Saturday, September 22, 2007

RealityofBranding

The Reality of Branding


Reality shows are all the rage. Rumor has it next year the Survivor franchise, having run out of exotic places to televise from is going to run an experimental Survivor: South Central LA hour long show: Contestants will be parachuted into that part of LA and any that survive until the end of the show wins a chance to return the following week to try again. Of course, show business execs are complaining that an hour might be too long and difficult to fill with the rate of expected attrition. Nonetheless . . . one has to view these reality shows with a cynical outlook; after all, how “alone’ can you be with twenty camera crews and fifty overhead cameras recording your every move and thought?

Of all the reality shows, the Apprentice comes closest to real world value. It teaches concepts such as leadership, teamwork, competition and customer centric that this here prophet has always thought worthy of dissemination. However, one can also watch the show and pick up such non-desirable traits as finger-pointing, sabotage, autocratic behavior, bullying, and pure stupidity. But it is fun to watch and probably more of a learning experience than all the other Survivor series combined (ad infinitum).

Nevertheless, I must comment on some aspects of the series. The format typically has two teams competing against each other on a particular assignment. They have 24 hours (or less sometimes) to complete a business assignment. Of course it is “staged” but often fun to watch. Here’s my beef: in less than 24 hours the team are challenged to create a new brand or branding position for a particular product and present their findings to corporate head honchos.

Wrong. Wrong. Wrong. This is teaching America that all it takes is 24 hours and a Power-point presentation and you have established a brand that you can sell by the millions.. This is an entirely wrong notion of how to brand and what brands are. Brands are not created overnight and come into the world fully formed and ready for consumer consumption. Brands are an emotional shortcut between the product/company and the customer and provide valuable information to customers regarding quality to customers. Brands identify, differentiates, minimizes risk to the customer, reduces search cost to the customer, and provide meaning to the customer. It is basically a promise: ”You continue to buy from me and I will continue to provide the same high quality product to you.”

1) Branding is a multi-year phenomenon. Some experts indicate it could take as many as 5-7 years to firmly establish a brand in the mindset of your customers. It takes time and multiple purchases to gain credibility and trust among customers. You cannot merely tell them once and it is a done deal.
2) Consistency in the message is a necessity. All forms of marketing media must contain the same branding message and position. Otherwise, your customers will be confused about what you stand for . . . if anything.
3) Brand message and position must be reasonable and rationale with the product or service you are marketing and the company mission/reality. A Tiffany store in Walmart may not do well. In other words, you can’t make pearls from swine. You can always get them to buy once but it takes a good product to get repeat purchases.
4) Provide a simple, realistic, relevant message. All the branding advertising in the world is not going to make up for a poor product. The product must be a quality, usable, understandable and relevant.

So next time you watch The Apprentice, enjoy the show, watch the business banter but understand reality is much more subtle (and less forgiving than The Donald).

Wednesday, September 12, 2007

Hoorayforproblems

Problem, Problem, Who’s got a problem? We’ve got the problem.


The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005. Those surveyed were asked to discuss their most recent shopping experience. Half said they had at least one problem. On average, survey respondents reported experiencing three problems on the shopping trip, during which they spent an average of $163.

Parking was a major source of aggravation for shoppers with 40% of those surveyed reporting dissatisfaction in the parking lot. This is not good news for retailers as parking problems set the stage for customers to "arrive angry," which can make them more likely to have a troubled shopping experience. Retailers must realize the shopping experience is total and inclusive, from the time the shopper decides to leave their front door until they return home

In addition to parking problems, shoppers surveyed complained that it took a long time for them to be waited on (24%) or to pay (33%). Shoppers who had to wait for service complained about it to 2.1 other people, on average, and those who had to wait a long time to pay told an average of 1.4 people. Customers' time has become an important part of the retail value equation, along with price, merchandising and other traditional components of the industry.. Time is a rare and precious thing. Yet because the Internet allows shoppers to buy around the clock, there is more pressure on retailers to respect their customers' time.

Meanwhile, retailers continue to focus on merchandise, jamming stores with inventory that overwhelms customers and cuts into the time they have to shop. According to the survey, shoppers are likely to tell 2.5 people, on average, about their inability to find an item because the store was cluttered with merchandise. In the end, retailers will wind up reducing the price on merchandise to make up for the negative experience, eroding their profit margins.

The survey shows some slight differences in attitudes among shoppers who were reporting their experiences at a mass merchant versus a specialty store. People who are in a specialty store are more in the pleasure-seeking experience, while people going to a mass merchant are on a mission.

Retailers historically have paid a great deal of attention to how to satisfy the customer, but have not been too interested in finding out what makes them dissatisfied. Historically it has focused more on product and experience as a way to create satisfaction.
And despite the value in learning about consumer gripes, retailers have resisted asking their customers what they do wrong for fear of stirring up negative thoughts. Retailers need to find ways to get customers to share complaints with management, not friends and family. One way is for retailers to ask customers to check a box on their credit card slip indicating they had a problem at the store. Retailers could then attempt to follow up, or give the customer a phone number or web address to make their complaints directly. If nothing else, it would give the customer a chance to blow off steam.. Retailers that are responsive and friendly are more likely to smooth over issues than those that don't try to be as friendly as possible.

And now to the moral of the story: Why don't shoppers confront the retailer directly? Respondents indicated they rarely discussed their concerns with store personnel or management. The prevailing psychology was that most people presumed it would happen repeatedly (46% of those who had a problem expect they would definitely or probably experience the same problem in the future), was unavoidable, and resigned themselves to poor service. When any service has become a pleasant surprise instead of the expected, the time is ripe for a marketer to woo customers with (if not exceptional) then solid good sincere service. How much more effort would it take to do so? And by what America is telling us, the reward would be well worth it.

कस्तोमेर्सोल्दंड़व

Something New, Something Old: Customers


Last week, I started counting the signs and marquees I saw in our little town alone:
“New Customers Half off first rental”
“Free XXX with first purchase”
“10% off First Year Fees”
“ First Time buyers—no payment until 2007”

At first glance, I thought, isn’t this terrific marketing. Then it hit me: I was not eligible for any of these because I was an already established customer. And then I did not feel quite so kind. What am I missing out on by being an old, reliable, non-threatening, buy and never complain type of customer? Are you taking me for granted—good old reliable Paul. Are you being complacent about me? Perhaps it is time for me to shake you up and change businesses. I (and I suspect most people as well) do not like being taken for granted and discriminated against (which is exactly what this is, discriminating for new customers/businesses at the expense of us older clients).

Is your business doing likewise? Working overtime to attract new customers and not paying attention or giving time to present, existing customers? This is a recipe for disaster. Do you think that once you bagged a new customer, s/he will be yours for ever and you can go hunting for new clients without regard for your previous catches? Think again.

Do you know what the numbers say? It takes five times as much time and money to get a new customer as it does to enhance an existing customer’s business. The typical business gains less than 5 to 10% of lifetime potential business from the initial sale to a customer. If you do not go back to your existing customers, you are missing out on up to 95% of potential revenues from that customer. You have already established a relationship with the customer, s/he knows your products, your company, your service capabilities and your employees. You have already established awareness and a reputation (hopefully a good one) with your existing customers. Think of the costs involved in gaining the levels of awareness and reputation that already exist in current customers to new customers who may have never heard of you. That is the benefit of your established base.

If you are already aware of these benefits and still chase after new customers, why? For many of us, the roots of the problem can be found in our evolutionary past: it is the thrill of the chase and the immense joy in the successful ‘kill.’. Or the pride achieved in a new ‘conquest.’ That as it may be, it is time to tame the primitive hunter and use the rational civilized mind to run a business, not a wild game chase on the Savanna.

I recently received a notice in the mail from a health plan I belong to. They indicate a rate increase is forthcoming. Then they indicated they could either raise the rate only on old customers thus “keeping our new customer rates lower to attract new business,” or raise rates on both old and new customers. They decided to do the latter. They have foregone the temptation to lure in new business while taking advantage of older customers. In the end, they will gain less new business but retain many more older customers. I cheer them on with their decision.

What can you do?
1) Many of the challenges can be traced directly to the incentive system provided to salespersons—more bang for new accounts than for managing older existing ones. Modify it so appropriate weights exist.
2) Do not actively discriminate between old and new customers. Your existing customers will play the game to get the ‘newie’ benefits: they will create new email addresses to confuse the system into thinking they are new customers. Don’t get into playing games. Stick to providing the best products and services you can offer. Everything else will follow.
3) Of course you should always be seeking new business. Remember that new business that comes because of deep initial discounts or freebies will more readily leave when the next vendor offers better deals. Seek those businesses/customers who will be long-term customers. Gain their attention with your product/service/reputation/quality not with a one-time deal.

Remember your old existing customers for it is they that will grow your business.