common lexicon, but retailers started to spin the new story to counteract negative connotations.

Snooping around YouTube, I found this Miami news report from 1984:

One noteworthy aspect of the video, besides the fashion (yikes!), is the fact that “Black Friday” is never mentioned.  Not one reference to “black” or “Friday,” even though the telecast was reporting about the big start to the holiday shopping season.   In fact, the reporter interviewed a husband and wife shopping together – not like today where Black Friday is promoted as a “lone wolf” activity, where a solo shopper has the freedom and flexibility to snatch up every deal. Or alternatively it is treated like a team event where groups of shoppers strategically coordinate their shopping tactics.

On the other hand, the final segment of the clip references the start of the retail store camping-out trend, with the story about Cabbage Patch Kids.  If you don’t know the history of the original CPK, watch this video, and skip to the 1-minute mark to see the vision of Holiday shopping future back in 1983:

So, how does this apply today?  Are we to expect Black Friday to continue its march to become the “Battle Royale” of shopping events, and even swallow up Thanksgiving, as several are cautioning?

I don’t think this is necessarily the case.  In fact, the point of the earlier comments is that things change, and rather rapidly at that.  Black Friday has not always been the gluttonous event of “doorbusters” and “Midnight Madness” sales.  While it has marked the start of year-end shopping activity, it’s only been recently since retailers have put a huge premium on this single day.

And I think we see the winds of change in new shopping behaviors.  As we recently reported from research in our Consumer Pulse, nearly the same share of people plan to shop online on Cyber Monday (38%) as on Black Friday (39%) this year.  And, online retailers have been implementing a big push to attract shoppers this year as they seek to gain a larger share of holiday sales (my inbox is filled with offers from a wide variety of e-tailers, and all I need to do is click a mouse rather than sit outside my local Best Buy with thermos in-hand.)

 In the end, the online start to holiday shopping and doorbuster deals will become “serverbuster” deals, and people looking for the killer deals or must-have gifts will do it online.  (The recent Target Missoni online fiasco shows that shoppers are as content rioting online as in-stores)  Then, perhaps, the Friday after Thanksgiving will return to the old days with families would get together and simply go shopping.

For more on holiday shopping trends download our latest Consumer Pulse: The Holiday Shopper: Cyber Monday, Black Friday, online shopping and what they mean for retailers.

Posted by Jeff McKenna. Jeff is a senior consultant at CMB, he is not asking for a Cabbage Patch Kid this year.

Despite some debate over the value of Enterprise Social Software tools, their use has taken off.  In 2010, Gartner, Inc. went as far as predicting the near term replacement of email by social networking services.  The lure of a tool that is low cost, simple to use, and that taps into the explosion of mobile devices promises to be collaboration on steroids.   

In our recent Tech Pulse survey of over 200 IT professionals, nearly one-third are currently using some type of enterprise social networking tools already, and an additional one-fifth plan to start soon.   Not surprisingly, usage is highest at larger companies, where the actual need is greatest.   

IT Departments, which are starting to catch up to this employee-led train and take ownership of it, typically  prefer social networking features integrated into core software applications already in use at the organization, as opposed to horizontal, purpose-built enterprise social networking platforms (three-quarters of IT departments prefer this). IT departments are dealing with application sprawl already.  Any time a trusted incumbent vendor gives them a way to meet their employee needs without adding an entirely different application (and vendor) to their environment that may not have well-developed APIs with their existing applications: they’ll take it.    

Which applications have the most demand for integration of enterprise social networking tools?

Some of the biggest users of these tools—not surprisingly—will be from Marketing and Sales.  This group of enterprise users will likely benefit from integration of social networking tools for CRM, SFA, and other marketing-related applications. Customer Service departments are also high on this list: large companies striving for greater customer-centricity have a clear need to get all parts of the company dealing with customer touch-points more effectively collaborating with one another.     

Internal IT management and IT help desk functions were also high on the list of departments that would benefit from enterprise social networking.  IT departments are not only catching up to this trend; they’re using it themselves as Gen Y and Millenials increasingly start to populate the profession.    

Which enterprise social networking tools are IT Professionals using/considering?

IT departments generally prefer company names from large application providers they already use. The top mentions for social networking tools currently being used include Microsoft’s Office Talk, Cisco’s Pulse/Quad, and IBM’s Connections.   These same tools are top mentions for tools they are planning to use in the near future.     

Things for Enterprise Social Networking Pure-Plays to Consider:

1. Don’t Skimp on APIs: Having tight, well architected integration with major enterprise applications already in use is absolutely essential to getting companies to bring on a new vendor…especially the larger companies that are the earlier adopters of these systems. Jive is already attacking this barrier by increasing the degree of integration its tool has with applications like SharePoint.  If these firms invest in tighter integration with applications that matter to these IT Professionals in a social networking context,   (e.g., Customer Service, IT help desk, and Internal IT), they are likely to gain greater attention.

2. IT Departments Need Some Convincing: Not having the benefit of incumbency and inertia, pure-play enterprise social networking companies must be amply prepared to counter objections they are going to face from IT departments that—while this might not be the place they initially target their sales efforts—they will ultimately need to gain the central IT stamp of approval in order to close the deal.

  Things for Other Enterprise Application Vendors to Consider:

1. Consider developing integrated social networking capabilities into the next release of your software: especially if you sell to larger companies and/or to departments within companies that are most open to using enterprise social networking. IT Departments, for one, will be compelled to pay a little bit more for these extra integrated functionalities and be done with it rather than overlaying a completely separate third-party solution that may bring its own set of integration and IT management headaches.

2. Play nice with other enterprise social networking vendors: especially if you do not have the resources or decide not to develop your own social networking capabilities—the ease with which your product integrates with some of the major enterprise social networking tools may soon become a check-list item in the evaluation process for your category. Helping develop easier integration with other social networking platforms is a defensive move that could prevent some future churn of existing accounts when it comes time to renew agreements.

Download our TechPulse on Cloud Computing Trends here.

Posted by Chris Neal. Chris leads CMB’s Tech Practice. He enjoys spending time with his two kids and rock climbing.

Last month, we released our 10 Quick Facts You Should Know About Consumer Behavior on Facebook, and there was a lot of great discussion about how different companies are using the mega-site. The sheer number of Facebook users, all over the world, means brands and companies know they need to engage and they want to know what fans like about their brand (and what they don’t like) and how it impacts their behavior.

But, what about that other social media giant—the place where everyone from hip techies to budding revolutionaries go to speak their minds in 140 characters or less? This week we released a new Consumer Pulse report highlighting 10 Quick Facts You Should Know About Consumer Behavior on Twitter. In collaboration with our friends at Constant Contact, we asked nearly 1,500 Americans over 18 about their Twitter habits, and the results are in. Here are a few of the facts that stood out:

Consumers follow brands on Twitter for exclusivity, promotions and to be “in the know” (tweet this)

While Facebook users are interested in showing off their brand loyalty, brand followers on Twitter like getting the latest news and promotions before anyone else. What is the lesson for brands? Don’t treat your Facebook content like your Twitter content, while the vast majority of Twitter users are also on Facebook, they don’t need warmed over content they’ve already seen, they want to hear about innovations and deals before everyone else.

One-third of brand followers are interacting with brands more this year than last (tweet this)

As Twitter grows, brands have a great, and growing, opportunity to listen to their promoters and detractors, and respond directly. While the majority of brand followers on Twitter do not engage in two-way conversation with brands—brand followers are engaged, the vast majority follow fewer than 10 brands.

75% of consumers have never “un-followed” a brand on Twitter (tweet this)

While “un-following” a brand is as simple as clicking a button, most brand followers are loyal to the brands they follow. This loyalty is no reason not to invest time in your tweets, 67% of brand followers expect unique content from the brands they follow.

Nearly half of consumers on Twitter have been tweeting less than one year (tweet this)

Twitter just celebrated its 5^th birthday but many users are just diving in now. Once, home primarily to early adopters and those in the tech industry, a significant percentage of Twitter users are very new to the platform. And it’s not just the very young. Twitter’s gaining new ground with older folks as well, a quarter of users over 50 reported tweeting less than once month.

In short, consumers expect brand presence on Twitter, and they expect more than just recycled Facebook posts. Twitter is a unique medium with its own rules, language, and etiquette, but the opportunity to listen and interact with consumers in your backyard and around the world is priceless.

Download the full report here.

Posted by Kristen Garvey. Kristen is CMB’s VP of marketing, a mom of two and is getting ready to hit Orlando for The Market Research Event. You can follow Kristen on Twitter @KristenGarvey

Last year we shared some of the key trends in cloud computing conversion with the potential  to make 2011 the year of the cloud. Namely, easy integration of cloud and non-cloud computing apps, system management apps that work across platforms, and support from third party service providers who “get” the cloud and its challenges. So, was 2011 the year of the cloud? Our recent Tech Pulse: Cloud Computing Trends and Needs, surveyed over 200 IT professionals and the results revealed an answer a bit more complicated than yes or no.

As expected, cloud conversion has grown steadily in the past year; more than 80% of companies currently use the cloud to house at least some of their apps or platforms. Beyond the growing ubiquity of cloud computing adoption, our study also looked at the following trends:

Cloud adoption is happening at US companies, but on an ad hoc basis: Companies with no plan to introduce cloud computing are rare, but even fewer have adopted a comprehensive company-wide plan. Instead, conversion to cloud computing is primarily implemented within business groups or for specific applications.

Many IT departments are now proactively promoting cloud technologies at their companies:  In sharp contrast to just a few years ago, a majority of IT departments now see themselves as the champions of cloud computing initiatives at their company, while they view more resistance from non-IT executives and line of business managers. Perceived recent improvements to cloud-based technologies along with economic uncertainty have helped changed IT departments from cloud resistors to cloud promoters.

The ad hoc nature of cloud adoption at US companies is creating cloud-based consulting opportunities.  There is a real opportunity for third party consulting and professional service providers that can help companies address cloud-based integration and security challenges. Application management for most companies now is a hodgepodge of non-cloud; private cloud; public cloud and hybrid cloud delivery models with sensitive data moving in and out of company firewalls and across different providers’ public cloud platforms. This is emerging as one of the most serious IT management challenges for the near future.

While this study revealed IT professionals’ lingering reservations about security and integration, it also revealed an opportunity for third party service providers in configuring company infrastructure to work effectively in the new cloud environment.  Clearly 2011 is proving to be a ramp-up period for the cloud.  Now that more IT professionals are primed for cloud adoption, cloud investment by the major players is surging and the enterprise mobility market is trending upwards, the buzz about cloud computing should rapidly come to fruition.

 Download our latest Tech Pulse: Cloud Computing-Trends and Needs here.

Posted by Brian Jones. Brian is a Project Manager with CMB's Tech team.