Compete recently had the opportunity to speak with Kevin Ertell, a well known E-Business and Online Operations veteran. Most recently Kevin led the E-Business efforts at Borders and guided the highly successful launch of Borders.com. Prior to Borders Kevin was an SVP with Tower Records responsible for online operations.

Kevin shared his insights on everything from Border’s Magic Shelf to the impact of Mobile and use of Videos.

What’s the one thing Online Retailers should be paying attention to?

I believe customer satisfaction is the most important metric for any online retailer. Conversion rate is also important, but it’s getting to be a tricky number to calculate as more and more retailers use their sites for purposes beyond the buy button (as they should). For example, at Borders we found the standard conversion rate calculation of traffic/orders didn’t really work because we couldn’t correlate it to sales on the site because we used the site to host store coupons, video entertainment programming, Borders Rewards tracking, etc. So, if we wanted to focus on a metric that tracked our selling success, we needed to focus on the type of traffic that likely came with an intent to buy (or at least eliminate the type of traffic that came for other reasons). We ended up going with something we called “true conversion” that measured product page views/add to cart multiplied by checkout process starts/orders. This true conversion metric was far more correlative to orders than anything else, so it was the place to focus.

What are your thoughts on Retailers being Cross-Channel?

Many times, “multi-channel” and “cross-channel” are used interchangeably, but I don’t think they’re the same thing at all. “Multi-channel” is more than one channel while “cross-channel” is leveraging the strengths of each channel to create an overall customer experience that is greater than the sum of its parts. For example, the web has many capabilities that are nearly impossible to achieve in store because of physical constraints. Customer reviews are extremely popular online and customers regularly report using them to make purchase decisions (both online and in store); however, they are very difficult to make available in a physical environment. Some retailers are making them available via in-store kiosks, but the kiosks are a large capital investment to make if they’re not already available. So, I think we’ll likely see more and more use of mobile phone technology to give people access to customer reviews, recommendations, wish lists, gift registries, etc. in store while they’re standing in front of the products.

What are you currently most intrigued by?

I’m really intrigued by the ideal of distributed shopping. We’ve all built our sites based on brick and mortar thinking, really. By that I mean that we build sites and then work hard to get people to come to our sites. However, the web doesn’t need to work that way. We can take our sites to where our customers are. Traditional retailers occasionally do this. For example, when I was at Tower Records we used to build stores in tents at music festivals like the Monterrey Jazz Festival and sell jazz CDs to jazz music aficionados who were there for the festival. However, those opportunities were logistically and financially difficult, so we could only do them for certain types of events. On the web, the logistics and costs can be almost insignificant to get to the most niche of audiences.

To hear more thoughts from Kevin and read the full interview, simply sign up for Compete in Retail, Compete’s monthly Retail newsletter by emailing us.

As marketers we want to, check that, we need to better understand consumers. Dr. John Medina provided his unique perspective on consumer behavior based on his knowledge as a developmental molecular biologist. Dr. John Ratey M.D., author of Spark - The Revolutionary New Science of Exercise and the Brain looks at consumers through another clinical lens.

In these challenging times, with the unemployment rate at its highest since 1992, what should we know about the link between stress/anxiety and exercise?

The phrase I’ve coined is “excernomics”. This is the time for people to get themselves into a peak level of fitness - physically, intellectually and emotionally. I know from previous downturns one of the things that was so important was for people to stick with their fitness program even if they were out of work. The best way to deal with these times from an evolutionary perspective is to be at the most fit level of fitness that we can be in. Being at the top our games physically helps us be there emotionally and cognitively. This is the time to get fit!!

Children are not immune to stress and anxiety yet surfing the Web, playing video games, sending IM / text messages, encourage sedentary behavior. What would you tell them?

We need to gets kids in shape. The co-opting of the gaming environment with the WII and WII-fit and Dance Revolution is a step in the right direction. There are a host of other “exergaming” options that grab gamers’ interest and can be as exciting as traditional video games, and they use physical activity as part of the game.

Also, physical education (PE) in the schools has to change. We need more of it and the concept of PE has to switch from a sports-coaching model to a fitness-wellness everyday athlete model.

How can advertisers spark the revolution you advocate and become agents for change?

I would encourage them to support programs by going into the schools to establish PE as a real entity, not just a place to collect athletes. Focus on working with schools and giving them the materials for healthy school lunch programs and then use those opportunities to educate them on what we know about what is good for us and what makes the brain much healthier.

Which advertisers are making strides?

SPARQ/Nike is trying to get into the schools to have kids follow their fitness on the Internet. It started with 100,000 kids as part of a summer program and they are now broadening that to schools in general. The Healthy Student Bodies program will make a big difference in using the Web to track their progress and get advice.

About Dr. John J, Ratey, M.D.

Dr. John J. Ratey, M.D., is an associate clinical professor of psychiatry at Harvard Medical School and has a private practice in Cambridge, Massachusetts. As a clinical researcher he has published more than 60 papers in peer-review journals in the fields of psychiatry and psychopharmacology.

At first glance, interviewing a developmental molecular biologist might seem unusual for the Compete blog. After all, what does the discipline have to do with marketing? It turns out to be very significant. The 12 brain Rules that Dr. John Medina identifies in his book are directly relevant for marketers. As Garr Reynolds put simply in my interview with him: “….his ideas will change the way we all work and learn.”

Rule #4: We don’t pay attention to boring things. What can marketers do to make campaigns more interesting to consumers?

The brain cycles through six questions whenever it confronts an input, whether it is running away from saber toothed tigers in the savannah or looking at product placement on a website: Can I eat it? Will it eat me? Can I mate with it? Will it mate with me? Have I seen it before? Have I never seen it before? Any marketing campaign that hooks the brain will have done so because it will have snagged the organ on one of those questions.

Rule #5: Repeat to remember. Should we take this rule literally?

Repeat to remember. Remember to repeat. You should take that rule literally. The brain can only hold seven pieces of declarative information for about 30 seconds. If the information is not repeated in that time frame, the brain will dump it.

Given the 12 Brain Rules, what advice do you have for marketers?

Three pieces of advice:

1. The brain is not interested in learning. And it is not interested in buying. It is interested in surviving.
2. It fleshes out this pre-occupation by creating and responding to two internal motivations, both strikingly Darwinian. The brain is interested in anything that will provide it a benefit. And it will do whatever it can to avoid pain.
3. Both motivations are related to a single goal: passing our genes onto the next generation. That sounds like it all comes down to sex, but it really comes down to endurance – in terms of millions of years. We barely survived our womb in the Serengeti, but we did so because of the overwhelming dictatorship of these twin interior forces.

Who should I interview next for the Compete blog?

I would interview John Ratey. He’s terrific.

About Dr. John J Medina

John J Medina is a developmental molecular biologist focused on the genes involved in human brain development and the genetics of psychiatric disorders. He has spent most of his professional life as a private research consultant, working primarily in the biotechnology and pharmaceutical industries on research related to mental health. Medina holds joint affiliate faculty appointments at the University of Washington School of Medicine, in its Department of Bioengineering, and at Seattle Pacific University, where he is the director of the Brain Center for Applied Learning Research.

It wouldn’t surprise you if I said that this holiday shopping season is expected to be weak. But would you be taken aback if I said that there is a fundamental shift in consumer values underway that may have a lasting impact on retailers? If your eyebrows are raised, listen up.

What changes are you observing in consumer values?

What I am seeing is the pendulum swinging away from the conspicuous consumption of the 1980’s and 1990’s and toward conscious consumption. And this is having a profound impact on the retail industry. Overall, the current economic situation is accelerating trends toward frugality and placing importance on relationships and people instead of things. The importance on things to make someone happy is being questioned. I am seeing almost an anti-consumerism sentiment.

The immediate change for retailers is that people are shifting from premium brands to down-market channels. Wal-mart is a big beneficiary of this trend with its lower prices and higher value. There is also a move into dollar stores and thrift shops as well as Freecycle or Craigslist and other places where people can barter and exchange goods versus just throwing away unwanted items.

In the long run, some of these new spending patterns will stick with consumers who may not return to spending more when the economy rebounds or who will stay with lower-end brands in some categories.

Is there another time in history where there has been a big shift in consumer values? How did it impact retailers then?

During the Great Depression there was a profound amount of frugality. People made the best use of what they had. This value system stuck with that generation for their lifetime. They purchased high-quality goods that would last a long time. They didn’t want to be wasteful.

There were also profound shifts in the opposite direction, during the 1980’s and 1990’s. During the tech bubble when people started to feel rich they wanted to display that affluence with a Rolex or perhaps a BMW or large home. During this period of high consumption the retail industry experienced tremendous growth and also consolidation as the rise of behemoths like Wal-Mart occurred.

Is there a brand or campaign that you think is getting in right in addressing the current shift in values?

Dentyne is taking a very basic product, a discretionary product, and instead of positioning it around taste or fun they are relating it to specific relationships and social issues. Their campaign (supported by TV spots, billboards and the internet) is all about people and your relationships with them – “Make face time.” Obviously the connection they want consumers to make is that if you are going to be with people you need fresh breath. So, Dentyne encourages people to get off the internet and re-connect with friends by providing visitors with 3 minutes to explore dentyne.com. It’s an original concept.

What advice do you have for retailers who are (re)developing their marketing strategies?

The most important thing for retailers is to tie value and values together. When you can make a statement to offer lower price or great value and also that you are doing things “right” (such as making a donation with each purchase or using environmentally friendly materials), it will help justify the purchase for shoppers. You need to provide a reason for consumers to prioritize your purchase in their life above other things they need to spend money on.

Who should I interview next for the Compete blog?

You should speak with Miranda Tisdale at Kohls about its 2008 “Inspired by the Artists…worn by you” campaign.

About Dan Stanek, Executive Vice President, TNS Retail Forward

Dan has more than 20 years of experience in consumer marketing and retail consulting for Fortune 500 companies. He specializes in marketing strategy, channel strategy and brand development. Dan has extensive experience developing brand and retail marketing positioning strategies for many of the nation’s leading retailers and consumer products companies.

Want a list of this season’s Top 25 hottest retail products?
Go to Compete’s DataHub.

“The options for placing media today are endless and I have had some interesting requests from clients that truly reflect the extent of those possibilities,” said Megan Hernandez, media planner at The Gate Worldwide. I recently had the pleasure of interviewing Megan and got an insider’s view on what it means to be a media planner today. As a media planner Megan acts as the liaison between the creative team, account team and clients to develop media strategies and campaigns, as well as purchasing all approved media buys. Megan was able to offer some insight into this continually evolving field and on why her clients are moving to digital.

Are your clients moving towards digital media and away from more traditional sources?

This depends entirely on the client and their background. Digital is an attractive medium because of the tracking ability on the results and on how efficient each buy was. Clients love to be able to report back to their team about how each dollar was spent and the results of the entire campaign. I find that if a client is hesitant about digital advertising and we run a test campaign usually by the end of the test campaign they are already planning the next one!

What tips would you offer to digital advertisers?

1. Know your audience. I understand that this sounds pretty elementary but in order to maximize your return on investment you must know your audience and where they are online in order to evaluate which sites target your core group.
2. If budget allows, develop a micro site or landing page. This will be able to capture complete reporting and conversions and will help tailor the message of the campaign to the audience in order to keep their interest.
3. Focus on reporting at the end of the campaign. It is extremely important to understand metrics and how successful your campaign was.

What advice do you have for advertisers as we head into 2009?”

Stay positive. At this time I understand that companies are experiencing budget cuts and advertising and marketing may be affected. No matter how large these budget cuts are, advertising is an essential part of a brand and one that cannot be overlooked. On a positive note, there are many mediums and strategies that can be adjusted to work within a company’s budget while still remaining effective. Right now, we are putting together many proposals for our clients to work within their smaller budget while still advertising in the proper mediums.

As marketers we know that the need to listen to, understand and engage customers more intently is intensified during difficult market conditions. I recently interviewed Diane Tarr-Smith, VP of Marketing at Communispace to find out how private online communities can help.

How can a company use a community as part of a larger marketing and social media strategy?

Think of it this way – imagine you sell soft drinks and you’re constantly looking for an edge over your major competitors. Now, imagine if every morning – while you’re drinking your first cup of coffee –you could chat directly with 500 of your best customers and hear their reactions to the new ad campaign, get the unvarnished truth about your new fruit-flavored water and hear some breakthrough ideas for a new diet iced tea. You’d hear free-flowing honest feedback from people who are invested in your brand. Well, that’s what a private online community is. The community can be used for pre-ad campaign testing, in-campaign tweaking for online initiatives, landing page effectiveness and even search engine optimization.

How do marketers turn the insights from customers into meaningful change for the company?

Let me give you a specific example. When our AXE community gives feedback on an ad, saying it won’t fly with AXE’s core demographic, the value is immediate – phew, glad we caught that one early. When campaigns can cost hundreds of thousands, it’s easy to track the ROI of the community and understand its meaningful impact. In the longer-run, what better way to ensure future marketing success than to build consumer insights directly into the ideation process

What are some practical tricks for companies looking to get started with online communities?

There are many public and private ways to use communities. Some tips to consider:

• Smaller is better – the key to success – and greater insights – is having the right people in a private, intimate setting. Participation rates skyrocket, engagement explodes and insights emerge.
• Recruit wisely – recruiting is paramount to success. Communispace has experts who do nothing but refine techniques for finding the best community members who create a special community dynamic.
• Don’t dominate – community facilitation isn’t easy. Don’t overtax or over-direct members. These are your advisors, so treat them with care and respect.

Where do you think market research is heading in 2009?

Take a look at the Economist Intelligence Unit (EIU) report, which mentions that in some cases customers are actually driving product strategy and development. In fact, the report states that “in 2013 customers will represent by far the leading source of new product and service ideas.” Moving forward we’ll likely see more companies following in the footsteps of GlaxoSmithKline, Kraft, Welch’s and others who already understand the need to listen to, understand and engage their customers more intently.

Who should I interview next for the Compete Blog?

Charlene Li. She recently left Forrester to start Altimeter Group and she has a unique understanding of what marketers must do to better engage today’s consumer.

About Diane Tarr-Smith
Diane has almost 20 years marketing for leading brands including Yahoo!, Fidelity Investments, Avid Technology, and Engage Technology. Most recently, Diane was VP of Corporate Marketing for Perseus/WebSurveyor, the only online research technology that ties market research directly with business results. Diane lives in Boston with her husband Jim and their Pomeranian, Maggie.