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.
* Grand Prize – John McCain’s Presidential campaign
* Overly confident LifeLock CEO brags about his company’s identity theft protection service by publishing his own social security number – and gets his identity stolen.
I can’t say whether Perkler answer, but I think there’s a business in helping consumers get the most out of the loyalty programs they are already in and – based on self-reported interests, perhaps - sign up for new ones.
Any individual in these programs gets random emails and direct mail about special timed offers, and it’s impossible to keep track. Plus, if I’m a frequent traveler (with no time to haunt sites like FrequentFlyer.com), how can I easily figure out what new programs I might want to consider? Impossible.
What if there was a dashboard that let you manage all your loyalty programs in one place? Numerous ways to make money, including selling services to the companies who offer the programs and advertising from companies interested in serving up messages to consumers with specific interests.
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.”
Pity the poor retailer right now.
Enormous job losses. Foreclosures. Homelessness rising most quickly among families with children. Fast-disappearing credit card pitches and credit limits dropping on the cards already out there. Selling toys and other kid gizmos is not the happiest business to be in right now.
Kmart obviously knows this, and is pulling out all the stops to get holiday shoppers into its stores and on to its website ASAP. The Sears Holdings-owned chain has launched a Disney-themed “Wish & You Could Win” sweepstakes seven weeks before Black Friday. It is also publishing holiday circulars and newspaper inserts already.
All this produced in me only a fleeting ”this-stuff-starts-earlier-and-earlier-every-year” eye roll - until I saw Kmart’s new TV ads – promoting layaway. Layaway?? Now? I think that this is truly repugnant. A low blow. Apparently most others agree, given that Kmart is one of the few remaining national retailers to offer the service. Wal-Mart and Target discontinued their own layaway services in 2006. Perhaps because such programs prey on the poor? After all, the idea of layaway actually rose to popularity… during the Great Depression.
Suzy Orman is going to have a coronary when she finds out about this…
Word to Kmart: Santa has class, and only wants to bring toys that parents can actually afford. KmartKmart layaway
Everyone knows that social networking is today’s IT girl of marketing. Most people aren’t exactly sure why, but there you are. What’s given me a chuckle are networks tossed together on a very loose definition of “shared” interests. Facebook, ironically, may the best example of them all. While it’s the media darling, to be sure, and has a kagillion members (including yours truly), most of whom have little in common. So its cosmic customer growth has been great for news outlets, but not so wonderful for marketers who quickly discover the limitations of Facebook applications and the difficulty of uncovering and aggregating “like” people.
Enter Unilever and their ad agency, Bartle Bogle Hegarty who chose Kodiak, Alaska for its harsh physical conditions and promptly set up a storefront where they began giving away free bottles of a new Vaseline lotion, Clinical Therapy. From there, Vaseline representatives began asking visitors to pass the word and subsequent visitors had to name the townsperson who had referred them. In other words, they went hunting for a key influencer: a “tipping point person” whose advice people heeded and who could influence others to try a new product.
This is the way they found Petal Ruch, who tried the lotion when she read that the company was giving away samples.
Once she did, the company claims that she passed the product along to 1,000 town residents in only two weeks. The company set up a special website, www.prescribethenation.com, where visitors could see individuals who have tried the lotion and how many people they passed it on to. Unilever also spent several days filming documentary-like footage for the ad campaign, and site visitors can watch videos of each person talking about why they like the product.
This is an outstanding word-of-mouth effort that I hope wins some awards. The effort itself could not have been that expensive (no doubt the filming was the most costly element, not the consumer/storefront piece) and, most importantly, Unilever built a “social network” from the inside out: by finding a passionate advocate first, rather than building the network and hoping someone will pop out of it.
So what is this, my 4th or 5th post about Starbucks? It’s the 5th. I wrote one when Howard Schultz declared that he would return to daily management because Starbucks had lost its way; I wrote one when Starbucks launched its new daily brew, Pike Place; I wrote one when the company announced that it was pulling back on its entertainment initiatives and eliminating its music business… etc, etc.
The point of all my meanderings this year is that Starbucks wandered too far off course and, like all companies, must become and remain exceptionally good at delivering on its core brand promise before even considering whether or not consumers will consider anything off-strategy or loosely complimentary (as CDs, books, magazines and smelly egg sandwiches most assuredly are).
Starbucks = Coffee + Service. Get this right first.
Why is this so hard? And I’m not saying it’s forever: you closed 600 stores this year and $4 coffee is becoming increasingly unaffordable. Bad times call for you to pull yourself together and take actions that will hold your loyal base close to you while the economic cold winds blow. Just… for awhile!
It’s a shame that they just can’t seem to handle that. In the lengthy Portfoliointerview that marked Schultz’s return to day-to-day management, he despaired at how badly Starbucks had strayed from providing a great experience and the best coffee. Then he told the journalist how excited he was about the smoothies (from Italy!) the chain was about to launch.
This week, Starbucks reinforced this on strategy/off strategy line of thinking by kicking off two discount programs to try to help its customers (the strategy part: keep coffee drinkers), while simultaneously announcing a new co-publishing deal with Farrar Straus Giroux for The Traveler, a picture book, described as “a beguiling and tender fable about what really matters in life.” Is there an unmet need for full-price picture books at Starbucks? No.
I’m frustrated. And I had a cup of coffee from the deli this morning. It was cheaper, there was no line and no one tried to sell me an iTunes card.
I wrote a post last week about marketers who are creatively capitalizing on the mangled economy, highlighting both Wal-Mart and KFC. All are trying to do something.
More and more fast-food and casual dining chains are introducing value meals, including IHOP’s $4.99 all-you-can-eat pancakefest, lunches at Applebee’s for $5.99 and hamburgers at Ruby Tuesdays for $1… and now we learn that several states are stepping up their lottery advertising with messaging like, “Maybe It’s Your Lucky Day.” Taking real advantage is Missouri, who is offering gas discounts with the purchase of a $2 lottery ticket.
What do fast food and lotteries have in common? They both disproportionately impact low-income individuals who can least afford the come-ons, with respect to both their financial affairs and their health.
Last Fall, I wrote a post using a photo of Angelina Jolie and her daughter, Zahara, clutching matching Valentino bags as the foil for an ongoing conversation about Neil Howe’s and William Strauss’ fascinating prediction that children/teens are returning to a more wholesome, altruistic view of the world.
Apparently, TomKat didn’t read my post before hitting Hermes on Madison Ave.
If you are interesting in marketing – or just think you may need to be in the same room with anyone 15-24 years old in the near future – and you haven’t read any of the Howe/Strauss books… you should. They’re all good, but I might recommend starting with either Millenials Rising: The Next Great Generation (2000) or Millenials and Pop Culture: Strategies for a New Generation of Consumers (2006). Using their own principles, Neil Howe did a great job in AdAge last month outlining why Obama has done so well with Millenials.
Title: Stephanie Fierman Goes to… Wal-Mart?
Subtitle: Retailers making the grand gesture to heed consumer concerns in the face of a depression got it goin’ on
As The Wall Street Journaldetailed just today, retailers are slashing prices and discounting like crazy in the face of shrinking consumer demand. Too bad most of these promotions aren’t working. Enter the grand gesture… and I’ve seen two retailers do it particularly well recently.
The winner thus far has to be Wal-Mart, with its announcement last week that it’ll be pricing several top toys at $10 for the holiday season. Both Target and KB Toys scrambled to follow with their own cuts, even adding items to the discounted list… alas, too late to get the spotlight. One of the most important people in my life is rabidly negative about Wal-Mart: its politics, its employee policies, its chilling effect on local commerce… She’s never been in one and never planned to go. When this announcement was made, the earth stopped rotating, pigs started flying and she said that, if she had kids, this promotion would get her into a Wal-Mart. That’s serious success.
The second smart promotion I noticed recently comes from KFC, where marketing is now led by Javier Benito, formerly of Coca-Cola and Starwood. KFC has introduced the Value Meal, a “complete and affordable meal for today’s value and time-conscious families,” consisting of seven pieces of chicken, one large side order and four biscuits. The twist here is that the marketing campaign challenges consumers to create the same meal for under $10 on their own. The TV commercial highlights a mom and her two kids moving through the grocery store trying to replicate the meal (at the butcher counter, the little girl exclaims, “7 pieces of chicken is HOW MUCH??”).
While the ad has generated a lot of buzz online from (mostly) women saying that they could beat this challenge any day of the week, it’s… generated a lot of buzz online. I think it has good potential to break through an awful lot of clutter.
Both of these are examples of retailers thinking outside the box and swinging broadly toward the outfield. Just because you have a bat, doesn’t mean everything has to look like the same old ball.
If you have any reason to want to drive an individual to a webpage, consider using a PURL. Click on the image to the right for an interesting example.
A PURL is a personalized URL – one that can be created to include an individual’s name. It usually looks like this http://firstname.lastname.yourdomain.com or firstname.lastname.yourdomain.com. Several companies can now use variable digital printing to automate the creation and management of PURLs for every direct mail or email recipient you may have, whether that list includes 1 or 1 million names. The PURL takes the recipient to a page of content that may be the same as all the others or that may content custom content intended just for that individual.
One company estimates that PURLs can improve direct mail response rates by 34% and I believe it. From a psychological standpoint, using a person’s own name next to your URL creates trust -and curiosity. A company that goes to the effort of greeting you by name seems to be sending a signal that it appreciates your business: and PURLs aren’t so overused yet that the effect has worn itself out.
PURLs are fun! Sending a party, conference or wedding invitation online? Anyone that has their own website can create multiple PURLs. Try it out.
Microsoft is launching a new $300 million advertising campaign to promote Windows, and Jerry Seinfeld is going to be one of the key celebrities at the center of the campaign.
I don’t get it.
I most definitely understand why Microsoft thinks this is a good time to refresh (reboot?) the Windows message: both Vista and Microsoft Office 2007 have been getting bashed, and Windows accounted for 28% of Microsoft’s $60.4 billion in revenue last year. It’s a franchise that deserves some love. And sleepy, lumbering Microsoft can certainly spare the cash.
But Jerry Seinfeld? I would propose that a good celebrity spokesperson should ideally be (a) believable and/or memorable as an authority on the topic, (b) a good representation of the mission and message of the organization, and (c) able to create an emotional link between the company and consumer.
Seinfeld is 54 years old, hasn’t been on TV for over ten years and, when he was, his computer of choice was A MAC. A Mac! Watch this early ad:
I love Seinfeld, but not for Microsoft. Even without Seinfeld’s known preference in computing, the choice only reinforces Microsoft’s reputation as stodgy and outdated. And in the thriving universe of the Internet and open source, the campaign’s very tag - ”Windows, Not Walls” – doesn’t bode well for the lumbering company’s ability to creating a new, fresh message that’s going to win any serious consideration. MicrosoftSeinfeldCrispin Porter
Lifebooker.com is a pretty nice idea. The site says it’s my “personal online concierge” to real-time discounted spa appointments.
Every woman knows that getting a last-minute spa appointment (let alone finding a good deal) is essentially impossible. But on Saturday around noon, the site informed me that I could get my eyebrows shaped at 4:30 at Rita Hazan at 15% off, and my guy could get a 50% off man’s mani-pedi at Sunpoint on the same day.
Great site, especially for us hurried ladies in the big city. I would add the ability to sort not only be service and time, but also by specific salon or spa. LifebookerRita Hazan
Select Soho House clubs and hotels in NY and the UK are now offering emergency same-day wardrobe service in partnership with NetAPorter.com. Designer shoes, accessories, dresses… forget – or ruin – something while traveling? These two premium brands have you covered.
This is so very clever and useful. Beyond the service’s usefulness, though, I think women will take advantage of it for the fun and the splurge of it, too: a new dress chosen with your significant other – for a special dinner that same evening in a chic hotel in a chic city – will add to the experience for many. Soho Housenetaporter.com
Well it had to happen sometime. With marketers transfixed by the concept of word of mouth, some finance person somewhere was bound to ask, “But what the heck is all that blahblahblah worth??”
BzzAgent – one of the first companies in the WOM with any kind of brand recognition – has put a stake in the ground, declaring that conversation with one of its “agents” should be valued at $.50. They got there by dividing total sales (that can be tied back to BzzAgent’s efforts) by the number of conversations.
I think that’s a little aggressive – and possibly silly. Sales are affected by so many variables, and not all BzzAgents (or targeted consumers) are created equal. In addition, I doubt if anyone has compared the financial impact of a conversation initiated and extended by paid agents vs. one that takes off on its own.
If asked, I would resist trying to value WOM just yet (and I’ve been asked, and I did indeed resist!). If anything, I would agree with a fellow member of The CMO Club, Deb Eastman of Satmetrix, the company that created the Net Promoter score.
Eastman and her company believe the score (which gauges how many consumers would recommend the product toa friend) is a better indicator of the value of “pure word of mouth” in general, and most certainly when compared to paying people to deliver your message. net promoter scorebzzagentsatmetrixwomma
An article in Crain’s NY this week talked about model apartments being sold already “dressed” – that is, sold with all the furniture, pots, pans and towels the developer had added to show prospective buyers.
It made me wonder if there’s a business in this: that is, deliberately dressing apartments (not just the few models a building may have) as part of the building process to be sold to harrassed, time-stressed yuppies and families. I was in a taxi a couple weeks ago and NBC’s “Open House” was highlighting some beautiful condo for sale – the furniture, art, etc. were absolutely perfect for the space. I fantasized about packing a bag, marching across town and moving in. The article also mentions that one of these models included all the furnishings at a 10% discount (for wear and tear), which is a nice bonus.
New York’s new fascination with designer apartment buildings – see Ian Schragers’ 40 Bond and Armani’s 20 Pine (weirdly, a building I used to work in) – would seem to lend itself nicely to the idea of a new apartment created, say, ”from the inside out…”
Yesterday’s Wall Street Journal including an article on Gap, Inc.’s plan to create a shopping cart that stretches across its Old Navy, Banana Republic, Gap and Piperlime websites. Fill one cart, pay one shipping fee. In a sense, “it’s all one big website now,” says Toby Lenk, President of Gap Inc. Direct. The company believes this integration will help drive sales.
I don’t know about that.
I suppose I’m aware that Gap owns Banana Republic and Old Navy in a strictly business kind of way, but – as a shopper – I have not stopped to consider how much money I’m spending across the entire Gap, Inc. organization, or wondered why I’m not getting Gap store coupons by mail for being such a good customer of Banana Republic. I think I will now.
This is a strategy that is not without considerable risk. Once you create links between brands in a consumer’s mind, you cannot pick and choose when those connections apply and when they do not. You potentially compound product quality, customer service, discounting, merchandising and credit issues that were once resting comfortably in their little silos. Now you’re training me to look at them all at once.
At the most basic level, once I open a box with Gap and Old Navy merchandise in it and find that something doesn’t fit, your entire corporation better be prepared for me to go online to whatever site or call whatever customer service phone number is closest at that moment. And I will most certainly expect preferential treatment – particularly deals and discounts – across all your brands if I am a heavy customer of (even just) one.
I think they’ve opened a Pandora’s Box with this. If the company made this move thinking the effects would be contained to streamlining online check-out and saving customers a few bucks in UPS charges, I think they may get a very prickly surprise.
This is a very, very interesting exercise that nearly all multi-brand companies should watch closely.
A new study indicates that love for a brand has greater impact on sales than do awareness and purchase consideration.
“Mind-set Metrics and Marketing Mix Models: Never the Twain Shall Meet?” is based on data from a panel of 12,000 households that tracked their purchases and the prices paid, 500 stores that tracked distribution and promotional activities and a survey of another 13,000 homes that asked questions about awareness, attitudes and purchase intent. The study focused on the sales performance of 61 cereal, shampoo, water and fruit juice brands in France over a seven-year period.
I certainly think that this is interesting – and a nice confirmation of what companies like Nike, Apple and even Mimobot already know – but I have questions about the validity of the conclusions.
This is because brand love equates to a desire and favoritism that is conscientiously built over a lifetime for many products. A Coke drinker who cannot stand Pepsi has developed these feelings over many, many years of ad exposure, promotions and personal experience: any one point in time – even a seven year one – cannot take this factor into account and is therefore, in my opinion, not too much more than an confirmation that people like brands more than others.
The fact that product preference may, in fact, be built over a lifetime also explains the researchers’ observation that distribution may be a bigger driver of choice than advertising. It’s not that this is necessarily the case, but that – at any giving point – it may be more important for an already-well-loved product to be readily available than to have $1 more worth of promotional exposure.
To do this study properly, then, the researchers would have to start with brands that had all been in the test market for the same number of years, with the same spend levels in the same media, and that started with the same approximate level of “brand love.” Otherwise, the results would be inconclusive.
Barney’s New York, the shopping haven for chic (and loaded) ladies on New York’s Upper East Side, is getting smart about its website.
The company has retained a company named Proclivity to help it identify and leverage shopping patterns captured on barneys.com.
Proclivity was started by a genetics scientist named Sheldon Gilbert. After moving into the private sector, projects involving the websites for J.Crew, Best Buy and MSLO made him realize how much site data is wasted. Describing scientists as “pattern hunter[s],” Gilbert created a proprietary system to look for online behavioral patterns. The system is self-learning. Barney’s is Proclivity’s first client.
With Proclivity’s help, Barney’s can now look at spending behavior through many different filters. An online customer who has bought a necklace, bottle of shampoo and vase may not have yielded any meaningful information in the past, but Proclivity can identify the fact that all the items were on sale when purchased and tell the system to send this customer emails calling out sales and specials. If the customer’s shopping behavior changes, so will the emails he/she will automatically receive. Proclivity can identify other kinds of patterns, such as order of purchase (do women buy shoes before or after hosiery?) and products most likely to be bought together, such as handbags and wallets.
Just as Barney’s VP of e-commerce did, most of us should view a new whiz-bang system with caution. But with response rates 10x higher than before and a plan to integrate store shopping behavior into the system, I don’t need Gilbert’s degree in biophysics to predict that Proclivity is going to see a lot more retail business in the future. barneysbarneys new york”sheldon gilbert””pattern recognition”
Microsoft
Seinfeld
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Swing tags in every room will promote “
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netaporter.com
net promoter score
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