Holiday horror: five potential profit killers to avoid for Holiday 2013
By: Aneesh Reddy, Co-Founder & CEO, Capillary Technologies
The holiday season is a time of good cheer for both retailers and consumers. Consumers get to celebrate their favorite season by giving presents to loved ones and eating holiday meals with family. Retailers get to enjoy some of the most successful, high traffic sales runs of the year. The holidays bring families together and keep companies in business.
But retailers should also beware some of the potential pitfalls of the holiday season— pitfalls that can lead to a much less successful holiday haul than usual. Adjust in advance and retailers should have a very Merry Christmas. Miss the mark, and profits will disappear faster than Santa makes present deliveries.
Fortunately, most potential mistakes that may hurt retailers can be predicted and avoided. Here are five of the most common ones to consider and how to avoid them.
#1: High shipping costs.
UPS is looking at a highly profitable fourth quarter, as both online and brick-and-mortar retailers look to gain customers by cutting out the need to stand in line and delivering packages straight to the consumer. But high shipping costs are burning some companies, creating extra, unexpected expenditures that weigh down the company balance sheet.
How to avoid high shipping costs: While you may not be able to escape initial shipping costs, you should be very careful about offering customers overly good deals on shipping. Everyone wants to do right by their customers, but Amazon has had to raise its required shopping cart total for free shipping from $25 orders to $35 orders to protect company margins.
Think like Amazon. Beware offering your own incredible shipping deals.
#2: Customer burnout.
You can’t miss an opportunity to sell during the holidays if you are a retailer. But you also have to avoid bombarding your customers with offers to the point that it turns them off. Consumers buy largely based on desire, so turning them off is one of the worst things you can do to yourself as a company.
And remember: you’re not the only one trying to sell them. Holiday ad spending is expected to rise by 3-4%. Fisher-Price recently upped its digital ad spending by more than 50%, and plenty of other companies, such as Toys R Us, Best Buy, Amazon and K-Mart are already running holiday ad campaigns in full swing.
How to avoid burning out your customers: Be honest, be different, and structure good offers. Customers hate being misled, so treat them well by telling it like it is so they see you as a positive force. Also utilize strong customer intelligence tools to make the right offer at the right time. If analytics suggest your audience will not appreciate you sending them an offer at current frequency, adjust accordingly.
'Tis the season to be smarter.
#3: Practically giving merchandise away.
Everybody loves discounts: it’s a fact so pervasive that Progressive Auto Insurance built one of its famous Flo commercials around it. Furthermore, the right discount used at the right time is a smart move that can help bring in extra customers, especially during the intense competition of the holiday season.
But dishing out too many discounts or playing to the most discount-driven shopper hurts your chances of achieving record holiday profits. There is a point when lowering the price becomes counter-productive.
How to avoid over-discounting: Stick to your profitable pricing in general. Then, to compete with those offering discounts that dwarf yours by comparison, structure your offer differently. Be intriguing and interesting; discuss with marketing masters the best way to present your deal so it stands out in a sea of holiday promotions. In the end, it won’t be the best discount that wins, but the most enticing one.
Present the right offer at the right time and the bottom line of the discount will become far less relevant.
#4: Uninformed Employees
Even in a world where digital marketing is more prevalent and important than ever, employees are still an effective, often essential sales touch point. When customers have a good experience in store, it means great things for your business; when they don’t it means you wind up with a nasty Yelp or Google product review and a dent in your sales.
Therefore, it’s a real disappointment when employees are rude or unhelpful to customers, creating an unpleasant overall customer experience.
One recent example of employee affecting sales is the treatment of a secret shopper trying out Nintendo’s new Wii U, who reported that multiple retail employees told her, “'Well, there's no difference between the Wii and Wii U.’" (there is, by the way) and implied she should buy the original, 7-year-old Wii instead of the new product!
How to avoid uninformed employees: One fairly obvious way to avoid uninformed employees is to increase in-store education. If you don’t have training programs in place or your programs have not been recently updated, you may want to look into updating.
Or, perhaps more relevant, train your employees specifically for holiday retail situations. Then incentivize them for selling hot ticket, high-margin items this holiday season.
To double-check the effectiveness of your measures, use secret shoppers and monitor social media. Keep your finger on the pulse of customer sentiment with smart monitoring of the word of mouth environment.
And naturally, hire well to sell well.
Some companies may have to contend with consumers playing with items in store but purchasing online instead of buying on the spot. Consumers may be looking at getting the best deal, or prefer the ease of pre-ordering rather than feeling the pressure of the sale during a trip to the retailer. Whatever the case, some customers are guaranteed to buy with a combination of channels that sends money from brick and mortar to online environment.
How to prevent show-rooming: For starters, be omni-channel in your approach: provide positive options foe customers online, via email, and through mobile devices. Also, make sure to adjust your pricing appropriately based on well-rounded statistical analysis. Capture enough data along the way to know how your customers think and how they will purchase.
You may also be able to take a page out of Apple’s playbook and reverse show-room by offering easy purchase in store of items viewed online. Use calculated discounts, early release, and flexible holiday hours to draw in customers.
About the author
Aneesh Reddy is the Co-Founder and CEO of Capillary Technologies. A visionary who believes that advances in technology can lead to significant advances in business value and ROI, Aneesh leads the Capillary team and works with enterprise customers to help them put the right communications for the right products into the hands of the right customers at the right time. He is the winner of the Under30CEO award, Forbes’ 12 Hidden Gems and a number of other high tech industry recognitions.
About Capillary Technologies
Capillary offers an Intelligent Customer Engagement platform to retailers and consumer businesses - managing the entire life cycle of customer data from acquisition, analysis, insights and activations. We are the world's leading SaaS provider of end-to-end Multi-Channel Customer Engagement, Big Data Customer Intelligence, Clienteling, Real-time Loyalty and Social CRM solutions to 150+ enterprise customers - with over 10,000 locations and 75 Million shoppers who interact with our cloud platform. Marquee customers like Marks & Spencer, Pizza Hut, Puma, Benetton, KFC and Courts, have realized as much as a 4-6X ROI from customer engagement across every major channel, including in-store, mobile, online, e-mail, and social by leveraging Capillary’s solution.
Present across North America, EMEA, Asia-Pacific, we are the youngest company to win at Marketing Magazine's CRM & Loyalty Agency of the Year Awards 2013. The company has also been named: a Gartner 2013 Cool Vendor, among Harvard Business Review's Pioneers of Reverse Innovation and to Mint WSJ Bloomberg Businessweek’s Hottest Technology Businesses 2013. Capillary is financed by Sequoia Capital, Norwest Venture Partners and Qualcomm Ventures. Visit www.capillarytech.comfor more details.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.