Finding Anderson's Long Tail

Wired Editor Chris Anderson’s Long Tail is an important book. The Long Tail provides the best description for the Infinite Inventory world our e-commerce web sites inherit. Inventory is slouching toward infinity because adding a digital product page costs pennies and may yield dollars. Amazon.com understands Infinite Inventory and its implications. Amazon wants to sell every book ever published and they accomplish this goal with vast distribution centers (warehouses) and the Amazon Partner Network.

The Amazon Partner Network provides important information on Stock Keeping Units (SKU’s) Amazon doesn’t inventory (i.e. include in their warehouse). If Amazon sees a pop for a product they don’t currently inventory it is easy enough to buy the suddenly popular product and move the sale from a partner to Amazon. If this sounds like partners beware you are not wrong. An Amazon partner selling rare out-of-print books has nothing to worry about. Amazon doesn’t want to inventory something as arcane as out-of-print books, but why not make a little money moving, or arbitraging, web traffic over to a partner. Amazon partner’s selling potentially popular products should beware. Once a product achieves a magical level of traffic or “sales intent” Amazon’s algorithm’s will kick in and they will be selling the thing faster than you can say Google.

These two concepts – Infinite Inventory and The Long Tail – are related and creations of our new digital marketing world. Before the Internet shelf space acted as a governor, physical shelf space was the ultimate filter keeping number of SKU’s down. Building Walmart and Target Super Stores with over 100,000 SKU’s under a single large roof was the first hint at a new Infinite Inventory world. Even in these behemoth stores physical limitations curb product presentation. The web eliminates physical restraint. Almost ten years ago I attended a conference where Barnes and Noble discussed having over a million SKU’s in stock, in their warehouse.

Barnes & Noble helped me realize products were functioning as something other than physical things. Our brave new digital world was transforming products from material things to information. Information is cheap to manage and, thanks to Moore’s Law, always getting cheaper. In an Infinite Inventory world it makes sense to “sell” every SKU in your market segment. “Sell” in quotes because physical inventory costs money, much more money than digital inventory. It makes sense to “sell” every widget in your market, but it may not make sense to inventory every product. This is where a partner network comes in handy.

Amazon understands the value of being listed in search engines for every book on the planet is greater, far greater, than the cost of having an Amazon employee create a product page and let the brilliant user generated content (reviews, comments from publishers) make the page highly relevant for search engine algorithms and consumers. Amazon functions as search engine AND merchant because Jeff Bezos understands Infinite Inventory and Anderson’s Long Tail.

Seeing Anderson’s Long Tail
During my tenure as an E-Commerce Director I saw Anderson’s Long Tail as a repeatable fractal. No matter how I cut our sales data I saw a long tail distribution. Another name for The Long Tail is the 80/20 rule. Most of your site’s business will be generated by 20% (or less) of your company’s SKU’s. Sales represent the ultimate vote. Traffic, reviews and comments are good, but nothing counts as much as people voting with their wallet.

Understanding those votes, encouraging and nourishing sales requires knowing your company’s 80/20 split. Here is a step-by-step method to calculate Anderson’s Long Tail, the 80/20 rule, in your site’s sales numbers using fictional data:

1. Pull a report of sales by SKU (or name as in the example below) over some period of time.
2. Total your sales (sum the column).
3. Create a new column to figure out what % of the total each SKU contributes by dividing the SKU’s sales by the total (see % total column).
4. Create a new column to calculate the running % by adding each % to each other (adding %’s is normally a bad idea, but we are just using the calculation as a yardstick to see where the 80/20 rule splits sales).
5. When your “Running %” reaches 80% anything about the line is contributing 80% of your sales.

*** See table below ****

When you know your 80/20 split you may be tempted to ignore the other items. Don’t ignore any item making you money. Don’t even ignore the products NOT making you money. The web works in a magical synergy where everything matters. In my last position the 20% left over after figuring our 80% contributed over a million dollars in sales! The 20% is dancing with your best sellers. You never know when a new wave may vault some small product back into the “head” of your sales chart. Maybe a tribe forms around “Dog Pencils” and they become all the rage more than doubling sales. Even if such a thing will NEVER happen the 20% still represent important contributions.

Even products you carry but aren’t selling can be important to the spaghetti that is Google and Search Engine Marketing. The first rule of Search Engine Optimization is DO NO HARM. If your company moves inventory in and out taking down product pages even as you put up new ones then your IT department is doing harm. You may be trimming product pages and products that provide valuable links, traffic and sales to other products. Google’s memory is forever, so any change to your product page presentation changes Google’s perception of your site and violates the first rule of Search Engine Marketing (SEM) – DO NO HARM.

Hope this post helps you see Anderson’s Long Tail in your numbers and begin to understand the implications of Infinite Inventory.

Products	$ Sales	% Total	Running %
Balloon Dog	$30,455	32.73%	32.73%
Holzer LED	$24,000	25.79%	58.53%
Bullman Pics	$20,000	21.49%	80.02%
Smith Sculp	$8,000	8.60%	88.62%
Acme Bag	$5,000	5.37%	93.99%
Art Paper	$2,300	2.47%	96.46%
Art Cards	$1,100	1.18%	97.65%
Art Jackets	$800	0.86%	98.51%
P Napkins	$500	0.54%	99.04%
De K Cups	$300	0.32%	99.37%
Koons Puppy	$200	0.21%	99.58%
Martin Dogs	$100	0.11%	99.69%
Dog Pencils	$100	0.11%	99.80%
Cat bowl	$65	0.07%	99.87%
Art Journal	$50	0.05%	99.92%
Frida CD	$45	0.05%	99.97%
Mzx Radio	$30	0.03%	100.00%
	$93,045

.

Viral Memes

Viral Memes
How do you make money with a web site? My last post discussed Why Web Sites Don’t Make Money. There are two reasons web sites don’t make money: lack of traffic and poor conversion of visitors to buyers (or subscribers, readers or page turners). Viral Memes is about how to increase traffic to your web site.

Have your read The Tipping Point by Malcolm Gladwell? If not I will pause while you read the most important marketing book written by a non-marketing journalist ☺. I’m only half kidding. Gladwell’s Tipping Point changed marketing. Working at M&M/Mars I learned marketing as a sequence of tasks. Create a product, develop packaging, and promote your new product and presto-chango you are in business. Creating To Do lists doesn’t mean, despite our collective misconception, marketing worked in such a boring serial fashion. Marketing is and will always be about the battle for hearts and minds.

Gladwell’s Tipping Point proved, quantified and reported how people pass ideas virally. When ideas become “sticky”, read Made To Stick: Why some ideas survive and others die by the Heath brothers for more on making ideas sticky, ideas may morph a bit during transfer. Transfer is what you want. Idea transfer is an awkward way of saying “word-of-mouth”, the best form of advertising you can’t buy.

Advertising you can buy is dead man walking because there are too many messages chasing too little attention. Read The Attention Economy for more on this. Time is another word for attention and time is the only commodity we haven’t figured a way to clone, to make more of. We can’t make more time….yet. Time’s arrow only goes in one direction. Time and therefore attention is the most valuable thing on the planet.

Overwhelmed is the adjective most used to describe modern life. Truly every generation feels overwhelmed. Our technical present amplifies our perception of time crushed between emails, cell phones and Internet. Life’s pace may or may not have actually picked up, but our perception of fleeting time may never have been so crowded, so overwhelmed.

If time and therefore attention is the only commodity we can’t make more of then every marketer’s job is finding ways to gain, keep and harvest attention. And, the first bit of captured attention is always the hardest. When the first person stops by your new web site he/she must be so engaged they tell five friends.

Back at M&M/Mars we would check the box next to “buy advertising” to push our new product out into an existing market. In this day and during this time even M&M/Mars doesn’t have enough cash to buy enough advertising to push a new idea out. New ideas must, must, must sprout legs and walk around on their own. New ideas, in order to survive, must become easily transferred memes.

Meme is a biological term created by British scientist Richard Dawkins . “A meme is a postulated unit of cultural ideas, symbols or practices that can be transmitted from one mind to another by writing, speech, gestures, rituals or other imitable phenomenon,” according to Wikipedia. Gladwell says it better, “A meme is an idea that behaves like a virus – that moves through a population taking hold in each person it infects.” Ideas become memes when transfer begins. X, Y and Z are all memes. Pet Rocks, Hoola Hoops and Magnetic Poetry Kit are examples of memes. Memes are ideas tracking across culture, ideas sprouting legs and walking around.

Since word-of-mouth marketing is the only advertising anyone trusts all marketers must be meme creators. Our ideas must sprout legs and walk around. Actually marketers were always in the meme creation business, and business was good. Creating memes in the 1950’s and 1960’s with six television stations, vibrant and economically healthy newspapers and fewer ideas clamoring for mindshare was what ““ marketers as “the good old days” will forever refer to. Does it strike anyone else as ironic we have the greatest meme transfer machine ever created, the Internet, while the transfer of a single idea is an order of magnitude more difficult due to marketplace clutter?

There is good news. More memes, more sticky ideas, are seen by more people faster than ever before. There is bad news. The chance your idea will become a meme, something so cool it sprout legs and walks around our culture, may be less. You just have to be better or lucky or both. If I could tell you how to consistently hit the viral idea / sticky meme creation out of the park I would live on a beach and drink large cool beverages with little paper umbrellas not Durham, North Carolina. What I can do is share Martin’s Five Steps To Meme / Sticky Idea Creation:

• Meme Creation Step One: Understand Your Idea
  This may seem too obvious, but you might be surprised how often marketers confuse tasks with their real jobs. Tasks and To Do lists can be helpful, but “create the coolest X promotion on the planet” is rarely on anyone’s list. Ideas must be stripped down and prepared for cultural transmission.
  


• Meme Creation Step Two: Simplify Your Idea
  Apply Occam’s Razor to your idea, whack off three or four confusing elements to core down to your idea’s most essential THING. Once you think you’ve cored your idea (somewhat analogous to coring an apple) remove three more things. Any idea you want to sprout legs and walk around growing with each cultural turn must be easy to understand and tell five friends about. Ever play “telephone” in school. This is the game where one person whispers something into their next-door neighbor’s ear and she turns to transfer the same idea to the next person. The idea, at the end of the daisy chain, is never the same…no matter how easy the subject. Return to your idea, the one you hope becomes a sticky meme and take away three more things. Done? Good, now do it again.


• Meme Creation Step Three: Build Support Systems
  Web sites are our principle means of idea transfer, so your idea will need a site. Should you include your new idea in an existing site or create new pages or even a new URL to support your sticky meme? I have no idea and neither will you. Do something, even if it is the wrong thing, and see what happens. Watch initial feedback VERY CAREFULLY. Watch for ways your sticky idea is being morphed by senders. Identify and understand what our cultural marketplace is doing to your idea. Once you think you have your hands around how your idea is being transferred reclaim it and send it out via some new medium. If you received feedback from a web site then put your sticky idea on Facebook or twitter. Watch what happens. Understand how your idea is morphing AGAIN and then reclaim it again. Go through this process as many times as it takes. You will know when success happens because your idea will start to live, breather and mature without you. Once day you are pushing and then, almost silently without a clear indication or warning, your idea is reverberating vibrating back to you.


• Meme Creation Step Four: Don’t Fight, Do What You Are Told
  Meme creation is almost impossible, so if, by some miracle, your ideas start to vibrate don’t fight it. If your idea changes so what? The reason you are employed is to create vibration, to get your ideas out there by cultural force. You have to use cultural transmission because NO ONE and NO COMPANY can afford the advertising bill necessary to push an idea out there anymore. Your job isn’t buying media, at least not yet. Your job is to do what you are told, reclaim your ideas however they appear in the world. If your idea seem unintelligible after cultural morphing WHO CARES? Creating transmission is more important than idea integrity. The first rule of crowd wisdom is whatever the crowd creates is right, whatever the crowd transfers IS THE IDEA. I’ve grown up to the north side of fifty living with marketers and letting go is our hardest lesson. We are actors, builders and designers. We act on the world the world doesn’t act on us. The new Zen of marketing is to create, watch, shape, learn, create again and send our marketing children out into a crowded cultural playground again and again until every playground talks about our children, out blessed ideas. We may not recognize our children, but we must be smart enough to understand whatever the crowd creates IS THE IDEA.


• Meme Creation Step Five: Amplify With Traditional Media
  Traditional media isn’t dead, or not as dead as I made it sound earlier. Traditional media can help your stick idea pick up speed. The most important and most ignored caveat is traditional media must be used aligned with the crowd’s version of your marketing ideas. Take your first storyboards, the ones before your idea was tested in different media and so eliminate cultural feedback, and your media buy will only HURT cultural transmission of your ideas. You will spend expensively spend money to talk to yourself about yourself. Don’t do this. Listen to how your idea tests out. Listen to the end of the Telephone Game daisy chain and amplify THAT.

I live in Durham, North Carolina not a sandy beach. I drink water not cool beverages with umbrellas. Without more information I can’t tell you the ten ideas that MIGHT go viral for your business. You might need to create hundreds of ideas before you find THE ONE, the idea that will sprout legs and walk around saving your ad dollars and maybe your company.

IF you would like a FREE Meme / Sticky Idea Reading, this is a little bit like talking to a psychic but different, ScentTrail E-commerce stands ready to discuss what we see. This initial conversation is always free. How to shape, promote, test and amplify your ideas into the next cultural hit will cost you ☺.

Contact
ScentTrail E-Commerce
Martin Smith, President
Email:MartinSellingZoe(at)aol
Cell: 919.360.1224

Why Your Web Site Doesn't Make Money

Why Doesn’t A Web Site Make Money?
As a Director of E-Commerce I understood my mission. I needed to consistently make more money on any given day than we made on the same day last year. Every year for seven years web sites my team and I created achieved this mission. Why Doesn’t My Web Site Make Money is about reasons web sites DON’T make money. Every web site needs to make money, in some form, or live in the red. Despite a growing number of sophisticated free tools, web sites still cost money. Even if you only pay yearly Universal Resource Locator (URL) rental and minimal hosting web sites cost money.

Millions of reasons why a web site doesn’t make money boil down to two big reasons:

• Lack of traffic
• Lack of conversion
  

Lack of Traffic
Creating a web site with $6,000,000 in annual sales means 10,000 to 15,000 unique visitors need to stop by daily. If your site converts its visitors to buyers at a typical conversion rate of 5% then 500 to 750 buy from your site daily. Assign an Average Order Value (AOV) of $40 and your site makes between $7 and $10 million.

Any element of this equation can be manipulated. Convert less and make the same money with MORE traffic (increase the number of people visiting the site). Convert less traffic, get less traffic but increase your Average Order Value (AOV) and you can make the same money. Here is a model to illustrate the point:

Web Site Conversion Metrics
	$4.3MM	$5.4MM	$5.8MM	$8MM
Unique Visitors	10,000	10,000	10,000	13,300
Conversion	3.00%	3.00%	4.00%	3.00%
Sales	300	300	400	399
Avg. Order	$40.00	$50.00	$40.00	$55.00
Daily Sales	$12,000	$15,000	$16,000	$21,945
Yearly Sales	$4,380,000	$5,475,000	$5,840,000	$8,009,925

Creating A Million Dollar Web Site
If you want to create a million dollar web site you will need to have about 1,500 people visit you a day (give or take). Web site traffic is never so easily cut and dry. Traffic is viral. Web site traffic tends to cluster around events or times of year. An e-commerce site selling gifts will be busiest in the fourth and first quarter (Christmas and then Valentine’s Day). A travel site might be busy in the winter and spring. If your site has a unique game or gets mentioned on a gatekeeper site such as Gifts.com, Daily Candy or BoingBoing.net you can get so much traffic your servers tilt. Servers tilt from too much traffic and is one of those “good” problems. It is a problem. You need to solve, but it is always easier to increase the size of the pipe going to your web site than fish for more people, more unique visitors.

In order to average 1,500 people a day your site must generate word-of-mouth advertising. Your site needs to turn some customers into zealous advocates, evangelists for your cause. Creating this kind of bond is one of the hardest things on planet earth. Your site can’t be the only way you touch customers. You must be available on the phone. Your reputation, as judged by reviews, blogs and comparison sites, must be spotlessly laudatory. Reputation is a “we are only as good as our weakest link” situation. Great web companies like Zappos understand how important customer satisfaction is to web success. Zappos knows a satisfied customer is the best advertising. Satisfied customers willing to share their secret discovery of your site may be the ONLY kind of advertising we trust, or trust enough to give strange web sites money.

Like traffic, satisfaction isn’t a flat line. Your company’s satisfaction bar must continually rise because you need people to take the next step, to recommend your site to their friends. The good news is there are new ways to spread word-of-mouth advertising such as Facebook and Twitter. Bad news is messages are exploding even as the amount of attention we can afford to pay to any one thing is in decline. Read The Attention Economy for more about why attention and not money is your site’s first battle. Once you have, sustain and convert attention your site can make money and survive. No reason to create an average site. Back in the day average sites could survive, but that day is gone. Only exceptional sites and supporting aligned companies survive in this economy.

Alignment is an important concept. If your call center believes in reducing costs and so they don’t help customers your web site will pay the price. Your satisfaction bar will not rise. Satisfaction will decline pulling down your daily traffic, sales will decline and you will spend hours weeding through site metrics to figure out what is going wrong (been there, done that, don’t want to do it again ☺).

Once your mission is clear, ethics defined and doors are open you should create promotions, games and contests that make people want to visit your site. I will write another piece about creating viral online marketing explaining how to kick-start a web site. I can’t go into traffic acquisition problems caused by poor site architecture, at least not on this post. One quick note - avoid Flash home pages as they don't play well with search engines. I promise to write another post about common architecture problems soon.

Million Dollar Web Site
	$1MM
Unique Visitors	1,500
Conversion	4.00%
Sales	60
Avg. Order	$45
Daily Sales	$2,700
Yearly Sales	$985,500

Lack of Conversion
Traffic is coming to your new web site but visitors are not buying. The vast majority of your traffic won’t convert on their first visit. Your site needs an email subscription box that can’t be missed AND automatic emails welcoming new members with a strong offer. People are visiting you, now the real work begins. Make changes, watch your metrics and keep increasing conversion changes toss aside any changes that harm conversion.

Best place to make changes to increase conversion are:

1. Shopping Cart
2. Product Page
3. Category Page
4. Home Page
   

Notice how this list of action steps backs out of your web site. If traffic acquisition was your problem start with your home page and look for Search Engine Optimization problems (like Flash). If conversion is your problem start with your shopping cart and move forward toward the home page.

Shopping Carts
Finding the perfect shopping cart is like searching for the Holy Grail. A “perfect” shopping cart is one that converts better than the old one. Make sure you include trust symbols such as Hacker Safe, Visa and MasterCard. Including trust symbols is something you do because others do and so absence of trust symbols creates more pain than it is worth (they are easy to get and install).

Make sure you have a clear map of shopping cart’s steps. Tell your customers where they are at each step and how many steps remain. Post information about your guarantees. Be clear about shipping charges or EVEN BETTER follow web convention and view shipping as a form of advertising and comp it. Zappos pays for shipping out and back. Genius online marketing requires thinking of hard costs such as shipping in new ways. I never made that sale at my old company. “Shipping is a hard costs,” I kept hearing. Free shipping isn’t inexpensive, but how expensive was it to get a customer to your site in the first place (A: VERY EXPENSIVE). Getting visitors to convert or not over $5.00 seems like tail wagging dog. You don’t have to eat shipping for ALL orders. You can set “sweet spot” targets such as Free Shipping On Orders Over $50 (or whatever works for your business model). Even Amazon has a target for free standard shipping.

I like to keep free shipping target low and then pile on a cheap upgrade to 2 Day or Overnight. Buy $50, get Free Standard Shipping with an ability to upgrade to overnight for $5 or $6 is an attractive way to gain overnight benefits without going broke. Bottom line is how you handle shipping impacts how your site is viewed. Handle web shipping costs wrong and your site will be viewed as expensive, over priced and out of touch. Guess what customers DON’T do for expensive, over priced and out of touch web sites – they don’t become advocates and evangelists.

Product Pages
There isn’t a single silver bullet for how to fix a broken product page. Be sure the picture is clear, the price is large, the savings larger (or more dramatic color), and the add to cart button easy to find. If you don’t have reviews get them. There is a debate about reviews on the product page and their impact on SEO. I come down on the “include them” side of this debate (full explanation requires a different more involved post). Video is an excellent idea, but read my post on Social Media Marketing: Videos for e-commerce video tips. Installing video can do as much harm as good, so go slow and test, test, and test some more.

Category Pages
Category pages have conventions. They tend to be listings with a little content. I like to have as much “buy now” capability on these pages as possible. If you have a buy now button at the category page level they can become an alternative form of navigation. Don’t forget a review summary as reviews influence what your customers will look at next.

Home Page
No way I can even begin to discuss all the home page conversion lessons I’ve learned here. Biggest issue is a clear hierarchy – what you want your customers to actually do – and a visually simple look. As simple as you think your home page is it isn’t.

Free Web Site Money Ball Review
ScentTrail E-Commerce will conduct a Free Web Site Money Ball Review to find out why your web site isn't making money. Here is how you can reach us:

email: MartinSellingZoe(at)aol
cell: 919.360.1224

Ask for Martin. Together we can figure out why your web site isn't making money.