Is social buying practicing its shark jump already?? Such was my thought (and mild sense of alarm) when I opened this month’s new Harvard Business Review and found a serious-looking article on the phenomenon titled, “Why Employees Can Wreck Promotional Offers.”
The piece is written by an associate professor of marketing at a reasonably prestigious U.S. university, and it profiles his research into the administration of group buying offers from the likes of Groupon, BuyWithMe and LivingSocial.
The article first caught my eye because of its anti-worker title, frankly… and then I read it. The key insight to be gleaned from this academic research is that employees – not just offers – can have a huge impact on the creation of a “positive customer experience.” Employees’ behavior, the professor says, can even cause the offer to “backfire” if managers fail to prepare employees properly or there is some other reason (e.g. a diner does not tip on a Groupon restaurant offer) that workers may cause a consumer’s initial interaction to be a poor one.
“In fact,” he says, “preparing employees for upcoming promotions and obtaining their buy-in is the most important factor influencing a Groupon promotion’s success”… “or any promotion['s], for that matter.”
Are we at the point in the shiny-object lifecycle where critical thinking is to be set aside and any piece of content with the word “Groupon” in it can (a) pass as “research,” and (b) make it into legitimate academic journals?
I hope so. I say that because if, instead, it’s a revelation in our universities’ classrooms that customer service and positive employee engagement are the keys to marketing success, we’ve got a much bigger problem on our hands.
I suspect it is the former, so this too shall pass.
Recently, though, I’ve noticed something annoying on my receipts: either an “eat in” tax (if you eat at the restaurant) or an “eat out” tax (if you take your order to go).
Either way, there’s a “tax.”
A tax?? McDonalds is taxing us, literally coming and going?
This makes no sense. Corporations can’t just invent their own taxes. What is this?
Turns out it’s just plain old state tax. In Connecticut, where I dined recently, the tax is 6%. 6% in, 6% out, 6% if you take your fries and you shake ‘em all about…
The 8.5% “eat in” (aka state) tax in San Fran at the time of this purchase
6%. Period. [Note: State sales tax laws on prepared food are notoriously kooky, but whatever they are in the state in which you're ordering is what you'll end up paying]
So why would a marketing icon like McDonald’s turn a charge that it is forced to apply into a fee that looks like an assessment from the company? I am flummoxed by this.
A Google search of “McDonald’s eat in tax” and “McDonald’s “eat out tax” yields lots of other folks with their “britches in a bunch” over this (like HERE and HERE and HERE). A couple of them actually posted the “tax” to sites like ripoffreport.com.
Now, this fellow claims that it’s because some states (e.g. California) actually have a take-out tax, so an establishment doing business in that state must be able to discriminate a meal served at the restaurant vs. one taken elsewhere. His supposition is that it would be cost prohibitive for a company to use software that could apply the tax rules state by state, and that it would be hard to administer.
I would be surprised if it’s a matter of cost. McDonald’s had $6.8 billion in U.S. operating income in 2009: how much could such a system cost? And how does that cost shape up against the reputation cost of such bad publicity?
There was a recent article in the Wall Street Journal titled “Firms Hold Fast to Snail Mail Marketing.” It seemed to be about small businesses who gave up their direct mail efforts in favor of email to either save money and/or because it seemed like the hip thing to do.
The particular companies profiled in this article told personal stories about how email didn’t generate the same positive results. In some cases, the owners actually heard from long-time customers asking what had happened to the letters/reminders/postcards they had received in the past.
This is because email is beside the point. Establishing a connection with a prospect or customer is and always has been what’s most important. Think first about your history and what type of communications have worked in the past. What kind of outreach prospects or clients appreciate. What makes them feel special. What generates orders, referrals and repeat business. One of the owners profiled in the article discontinued his art-based postcard mailings, only to discover the cards permanently displayed in his clients’ offices. His customers started calling him asking whether they’d been taken off the company’s mailing list.
What we have right there, friends, is some serious brand love.
Testing is fine. It would be foolish not to test new technologies, which are usually cheaper and more easily wielded than the old ones. And compromises must sometimes be made in order to preserve cash. But – putting dollars aside – the beginning of the value chain is the relationship with the customer, and at the distant far end is the tactics you choose to reinforce and grow that relationship. Too many executives (particularly those in small companies, who either can’t afford good marketing help or get less-than-great advice) are putting social media at the forefront of their thinking because they’re reading about whatever the heck it is everywhere they go.
I tell these folks that they were right the first time when their gut was to do something special – something that showed they cared. If you can replicate this more cheaply, by all means do it: but don’t let any new whiz-bang communications vehicle get in the way.
Ah, the sweet satisfaction of being able to vent. You know the feeling: you have an awful customer service experience and vow to tell every man, woman and child all about it until the day you keel over.
And so you do.
But how many people is that – 5, 6, maybe 10? And how quickly did you stop telling anyone about it – a week?
Brands often still behave as if they live in that world when – in reality – that world is gone forever. The “social media” phenomenon has seen to that. And I preach this as often as possible, even making presentations on the topics of online reputation management, the implications of new sites and technologies for marketers and how companies need to adjust to survive.
But we all know that this doesn’t happen. Three of my all-time favorite this-reputation-disaster-could-have-been-avoided stories are Jeff Jarvis’ Dell Hell, the recording of Vincent Ferrari trying for 15+ minutes to cancel his AOL account and KFC/Taco Bell doing nothing for hours and hours while local NY news crews shot video through the front window of a closed store while rats scurried here there and everywhere, thereby turning a gross story into a global event (not a good day for Yum Brands…).
Today, I share my latest fave: Sons of Maxwell creating an absolutely masterful video and song, “United Breaks Guitars,” about an awful experience it had with United Airlines.
It seems that the band, Sons of Maxwell, were on the tarmac in Chicago when some fellow United Airline passengers looked out the window and saw one of the bandmember’s $3,500 guitars being thrown by United baggage handlers. The guitar was severely damaged and unplayable. United did not deny responsibility, but tortured the band for nine months until finally refusing to compensate the guitar’s owner, Dave Carroll, for the loss.
Mr. Carroll subsequently vowed to “write and produce three songs about my experience with United Airlines and make videos for each to be viewed online by anyone in the world.” HERE IS THE FIRST of the three:
The video was viewed 150,000 times in its first 48 hours and several comments on the page are from those who say that the band’s experience has negatively impacted their opinion of United Airlines. One person remarks that, based on the video, he shifted a group’s travel plans to another airline, thereby costing United about $10,000.
Now I’ve worked in plenty of places, and know that sometimes individual employees can be dimwits (the video dramatizes the apparent reaction three in-flight airline employees had when first alerted to the problem). I also know that it’s a fact of life that a company can’t resolve every customer service complaint to a person’s satisfaction: some companies even calculate the likelihood and cost of getting sued, based on past experience, and consciously do not address costly errors. History dictates that it’s more cost effective to take the risk of a lawsuit. But this… is not that.
The guitar cost $3,500. United Airlines does not deny responsibility. By the time Carroll is finished, I predict well north of 1 million views of his videos: videos that will last forever and be ”rediscovered” from time to time.
We’ll see. United says it has contacted Carroll, but first reports say that the airline likes the song (gee, thanks) but has not yet offered remuneration.
In the meantime, the band sold 40 albums on its website in 24 hours after releasing the video. It usually sells one per day.
While restaurant chains suffer, and the industry predicts a “purge,” one restaurant has decided to let its customers take more of a direct role in its future.
Sghetti’s Italian Bistro, a local restaurant in Pennsylvania, has established a “pay what you think it’s worth” policy. The menu no longer shows specific prices, opting instead for a suggested price range by category: appetizers $3-$9, pasta $6-$12 and so on. The offer is good for parties of 8 or less at dinner only, beginning at 4pm.
“[The recession] is sad, for senior citizens and young families,” says the spot’s owner, Eugene Razzano. “…we can do something to empower people.” Razzano recognizes that some diners won’t be fair, but believes that the press coverage and increased traffic – particularly return traffic – will make this a successful proposition overall.
I think this is brilliant. Razzano has been very clear that he is assessing the program on a week-to-week basis. High-margin beverages are not included, and parties are asked to tip the wait staff, as usual. He’s getting full-blown word of mouth, while still protecting himself on the downside.
Part of the commentary on this blog lately has seen me preaching restraint to businesses advertising at such a sensitive time. If you’re going to put a message out there, be 100% certain that it connects to how people are feeling and what they are experiencing. Even if a negative reaction happens “outside your target audience,” it can have an outsized ability to impact business over the mid- to short-term. My opinion is that companies including Pepsi and Hawker have taken risks with their brand images by promoting messages that are out of tune with the public zietgeist.
In December, Domino’s created an online-only promotion offering a free pizza to site visitors using the promo code ”bailout.” The promotion never got final approval internally… but someone didn’t tell the pizza retailer’s online tech team.
A clever consumer living in a suburb of Cincinnati somehow caught on to the live promo code last week and before you can see “meat lovers special,” Domino’s had given away 11,000 free pizzas. In less than 24 hours.
The news spread quickly, fueled in part by online moms at sites like www.CincyMomsLikeMe.com. If you’re curious about the power of online moms and aren’t familiar with the Motrin Moms event last November, I really would suggest you check it out. Do not screw with these ladies!
Things became even more complicated by the fact that Domino’s retail stores are franchised. A man who owns 14 locations in the Cincy area thinks he gave away somewhere between 600 and 700 pizzas. Corporate has promised to reimburse all franchisees. Maybe the stores will even see an upside: the event got hundreds of people to try the new ordering engine at Dominos.com (which is pretty good, by the way).
Depending on how you look at things, Dominos is either lucky or unlucky the promotion wasn’t discovered two days later – on April Fool’s Day…
P&G’s Charmin brand has found a fun sponsorship opportunity with SitorSquat.com.
A woman in New York, Danika Landers, started the site as a blog in 2007, and it uses Google Maps to help you find the nearest public bathrooms anywhere you may find yourself in need of one. It purports to be the largest (only?) “toilet database and locating service” in the world. It is essentially a wiki that is easily accessible via mobile devices including the iPhone and Blackberry. Both the site and the downloadable apps are free to use.
Danika describes the impetus for creating the site as a personal realization that “that the act of relieving oneself is somewhat an artform” that becomes suddenly complicated “when our personal space is not our personal space.” Anyone traveling with an infant or parent – or on any highway road trip in America – can attest to the veracity of such a conclusion.
Danika has a little extra fun with the site by allowing users to submit a rating for the public restrooms in question; a rating of a 2.5 or over will be characterized as a “sit,” while a toilet with a lower rating will be a “squat.” As such a rating might change with every use (ick!), I would suggest that a user make his or her own judgment in the moment: this is truly a case where past performance may not indicate future results. P&G jumped on the opportunity to sponsor the site and its sensibility as a great fit with the brand’s overall efforts to support grassroots activities that make the bathroom experience a positive one. The company has set up mobile bathrooms at events like state fairs in the past, has had Charmin Restrooms in NYC’s Times Square for three years running (see dramatic video here!) and – my favorite – toured the U.S. from 2003 to 2005 with a bathroom mobile nicknamed ”Potty Palooza.”
“Our goal is to connect Charmin with innovative conversations and solutions as a brand that understands the importance of bringing the best bathroom experience to consumers, even when they’re away from home,” says Jacques Hagopian, brand manager for Charmin.
This blog has commented on companies sponsoring public bathrooms before – remember Visa’s sponsorship of porta-potties at a music festival last year? While consumers may always appreciate this benefit, SitorSquat.com is likely to get bigger results for Charmin* based on brand fit and is the only site of its kind with which the brand has associated itself. 1,600 users have downloaded the mobile app thus far and the site has over 500,000 UVs since launch. Nice find!
* Lysol just announced that it’s taking over the women’s restrooms at 9 NASCAR races this year. This also sounds like a decent brand fit, obviously. Assuming Charmin’s sponsorship wasn’t too expensive, though, the remote/mobile aspect of SitorSquat makes it a winner as it puts the Charmin brand in the home and on the phone of thousands of users every day.
Yesterday’s Wall Street Journal had an article about the knowledge management and CRM strategies that are filtering into the U.S. airline industry. Huzzah!
While I’m sure many airlines are experimenting, this particular piece features Alaska Airlines, where Steve Jarvis, the company’s head of sales and customer experience (and a man intensely focused on delighting high-value customers), talks about what they’re doing and learning along the way. Wordlessly delivering a frequent flyer’s favorite drink (in coach) “is not about the cocktail. The point is the recognition and thanks for your business.”
As a frequent flyer desperate just to be treated like a human being when I get to the airport, Steve Jarvis is my hero for recognizing that it’s good to be nice to people you need and actually doing something about it.
This will not be easy. The foundation of my entire career is customer segmentation and CRM. I know – in technicolor – how gigantic the technological and personal demands can be inside a company determined to change.
For starters, identifying even what customers do today – at every touchpoint – requires considerable data alignment. As with banks, airlines tend to have (a) outdated systems, that (b) don’t talk to one another. So whether a customer buys a ticket online (and when and for how much) is likely to be invisible to a gate agent. A phone representative most definitely does not know about the luggage problems you’ve had 2x this year already, and a customer service rep at the airport has no idea whether an email notification re. a cancelled flight was delivered to you or not. If this information exists, it typically sits in silos that either must be refitted or, sometimes, blown up entirely.
Second, the modeling capabilities needed to capture and place a quantifiable value on behavior – evolving usually into some kind of score that informs the type of service a customer receives – is imprecise at best and far more sophisticated in industries that have been at this for decades, like banks and credit card companies. The European airlines have a jump on us, though, and that’s good news for the learning curve.
Third, the really-really stripped down implication of all this work is that the value assigned to a customer will change the marketers’ human behavior. This is very hard – far beyond basic training and comp changes. In a crowded airport, you finally reach the counter, already yelling, and the agent is supposed to capture your name, “read” your score and follow the instruction that would be appropriate for a customer with that score. Good luck. It’s doable, but must be implemented with patience and empathy.
So if this is the direction in which the airlines realize they must head… fantastic! There are a lot of weazened but wise customer experience/CRM/segmentation veterans out here whom I’m sure would want to help. I, for one, will continue to watch for hints of progress, both on the plane and off.
The Web has a wonderful ability to make historically opaque businesses and transactions far more transparent and accessible.
The Internet did this for car buying years ago: between Consumer Reports, Edmonds.com, CarsDirect and a myriad of other sites, the shopper who would have previously driven to whatever dealerships happened to be local now has a lot more bargaining power… and can buy a car from anywhere in the country if the (online) price is right.
To that end, I recently commented on a TechCrunchstory about a new company called DriverSide. Like RepairPal, DriverSide.com intends to help cash-strapped consumers more effectively maintain their cars instead of having to sell or replace them. My point was that these sites will only begin to reach their real potential when a user can write his/her need and have mechanics compete for the work via online bids, a la an eBay auction.
Almost right after I posted this comment, I stumbled on a unique application of this concept from the Netherlands: Spaarbod. You thought Bankrate made it easier to shop for interest rates? Spaarbod permits Dutch consumers to specify how much money they’d like to bank, for how long and on what terms, and the site (like Bankrate) returns the best rates publically available at the time. You can accept one of these offers immediately, or Spaarbod will send your request (minus your personal information) to participating banks who can then bid on your money. Within 24 hours, you get an email listing the five highest bidders.
The service is free to use, and winning banks pays Spaarbod a commission when bids result in new deposits.
It’s not difficult to imagine these auctions going live, where each participating bank would have an employee bidding in real-time for a user’s deposit.
Heck yeah! And why do I have to shop around for the privilege of giving you my money anyway??
Such a seemingly simple idea but – on a marketwide scale – this model has major implications for advertising and marketing overall. If engaged consumers (buyers) approach marketers (sellers) when they are in the market for a seller’s services, those sellers could potentially spend far less money on spray-and-pray mass marketing… and pass the savings on to the customer in the form of lower prices or, in this case, higher interest rates. The advertiser is likely to spend less and the customer gets a higher-value, more customized outcome.
Doc Searls (who also may have been the first person to use the word “conversation” in a marketing context) first coined the phrase “intention economy” to describe the idea of markets designed around engaged buyers instead of message-pusing sellers. I’ll explore the intention economy in another post.
Recently, Jeffry caught something that tells us just how bad the financial situation is.
Yes folks, these institutions are so upset, and have become so unstable, that they are literally peeing their own metaphorical pants. And their grammar stinks. Oh, I know: it’s shocking!
Jeffry points out something that shouldn’t be a surprise, however: anything that represents a financial company today that is viewed or experienced by the public – even signage in a local branch - deserves additional scrutiny. The smallest failure in personal service can undermine costly efforts elsewhere.
Did I mention that this sign was posted on the door of a credit union inside the U.S. Capitol Building?
Do you remember the 1970′s Fifth Dimensionsong, “One less… FICO to answer. One less… FICO to fry…” You don’t? Well you may start singing it when you go to collect your three FICO scores and discover only two available.
As of Valentine’s Day, Experian will no longer make its credit score, or FICO, available to individual consumers. So while you previously could have gone to myFICO.com and purchased any or all of three scores – from Experian, Equifax and TransUnion– there will now be only two.
Given what’s happening in the economy, it seems an odd time from a PR point of view to take such an action. Lenders are raising their credit standards, and a yes/no decision can sometimes come down to a matter of a few points on your FICO. If you are in the market for a loan, you want to see all the same information that lender is seeing: particularly because individuals often find errors in their credit records that must be corrected.
The stakes are particularly high because Experian itself will continue to sell (your) FICO scores based on its data to lenders, such as banks. This means that the lending institution will see a score that you can no longer see for yourself.
Fair Isaac expressed surprise at the action at a time when consumers are particularly “concerned about their credit standing.” Of course, there is some competition between all these parties, and Fair Isaac actually sued Experian in 2006 on an unrelated matter. That lawsuit is still outstanding, which probably doesn’t exactly create a spirit of cooperation between the two firms.
If you are in the market for a loan or credit card, I would recommend buying your Experian-based FICO score while you still can. And always pull your other FICOs once a year for free at www.annualcreditreport.com.
The online/social media environment has greatly amplified the opportunities for customers who love you (or hate you) to spread the word – and spread it more frequently, to a broader audience and with a greater array of tools.
Colloquy has released a white paper reflecting the results of an October 2008 survey that measured the intersection between reward program membership and online word-of-mouth (WOM) activity among those members.
While I hope it won’t come as a big surprise, membership in and usage of a brand’s reward program is a significant predictor of a consumer’s likelihood to speak positively about your brand online. The more active the frequent user/shopper/flyer in your program, the greater the chance that you will experience the happy halo effect of him/her praising you online. This is particularly true among women, who have become a driving force in terms of discussing and sharing products and experiences on the Web (Motrin, anyone?).
The larger take-away here – the hardest one, I think, for large companies to absorb - is that everything is connected now. The idea that you could treat your customers one way and your employees another, without affecting your public persona, is no longer relevant. Cut your charitable activities without the “outside world” finding out? Forget it. Increase mileage requirements in your frequent flyer program, and it will not only affect the opinions of your members, but also those members’ Twitter readers (who may not even be your customers).
One person with an anonymous blog and a catchy URL can impact your reputation around the world.
Of course The New Champion Customers is just a tip of this iceberg, but it offers an interesting angel and chock-full of great charts. Take a look.
I’ve never been a big Costco person, probably because I live in an apartment the size of a postage stamp. But just this year – when my mom moved close to one in the New Jersey burbs – I took the leap and bought a membership. Now I love going there: the warehouses are like Disneyland! There’s a pie as big as my couch! Cool!
Sidebar: when I finally did buy, it’s because I saw a specific product I wanted that Costco carried at a great price. I bought enough of that product (plus some gum, I think) to “pay for” the $50 membership fee on my first visit. Making a purchase a no-brainer is every retailer’s goal , no?
Now we get a little glimmer into the company’s customer service smarts, as well. Like many membership-based retailers with preferred shopper programs, it’s easy for Costco to keep track of a member’s purchases and to retain specific transaction-related data, such as the date and time of purchase. It turns out that one of the ways in which Costco delivers value back to members based on this information comes in the form of product recall notifications.
While Costco routinely sends letters to customers who have purchased recalled products, it is now the first major retailer to implement an automated calling service that dials and leaves messages for members warning them of problem products.
Costco uses an external vendor that can make up to 500,000 calls per hour. The company estimates that it has already made 1.5 million calls so far related to the ongoing recall of peanut butter products alone.
Would a company focused only on this quarter’s profitability do the same? Probably not…. especially since Costco will give the customer a refund for any recalled product that is returned to a warehouse (with or without a receipt). But how much is a call like this worth to a customer about to serve tainted food to his or her family? It’s invaluable. And, if the company doesn’t already, it would be fairly straightforward to measure the monetary value of the program.
This is a worthy practice. Let me know if you see holes in it.
Outer Mongolia… that’s the place where your favorite stores sometimes locate Customer Service and the Returns desk. It’s all sun-shiny up front when you’re buying, but returning? Not so much.
In November, I pointed out the opportunity to communicate positively with a shopper when he/she is returning an item, rather than turning the event into a hum-drum (or negative) in-and-out transaction. Now comes a survey that drives the point home.
20% of respondents to a survey fielded by Opinion Research Corp. say that their 2007 holiday return experience exceeded their expectations. Only 9% could say the same after the 2008 holiday. Wait time and a lack of adequate staffing were major complaints. That’s rough, because returning customers who have a positive experience are exponentially more likely to shop in the store again and recommend it to others.
Unfortunately, the core of this problem may be an attitude that a consumer buying items has free will and will not put up with a negative service experience, while a shopper trying to return an item has no options. This is short-sighted, at best. Retailers are going to be relying on repeat shoppers – keeping their bases loyal – more than ever. Every contact at every touchpoint will factor into a shopper’s choice of retailers. Don’t overlook those experiences that don’t immediately translate into a sale – returns are on the top of a list that would include parking, bathroom availability and cleanliness. Not the sexiest elements, but vital just the same.
Yesterday, I wrote a post saying that perhaps the press shouldn’t rule out weight-loss companies just yet: that perhaps cost-effective programs will actually fit nicely with the trend toward dining at home.
Now comes news that recipe websites are doing great business. I always knew that someone out there was cooking… [Sidebar: I had dinner with a neighbor the other night. He brought over take-out. He asked me for a big pan and a set of tongs. I had neither. It wasn't pretty.] Allrecipes.com had 8 million unique visitors in October! That’s a lot of tongs.
What other types of business and websites might benefit from the nesting trend? I know that some of the recipe sites allow a user to print a shopping list containing all the ingredients required for a given recipe. What if a site also allowed you to customize that recipe? Say you wanted to make a chicken dish, and you could enter a budget and the number of adults and children you wanted to feed? Or what if a site had a partnership with grocery chains, so it could tell you that chicken is on sale at your local Kroger but not Publix?
There have to be a lot of ideas (or at least good experiments) here for grocers. At stores with floor space, what if a grocer partner clustered all the ingredients for a site’s “recipes of the week” in one frozen and one non-frozen spot on the floor? For the grocers who already offer delivery, what if you could call or contact a grocer online, specify the recipe and have the store know what ingredients you needed?
Grocers have been on my mind as the economy has continued to crater. In a walking city like New York, at least, a grocer probably sees a person more frequently than just about any other retailer. What is that grocer doing to fully leverage that visit? Frequent shopper discounts are good, but standard. Once you’ve got a customer in your store – 3 or 4 times a week – there has just got to be opportunity at a time when everyone is looking for ways to make things easier (and less expensive than eating out). recipe_websitesAllrecipes.com
If you’re like me, you don’t need external affirmation or reinforcement of your decisions all the time… but sometimes is nice!
Back in June, I told you about The Consumerist, a wonderful online community and blog owned by Gawker. I raved about its informative stories about good and bad customer service experiences (“Shoppers Bite Back”), along with all the corporate phone numbers, addresses, etc. you frequently wish you had at your fingertips. The site also does a great job for its 1.8 million readers of promoting great deals and discounts.
Now comes the affirmation I mentioned: Consumer Union has just purchased The Consumerist! Jim Guest, President and CEO of Consumers Union, says that the Consumerist community’s passion for helping consumers shop in a “fair, safe and just marketplace” will add exponentially to his company’s relevance and reach. It will also bring younger readers into the Consumer Reports fold.
And for The Consumerist and Gawker: WOW. The site’s new owner knows a thing or two about online marketing and revenue generation. With 3.3 million loyal, paying readers, ConsumerReports.org is the largest paid-subscriber website in the world.
A good deal all around! Let’s just hope that Consumerist readers will continue to have access to its content free of charge… with some heavy-duty Consumer Reports cross-sell pitches thrown in, of course. Consumers UnionConsumer Reportsconsumerreports.orgThe Consumerist Consumers Union Buys Consumerist
Technomic recently announced the top 5 restaurant trends for 2009. I didn’t think the list held too many foodie-oriented surprises, declaring “ethnic flavors will continue to star” and “experimentation with flower.”
While Technomic’s press release acknowledged that the coming year will be even more of a “buyer’s market” than 2008, I was surprised to see that none of the trends reflected the fact that what is not flowering is consumers’ wallets. There is no mention of how restaurateurs are going to try to drive traffic in the worst economy since the ’30s. One of the trends, in fact – “kids menus will be up-scaled and expanded” – could imply an up-scaled price, as well.
This is odd, given that Technomic itself issued the results of a survey in October indicating that restaurants will be hit hard by the weakened economy. 74% of consumers plan on visit QSRs and full-service establishments less often next year and 50% - including 70% of higher income diners – plan to spend less when they do dine out.
At least from a consumer point of view, there seems to be an odd disconnect between the trend list and reality.
Catalina Marketing and Pointer Media have just released a study indicating that 2.5% of consumers account for 80% of the sales for the average CPG brand. Less than 2% of the over 1,300 brands studied have more than 10% of shoppers generating 80% of their sales volume.
1% of buyers account for 80% of Iams pet food sales volume.
This is really incredible information – and blows the old “80/20 rule” clean out of the water.
There are significant ramifications for messaging, media, customer service, community outreach, packaging, channel management, corporate giving – you name it. Catalina and Pointer are, of course, creating a new service to help brands find these “pivot point consumers,” but these kinds of metrics should generate significant thinking all the way down the value chain.
Well, I said it a couple days ago – the onslaught of enormous discounts would soon desensitize consumers to sales (10% off! $25 off of $100! 25% off from 2- 4am!) – and there it is in the Wall Street Journal today. Christina Binkley, who covers fashion and other categories for WSJ, writes in a big article about shopping for bargains that she’s “turning up [her] nose these days at most fashion discounts of less than 50%.” 50%!
This is not a good sign for clothing retailers and will soon spread to other categories. And higher and higher discounts are not the answer: like some foods, the more you eat the more you need to feel satisfied… until your status becomes untenable. Discounts are simply going to a create a new – lower – floor for prices overall.
So it’s vitally important that retailers of all shapes and sizes look for ways to stay present in the minds of important customers and prospects. Take Saks, which is suffering some awful results as well as huge discounts: do exclusive store events. Consider refer-a-friend vehicles where a customer can get something special for getting a friend to stop by. Increase your email volume and, where you have past shopping behavior information, try to customize the content. For the woman who has even looked at Bottega Veneta bag on your website (let alone bought one), see if one of the designers at Bottega would be willing to contribute monthly advice about how to purchase and maintain quality leather products.
It’s not always about how much money you spend on a customer – and the sad fact is that all the discounts in the world may not create sales right now. But you want to keep a customer warm for the someday when he/she is willing to spend money again. Keep in touch. Demonstrate value. Do things like the Bottega example above that don’t appear to be a sales pitch and allow the recipient to feel special.
The small ideas on the fringe about being “nice” to customers may be worth far more than that for some time to come.
One of my favorite newsletters has labeled the trend toward brands offering special perks as “perkonomics.”
Trendwatching.com points out that while the credit card, travel and hospitality industries have relied on rewarding good customers with cashless privileges (seat and room upgrades, etc.), most other businesses and brands have not seized the same opportunity.
I think there are many many reasons why perkonomics is going to become increasingly important: (a) I haven’t heard anyone talk about this, but I believe that consumers are going to become desensitized to discounts. As we dive into this recession, everyone is offering dollars or % off in big numbers and – over time – this will lose its power. The prevalence of discounts will simply serve to lower overall price expectations. It’ll take more to jumpstart a consumer’s loyalty. (b) Have you noticed that it’s harder just to navigate the world lately? Companies under pressure tend to cut services and benefits. Those who can offer experiences that cost them little to nothing will see appreciation that far outweighs their actions. (c) Competition means that it’s too easy for a consumer to dump you and move on. The little things are what will keep them. (d) There are still segments with cash and market power who – at least for awhile – may wish to be less ostentatious with their purchases. Brands need to stay fresh and memorable (and appreciated) during the downturn.
I’ve been thinking about this since a friend told me that Visa Signature offered exclusive lavatories to cardholders attending a big music and arts festival. Would you expect a special potty from your credit card? No. Will you always remember the huge lines for the regular icky bathrooms while you were treated to a better experience? You bet.
Whether it’s a dedicated line at club, a special reservations phone number at a restaurant or a free bottle of water in a hotel room – these are the things that consumers will remember and that cannot be “bought.”
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