Military strategies aren’t exactly the first thing you think of when you think of marketers. However, the flank military strategy is what marketers at some of the top e-commerce companies in the world are using for customer acquisition. This strategy refers to a concentrated movement where someone surrounds a particular area to achieve an advantageous position over an enemy. Now, let’s talk about how this is being integrated into marketing.
New entrants to retail spaces, or really any brand looking to seize market share from dominant competitors, will uncover powerful traffic sources that may be under-leveraged or unknown to category leaders by using this tactic. We often see dominant brands in an ecosystem investing most of their time and resources into only the largest sources of traffic, such as Google, Facebook and massive affiliate websites. But there are new entrants finding success with hugely powerful specialty blogs, niche websites and targeted affiliates. Some of these websites could have been deemed too small or unimportant before. The flank military strategy helps new entrants build brand awareness, grow revenue and eventually prepare brands, both financially and from a branding perspective, to start going head-to-head with traditional players on larger marketing and advertising platforms.
It’s no secret that pretty much anyone can start a business these days — it’s easier than ever to get a website created and start selling products online. This means that everyone is a competitor, and there are new competitors added every single day. So when planning 2018 marketing strategies, it’s never been more important to look at all of your competition. Big-box chains that think they’re only competing for customers against other big-box stores are wrong, and they'll lose a huge mass of potential customers.
Where Did This Start?
This type of strategy has been impacting stores for a long time, but it’s steadily increased over time. Let’s talk about Walmart vs. Target. When Target started trying to take Walmart’s customers, specifically in the ’90s, it didn’t even scare Walmart. Target couldn’t compete with the size of the Walmart footprint alone. Target couldn’t offer the things that Walmart did, and Walmart didn’t think it would ever lose customers or market share to Target. So Target picked a couple of categories it wanted to dominate — financial services and fashion. One by one, Target started beating Walmart in these categories, and more. It peeled off one layer of customers at a time and converted them from Walmart-lovers to faithful Target shoppers.
We also saw this in the ’80s and ’90s with other major department stores. They used to sell a large selection of both furniture and electronics, but the cost of keeping those goods in-store was high, and the profits were not. Therefore, they slowly started getting rid of furniture and electronics in their stores. What they found is they lost a lot of customers — not just customers coming in to buy electronics, but customers who bought other things while they were shopping for those electronics. This really catapulted the decline of department stores.
This applies to digital marketing in much the same way.
It’s no surprise these days everything is online. From ordering fine jewelry to toilet paper, you can do it with the click of a button on your computer or smartphone. And while major retailers like Walmart, Target and Amazon.com are winning a large share of the marketplace, they’re not the only brands that companies need to be concerned about.
Let’s take a look at men’s shirts. Which retailer do you think sells the most? Macy’s, J.C. Penney, Nordstrom? Well, you’d be right. But there are new entrants to this space that are using specialized blogs to reach a nice audience ahead of these top department stores. Bonobos, Club Monaco and UNTUCKit are gaining traction on these category leaders to the tune of 18 million people. While Nordstrom is getting traffic from more than 475 million people, and yes, that’s a lot, why would it want to miss out on the other 18 million people who could be potential customers? That’s a lot of shirts and a lot of money in its pocket.
Savvy retailers are building partnerships with new-age media partners, and it’s paying off big. UNTUCKit is the only competitor in the men’s shirt space that’s leveraging Barstool Sports, a highly targeted and widely followed sports media company. This is turning into a highly profitable decision for UNTUCKit, driving more than 6 million people to its website in the past 12 months alone.
Let’s switch gears to women’s lingerie. While Nordstrom and Macy’s are indexing at the top of this category, we see new entrants like Thirdlove.com, Yandy.com, and Warlively.com performing very well on Facebook, driving over 50 million people to their websites. Traffic to Nordstrom is steeply declining as ThirdLove begins to leverage Cupofjo.com as a powerful traffic source. We see a similar example with Yandy on Fark.com and Boredpanda.com.
The bottom line is that new entrants are competing — and winning — across a variety of traffic sources. There’s opportunity everywhere, including social media (both paid and organic). Users consistently show that they’re willing to engage with new brands, especially when the offering is new, exciting or different.
Can Department Stores Last?
Now that we know the problem, how can department stores prepare for these category killers and protect their businesses? They must focus on three main areas: margin, traffic and brand/relationship, and defend them at all costs.
- Margin: If you think that your only competition is other big-box retailers, you'll disappear. It’s important to know which categories your business controls, and make sure you keep controlling those categories.
- Traffic: Know which traffic sources are driving people to your website, and which of those people are turning into customers. Also, think about which products you're selling that are bringing actual foot traffic into stores. Using tools with prescriptive attribution and analytics will enable you to determine these traffic sources, and help you make the most impactful use of your marketing dollars.
- Brand/relationship: Keeping a positive reputation with your customers is key. Customer service isn’t the same as it was 20 years ago. It’s evolving, and you have to be evolving with it. When customers see evidence of design and technology that makes their lives easier, they then expect to find it at every point of interaction. Don’t lose your customers due to poor or outdated customer service.
Knowing as much as you can about ALL of your competitors is a much more difficult task than it once was. It’s imperative to stay aware of all emerging competitors and stay diligent about finding the right ways to target the right type of customers. Keep your focus very specific, know who your customers are and what they want, cater to them, and win customers in 2018.
Shawn Schwegman is the co-founder and chief strategy officer at DemandJump, a customer acquisition platform that enables marketers to find new customers with precision by locating prospects three steps before they reach you.
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Shawn Schwegman is the Co-Founder and Chief Strategy Officer at DemandJump. Shawn has previously worked with Overstock.com, ChaCha, Sally Beauty, Target, NewEgg, eToys, Cisco, Costco, and more.