Friday, July 31, 2009
Implications: Another reminder that, in addition to battling with competitors in your category, it might be a good idea to ask what kinds of categories you can compete with.
Target is selling outdoor furniture and backyard gazebos as an alternative to taking a family vacation, for example.
So, beyond your long-known list of competitors, where else could you prospect for new business? The idea of extending their turf is apparently making some restaurants feel… “right at home.”
Years ago, the wireless industry ran a number of public relations campaigns to encourage drivers to finish their phone call before hitting the road... or at least, invest in a hands-free device which would theoretically make the practice of talking while driving less dangerous. I’m no political scientist, but the messaging appeared to me like an effort to prove that the industry is capable of disciplining its’ own consumers, and that no outside regulation was necessary.
Years later, with the increasing popularity of text messages, Internet- and email-capable smart phones and other applications that require our visual as well as audible attention… the trend toward distracted driving might again be placing the wireless industry—and its customers—at risk of outside intervention. (A number of states have already made it a ticketable offense to text while driving; eager for new streams of revenue and increased public safety, other states are almost sure to follow.)
Implications: Accident investigators, personal injury lawyers and insurance companies are getting more and more sophisticated about the cause and effect of distracted driving. A cell phone call or text message leaves a “digital fingerprint” that is easy to follow. Don’t be too surprised to hear a public relations campaign—sponsored by members of the wireless industry—encourage more responsible use of their product. (Reminiscent of “please drink responsibly.”)
What kinds of behaviors within your company or category could invite unwanted regulation? Is there anything you could do to head-off those headaches?
One article I read with great interest this month came from the Research Brief at Media Post. It cited a study which illustrated a chasm between the thinking that goes on in the C-suite, and the thinking that goes through the mind of a consumer. It was one of my favorite reads of the month, and I invite you to review it by clicking here.
Implications: There’s only one way to understand what’s going on in the mind of your consumer.
As you walk the floor of your retail store or auto dealership… or, if you’re in packaged goods or manufacturing, as you observe people who shop where your products are sold. Talk to people. But more importantly, listen to them.
Research can mean a wide variety of things: Focus groups, primary surveys, secondary (subscription) data, telephone or online surveys, or simple intercepts. There’s an old saying…
“What you know is important. But it’s what you think you know that ain’t so that can hurt you.”
Regardless of your political persuasion, whether you think the federal government should be involved in health care or not, this much public relations light, shining on the details of how health care and insurance are run, can only lead to change… whether driven by the public sector, or the private.
My personal suspicion is that all of this talk about the state of health care is making people more conscious of their personal health, and their personal responsibility for staying healthy, and for managing their own care.
Implications: You don’t have to be a doctor to be affected by the health care debate. Of the products or services you sell, what could be positioned as, “health conscious?” (Hint: Chicken soup, fitness clubs, etc.)
In what ways do the products or services you sell contribute to prevention of illness or injury?
In what ways might your products or services be accused of being un-healthy… if scrutinized through the lens of a competitor’s marketing campaign?
An essay today by Phil Lempert, the Supermarket Guru, sheds some light on how hospitals might now be competing with the rapid-clinic down at the local drug store. I suspect a lot of companies will attempt to get into the act of health care, just as many companies took-on an environmental slant as the green movement gained momentum. If you're in health care or insurance already, you may soon face new competitors from outside the category. Or, from within. If you are "outside" the health care category, you might think about ways your company can contribute to a more healthy lifestyle for the consumer.
Do you have a healthy value proposition as these issues come to the forefront of national awareness? If your offer is authentic, you might have some strong opportunities.
Today’s New York Times was among those outlets heralding the news that finally, it is not the economy that is slowing, but the recession! (Click here to read the story.)
Implications: I know I’m sick and tired of hearing about The Great Recession. I’m confident you’re tired of it, too. But as eager as we might be to put this recession behind us, remember that we’re likely to see ups, downs, and bumps on the road to recovery. (See, “Why some companies that survive the recession may not survive the recovery,” June, 2009.)
That’s why you should...
Celebrate the good economic news, when it comes. But keep it in context.
Realize the success of your company is built on the relationship you have with consumers. (Focus on the people who live on Elm Street, not the news coming out of Wall Street.)
Consider which competitors are taking a “wait and see” approach to business; their customers may be yours for the asking.
Reflect on what kind of challenges you might face during a turbulent recovery. Which goods might cost you more? What cost increases might you have to pass along to the consumer, if supplies fail to keep pace with demand?
Have you spent the past two or three years training customers to only buy from you when it’s cheap? Should you be talking about your broader value proposition right now?
Optimism is fun... but realism is more profitable. Reconcile everything you hear--good news and bad--with the realities and needs of your customers. In doing so, your recovery is likely to begin sooner than most.
Tuesday, July 14, 2009
Evidence supports the notion that among workers, recession fatigue is setting in.
In an economy littered with layoffs and cutbacks, employees are likely to feel angst over lost co-workers (some of them perhaps good friends), and a heavier workload for the same (or perhaps less) compensation.
In some jobs, these conditions are aggravated by the fact that many employees are "recognized" based on sales or customer service benchmarks. With sales suffering across many sectors, and with fewer customers to work with, it has become difficult for employees to hit those benchmarks; thus, they're not receiving the recognition they once did. Under those circumstances, it’s only natural for a job to seem less fulfilling… or for the employee to feel like that, “it is going to be difficult to succeed.”
Implications: Beyond the casual exchange of greetings in the hallway, or anecdotal belief that your employees are happy… what do you know for sure about job satisfaction in your company? (Companies often review employees; how long has it been since you invited employees to review the company?)
Have your incentive and recognition programs been adjusted in response to the changing environment? If not, should they? (Some companies get a lot of mileage from using perks like theme park tickets, concert tickets, and sports event tickets to reward people for hitting certain sales or customer service benchmarks. What would an excellence contest look like in your organization?)
Have you held a managers meeting, lately, about keeping the staff motivated? (Is an internal workshop on the topic warranted?)
Even if the recognition is a certificate instead of an engraved plaque, or a dinner-for-two instead of an elaborate vacation… it’s important to credit people for the success of a company. Will everyone be satisfied with these smaller tokens? Perhaps not for the long term, but they might buy you some time… until revenue improves and more elaborate rewards are once again affordable. And workers are likely to appreciate that, even when times are tough, you recognize excellence. There’s never a wrong time to let your strongest performers they’re appreciated.
Tuesday, July 7, 2009
Moments after I published the posting about loyalty programs this morning, colleague Steve Marx forwarded an email to me that he had received from Delta Airlines, calling it a stroke of marketing genius. It said:
"We understand your ability to travel is more restricted this year, due to the economy and other factors, but we hope you'll continue to fly with us and enjoy your Medallion status benefits while continuing to add even more Medallion Qualification Miles to your balance."
The email then informed Steve he would receive a “Jump Start” of 15,000 free miles toward Medallion status.
Implications: Losing his preferred status with a frequently-used carrier may have prompted Steve to consider an alternate airline as his primary carrier. But Delta pre-empted that consideration by continuing to treat this valued customer… like a valued customer.
Jim Hopes, another of my colleagues, received a similar email from Delta. Here's how he reacted: "It made me check my account online and I realize now I still have a shot a Platinum for next year. Not guaranteed, but now it’s feasible. About a month ago I had given up on the notion. I will remember to consider Delta for every trip yet this year. Who knows? I could be Platinum again."
Historically, Medallion miles have been the reward for loyalty; today, they may be the cause of it.
You’d think supermarkets would be gloating about all their money, now that consumers are spending more meal occasions at home. But just because they’re dining at home doesn’t mean they’re buying the ingredients from a traditional supermarket.
A recent Marketing Daily story reminds us that traditional grocers are now competing with super-centers like Target and Wal-Mart, limited selection stores like Aldi and Trader Joe’s, and a host of “dollar stores.” Citing a recent Willard Bishop study, the Marketing Daily story said an estimated 42.1% of the typical food dollar goes to traditional grocery stores… and that number is expected to fall to just 35.2% by 2013.
Implications: In our Elm Street Economics workshops, we encourage participants to think beyond the companies they compete with in their own category; that one should also consider entire categories you could compete with. For example, the display of gazebos and outdoor furniture at a Target store featured signage that positioned the purchase as “an affordable alternative to that expensive family vacation.” Target has, in effect, decided to compete with the travel industry… by suggesting they can help consumers turn their own back yard into a pretty nice destination.
But just as looking outside your category can create competitive opportunities, it can also be the source of competitive threat. Kroger, Publix and Safeway are not just competing with similar supermarkets. They’re competing with club stores, convenience stores, dollars stores, discount stores and super-centers. Oh… and they’re also competing with restaurants… and the option that consumers have of skipping entire meals or choosing a grab-and-go snack replacement.
Likewise… beyond the competitors in your category, what categories might you compete with to create additional sales opportunities? Or, from which categories or channels might your next competitive threat be coming from?
Since shoppers started receiving “S&H Green Stamps” for qualifying purchases, or “depression glass” for buying Quaker Oats, loyalty rewards have been popular with consumers. The science of loyalty marketing was elevated even further when Braniff Airways introduced the first frequent-flyer program in 1980… and the strategy has become easier and more efficient as technology and the Internet have made it easy to measure and manage customer loyalty.
But what happens when an “A” client drops to “B” status? One recent study suggests that when a customer is demoted, the harm caused by the demotion can outweigh the original goodwill that was generated by the rewards program in the first place.
You can read a briefing about the study at the ANA Journal of Marketing web site; the story contains a link to the actual report.
Implications: At a time when many consumers are cutting back… companies might see many customers fall from “gold” status to merely “silver” (or from platinum to gold, from first- to second-class, five-star to four, et al). So the questions become:
- If these people are still some of your most important customers, should you really send them any kind of signal that might indicate they’re now “second class?”
- If they’re not earning platinum status, can you afford to give them platinum rewards?
- Can you afford not to?
- What kind of incentives might make the customer eager to resume (or re-earn) their elite status?
- If you had it to do over again… how would you modify the terms of your rewards program?
If you grant someone “important status” for their patronage, taking that status away is likely to be interpreted by some consumers as a signal that your company considers them “un-important.” Of course, the best time to consider and mitigate the consequence of customer demotion is before a loyalty program is ever launched. But when recession might be causing many of your loyal customers to spend less… you may have no choice but to consider those consequences right now.
The piece seems to support my assertion that the challenges presented by an economic recovery could be just as hazardous as those caused by the recession. [See the Elm Street posting dated 6-24-09.]
Thursday, July 2, 2009
Before we get started, I want you to know this is not intended to be a rant. It is merely a public discourse, inviting you to consider the influence customer service on marketing ROI.
After waiting patiently for her turn, a customer approaches the counter to place her order. Without taking his eyes off the cash register (and using the visor that came with his uniform to further guard against the risk of making eye contact), the employee issues the predictable quip of the fast food restaurant: “WhatcanIgetforyoutodaywouldyouliketotrythenew[whatever]combo?”
Mumbling and monotone, the clerk's words are drowned-out by his demeanor. His disposition implies--or at least it allows anyone within earshot to infer--that he is bored out of his mind, hates his job, and resents his customers.
In the interest of fair play, I’m not just picking on fast food restaurants. Similar scenarios play out every day at discount stores, big box stores, department and specialty stores. Instead of being greeted with the very basic “Hello,” or the mind-blowing, jaw-dropping, “I’m glad you came in today,” our visit is often welcomed with the over-repeated and under-rehearsed, “Would you like to save blah-Percent by opening a store charge card today.” (Same monotone delivery, different words.)
“Oh, yes!” I think to myself, sarcastically, “There’s nothing I’d rather do than be in debt to a company whose employees hold it, and its’ customers, in contempt!”
After ringing-up my order and handing me the receipt—again, without a single incident of eye contact—the cashier shoves the articles of clothing I’ve just purchased down to the end of the counter, out of her way, so she can move on to the next guest. The cycle repeats: “Would you like to save blah-Percent…”
The instant my receipt and change were slung to the counter, I was demoted. In the eyes of this cashier, I went immediately from the status of customer—which deserves at least a momentary if pretentious nod of appreciation—to nothing more than an obstacle... one that should get out of the way so the next guest’s merchandise can be shoved down the lane.
After witnessing or experiencing each of these too-frequent, robotic episodes, I catch myself wondering how much money that company has spent marketing to consumers just like me… promising they’ll treat me like a star, that I deserve a break today, that I can have it my way, that buying from them is like working with a good neighbor, that I should expect more, that I can live better! I think of the millions they have spent promoting service with a smile, satisfaction guaranteed (or at least, implied), and that working with this company is unlike working with any other!
I contemplate the brand equity that should exist after companies like these have made investments like that. And then, in my sick little mind, I hear a deep “gush,” followed by the sucking sound money must make when it has been flushed into a toilet.
A weird economy opens everything up for evaluation; why not re-assess the dynamics of marketing? Marketing is not advertising. While advertising may be an important part of marketing, marketing refers to the overall relationship a company has with its consumers. The way the customer is greeted, treated and appreciated. The way their loyalty and patronage are rewarded, and the way their transaction is conducted. Marketing is the research, product line, customer service, advertising, staff training, web site, store front… the entire relationship a company has with its consumer.
So when it doesn’t work, are we too quick to assume that consumers failed to respond to the campaign? Could it be that the marketer failed to respond to the consumer?
My wife and I relocated about a month ago. And as physics would have it, when we moved into our new home, we got a new neighborhood for free. Since we no longer live near our old providers, we’ve been on the hunt for a new bank, supermarket, dry cleaner, pharmacy, gas stations… you get the idea. Lots of companies are getting the chance to make a first impression on us right now.
We had errands to run yesterday. First we stopped for lunch, getting not just blah, but bad customer service. Then, we stopped at a hardware store, where an old-timer who seemed to authentically enjoy people took the time to find me a half-inch, deep-well socket for my ratchet-wrench… along with a half-dozen lock washers.
In the coming weeks, if I need anything that stands even a remote chance of being sold there, my first stop will be that same hardware store. But if I am hungry, I am likely to consider every available alternative before going back to that same restaurant… no matter how much money that chain might spend on advertising.
If you’re an advertising VP or a CMO, a product designer or a market researcher, and you’d like to diagnose the biggest obstacle standing between you and your consumers… pick up the phone—incognito—and call your own company on the customer service line. Or walk into one of your stores like an average Jill or Joe, and see what your company looks like when seen through the eyes of a customer.
Implications: I think that for many companies, the greatest risk is not that a campaign will fail, but that it will succeed… and front line employees will fail to deliver on the promise it made. Everyone in your company should know that the customer is not an obstacle to get around. They are the purpose of your business; the one thing your company cannot afford to cut.
In a robust economy, it might seem easy to take sales and customers for granted. (Before you dispute that, reflect on a few of your own personal experiences as a consumer.) A recession, on the other hand, can be a time when complacency catches up with its offender… as both sales become more rare and precious, and as customers become more deliberate and discriminating. As spending contracts, the concept of “value” has a great deal of gravitational pull. That doesn’t just mean a bigger package for a lower price. Beyond the products and services we buy, consumers want the purchase experience to hold more value for the dollar. Consumers want to be appreciated.
I'll repeat the headline that opened this story: Some business problems have not been caused by the recession. They have simply been revealed by it.