{If Marketing Ran the Airline World vs. If Operations Ran the Airline World}

If Marketing Ran the Airline World: 

As passengers board the plane, marketing would love to create “a moment” to start the experience. The moment could include a video where employees or the president of the airline thank customers for choosing the airline, then present a feel-good section where happy customers and employees showcase the cities around the world that the airlines connects to. At the end of the video a jingle and tag line would play that connect to the customer such as, "Your friendly airline," or "Bringing the world closer," or "You focus on the destination and we take care of the journey".  All these messages would be the airlines ways of making the customer realize that they are part of this big family and larger than life experience.

Before the flight takes off, marketing would use the captive audience to sell. After the welcome and feel good messages a limited time offer would appear on the screen. "In the next ten minutes, buy a $400 gift voucher for only $300, a 25% savings. This is our way of saying thank you."  The message would be followed with a link passengers could access from line and a 10 minute countdown.

If Operations Ran the Airline World: 

In an effort to be efficient, operations would want all passengers to get to their seats as soon as possible. We all realize that an airline does not make money when its planes sit on the ground, hence effectiveness in the airline industry would be measured as percentage of the daily hours the plane is flying. The airline would then facilitate speedy airport transitions and ask de-boarding passengers to clean up their place and get it ready for the next passenger.  Then “marching band” music would play during boarding to encourage customers to move faster to their seats. If passengers’ speed in taking their seats was not up to par, the crew might gently shake the plane to encourage taking a seat. The operations team motto might be, “How can we get passenger butts in seats as soon as possible.” 

Once the plane takes off, vending machines would be stationed throughout the cabin where passengers could purchase their own food. This would eliminate the need of the flight attendants as service personnel completely.

Even though the above examples make sense from each department's point of view, is this in alignment with the vision of the airline? When an airline's marketing team positions the brand as "Your friendly airline", does putting a vending machine in the cabin make it friendly? Or does making customers buy a voucher at 25% savings before take-off sync with getting passenger butts in seats ASAP?

Taking a customer centric, Marperations approach tells us that each functional department in a business cannot act like a sovereign nation with its own territorial boundaries, laws, and constitutions. They are all part of a bigger customer nation. Hence following the vision of the customer and aligning the department goals around that is it's key to success.

{Angelina Jolie Teaches a Marketing Lesson!}

Ever wonder why some retailers or restaurants put on their coupons, "Valid at participating locations only"? It is a very glass-half-full way of saying, “Some locations may not take this coupon, but go ahead and try it anyway.”

Based on this, three questions come to mind:

1. Why do marketers want to promote an offer that is not being accepted in all units? Is it an example of semi-deceptive advertising, where marketers think consumers will like the offer in general and visit the store anyway?
2. What does disappointment do to the customer? At the very least, it irritates the customer, but it can also make them irate. Even though the customer may still buy something because they are in the store, trust in the brand starts to erode, a pillar of customer loyalty.
3. What position does this put the employee in? It forces the operations employee to say, "No". The employee has no chance to succeed and wow the customer when they are put in a situation where they cannot say “Yes”. An employee who is embarrassed by saying “No” to the customer and a customer who is upset is not the recipe for building a brand.

These kinds of marketing offers pop up everywhere. Consider these situations:

• A customer fails to read the fine print and realizes only after coming to the store that they must make additional purchases for the offer.
• The offer is only valid for specific times of the day or week.
• To receive the discount advertised, the customer needs to pay full price and then get a store credit or coupon in the mail.

Marketers must take on the responsibility of setting expectations that can be fulfilled. Recently, Louis Vuitton produced an ad featuring Angelina Jolie with a bag that has been out of production for the last six years. Of course if the ad is successful it will make customers come to the store to purchase the bag. But what happens next? The store employee is forced to say the bag is unavailable, creating one very disappointed customer. 

{Beginnings - Lane Cardwell, President, P.F. Chang's China Bistro}

Written for and distributed at the Marketing Executives Group, Chicago, May 19, 2011; 

Published in Restaurant Marketing Group's MEG Consumer Talk  

Lane Cardwell

President, P.F. Chang’s China Bistro

I have had a lot of beginnings lately.  In the past two years I have doubled the number of restaurant companies that I have worked for in the past 32 years.   I was recently the CEO of Boston Market, and have just joined P.F. Chang’s China Bistro as its president.  My other two restaurant companies, going back 30 years, were S & A Restaurant Corp. (Steak and Ale, Bennigan’s) and Brinker International.

It gives you a different perspective on our industry when you start fresh with a company after so many years in the business.  Let’s call it “nuanced naivety”.  You are naïve about the way that the new company that you have joined does business; however, you understand the nuances of the way that business is done in the restaurant industry.  It must be how a professional athlete feels when they join a new team after a long time in the league.  To be of value you must take what you already know and make it work within a team that you don’t know well yet.

I remember all of the new people that joined my earlier companies.  Full of questions (“why don’t we?”, “could we?”, “have we ever?”), lots of ideas, and challenges about the way that we have been doing business for a long time.  They were irritating.  It took us old hands several months to break these new people of their question-asking and mold them into one of us.  Some never could be taught the way that we did things and moved on to annoy some other company.  I never stopped to question the opportunities to reexamine our company and concept with fresh eyes that we may have missed.

I have been that irritating person over the past two years.  I am early into annoying my team at P.F. Chang’s with my constant questions about why we do things the way that we do them.  “Why did we decide that?”  “What else did we consider?”  “Is it working?  How do we know?”  It’s hard to join a successful team and a successful concept.  It’s easier to join one that is struggling.  It makes sense that you would question things in the struggling company, not so the successful one.

The one thing that I have noticed in most of the restaurant concepts that I have worked on is that the customer rarely gets a seat at the decision-making table.  They are paid great lip service, but rarely are consulted about changes to a brand that they make possible with their money.  Our front line employees talk to our customers every day.  They know what they like, don’t like, don’t understand, and what delights them. 

Somehow a lot of this information gets distorted or filtered as it drifts its way up the chain of command.  Sometimes we drown in the quantity of the information.  We try to capture it with customer feedback systems and formalized marketing research, but it’s like trying to report on local weather from across the country.  Nothing quite replaces stepping outside and looking up in the sky.

Every day decisions are being made throughout the industry about the care and feeding of our restaurant concepts.  Different departmental groups with different views of what is important weigh-in with their opinions.  Very different operating regions must often compromise by deciding on one approach, with the result neither exciting nor disappointing all of their guests.  Like the story of the three blind men trying to describe an elephant by touching its leg, trunk and side, each constituency sees the situation a little differently. 

There are three normal outcomes of a decision being made about a concept:

1. Good for the company, good for the customer (the proverbial win-win)
2. Good for the customer, not as good for the company (absorbing a cost, or adding a new service or offering)
3. Good for the company, not good for the customer (large price increases, quality cuts, concept elements being trimmed or deleted)
4. We will assume that good management would not allow something bad for both the company and the customer to occur (but sometimes they do)

I have learned over time that if you stay vigilant against letting #3 dominate (Good for the company, not good for the customer), everything else will tend to take care of itself.  Sometimes it is a lonely voice representing the customer when decisions are being made.  Often your co-workers are not even aware that the decision-making process is one-sided.  They don’t understand why something that cuts costs, or makes the restaurant run more smoothly can sometimes be a bad thing.  After all, aren’t we paid to take care of the company?

I always tell people that gravity works on restaurant concepts like it works on everything else…it pulls things down.  Usually a concept is at its best in the early years.  It is fresh, new, exciting, and pleasing the customer is an all-consuming activity each day.  As you grow you begin to look for efficiencies that offset the difficulty of managing 10, 100, or 1,000 restaurants remotely.  Programs are introduced.  Policies are spelled out.  Buying power and standardization are introduced.  When you add up the impact of all of these “efficiencies” over the years you begin to see the effects of gravity.  The concept is bigger, but not better, than it was in the early glory years.

Do you want to make a difference on the restaurant concept that you work on?  Every time a change is proposed, ask yourself whether it is good for the customer.  There is nothing wrong with something being good for the company, but is it also good for the guest?  If you can bring this mindset to the job every day you will be a success in the long run. Brand building is hard work and good companies want to be challenged on issues where the customer is not the winner. 

Do you find that your company doesn’t want to hear it?  Go find a good company that does.  A career is a terrible thing to waste, and you are wasting your time waiting for the inevitable decay that sets in when each flip of the decision-making coin comes up heads only for the company.

Let your own new beginning be the way that you think about each decision affecting your brand that crosses your desk, or is raised in a meeting.  It takes a lot of effort to hold on to the things that made your concept successful when it started, much less to improve it.  By being customer-centric you greatly improve your long term odds of success.

{The Start of Marketing and Operations Divide}

As we work in the area of Marperations, it is important to understand the origin of the marketing-operations divide. This understanding will help us figure out why operations cares so much about efficiency and why marketing has an eye single to effectiveness.

A look back in history shows that the 18^th and beginning of the 19^thcentury marked the rise of production. Producers focused their energy on producing more, making efficiency suddenly more important than ever. But the ongoing focus on efficiency came to a point where, in the1940s, production started to surpass demand. The country gradually evolved into a sales era to move surplus inventory. In order to bring more structure to sales, the concepts of marketing evolved and came into being in the 1950s.

From the start, marketing primarily came into existence to counter the effectiveness of operations. Since marketing came into being to sell surplus inventory, over promising and setting high expectations became common practice among marketers.

Marketing did not come in to build demand, but to work in tandem with operations. Operations had already put itself in a position of producing more than the demand required. Marketing was simply getting rid of the surplus as a profit.

There is still a divide today. Operations still wants to do more of the same thing, and doing more of the same thing is a complete no-no in the world of marketing.

The divide still runs deep; it is time for a Marperations approach to take over. Companies need to understand that marketing today can connect to consumers and help operations choose its product mix and production quantity. Marketing can influence the features and benefits offered by a product. Marketing can lead and support. Operations on the other hand, cannot be stubborn about its leadership. It too must open the doors to change and realize that they only way for the entire brand team to truly win is to make the consumer happy.

{Operations Focused Marketing: A Marperations First?}

Ever since the inception of the Marperations concept, I have been searching for  examples where operations completely defines a brand and marketing simply must reflect the differentiated operations. Last weekend I found an example where I would have least expected it.

I was in the Cherry Creek area of Denver waiting for a meeting. To kill time I looked for a place to get a cup of coffee. To me, coffee has become synonymous with Starbucks. So naturally I was looking for the nearest Starbucks when I came across a local coffee shop called Aviano Coffee, I walked in and immediately realized that this was a different kind of a coffee shop: the décor was modern, trendy, but unassuming and not in my face. They were not trying too hard.

I walked up to the counter and ordered my usual, a small cup of coffee with room for cream. My first surprise came when the coffee maker did not look surprised with my use of the word “small”, as in the Starbucks world, “tall” is the new “as small as it gets”.  Then he started making my coffee.

First he poured some hot water into the coffee pot, and then he ground some fresh coffee beans, fresh just for me. After that he poured the ground coffee in the filter and a little hot water on the coffee grounds, then he paused. I was anxious now. All I could think was, “Come on, pour the rest of the water and give me my darn coffee!”

That is when he explained, “I soak the coffee grinds for a few minutes first so that when I brew your coffee you get the best flavor.”

Now I was intrigued and thoroughly engaged in the coffee making process at Aviano Coffee, as the impatience in me was overcome with interest and curiosity. I was ready to play this coffee making game. A few minutes later when the coffee maker started pouring more hot water into the filter, he further explained, “The pre-soaking makes sure that any carbon dioxide or other gases trapped inside do not make it to your coffee.” I had not yet tasted the coffee but by now I was nearly sure that this would be the best cup of coffee I will ever have.  I was getting really excited to taste this special coffee.

Finally, he poured my coffee into a small cup, and again I was happy to notice that the small cup was actually small. As he handed me my coffee he said, “Please let me know how you like the coffee.”

I simply loved the cup of coffee. As I left the coffee shop I realized what Aviano Coffee had done to me: they had completely changed the definition of the best cup of coffee for me. All of a sudden I could see through the branding and marketing of Starbucks where branding was everything. I could see that the coffee at Starbucks is made by a high dollar machine that the barista simply stands behind and operates. Starbucks had suddenly become a production facility in my eyes where Aviano practiced the art of coffee making.

Aviano Coffee had no fancy branding. It was not trying to appeal to my five senses by building a store that follows the Disney principles where every interaction is planned and orchestrated. Instead they were simply making the best cup of coffee they could, just for me. Now if that is not pouring your heart into coffee, I do not know what is. It was not the marketing of the brand that intrigued me to try the shop. There were no coupons, no marketing stories, and no feel good charity promotions. Instead I discovered the shop on my own and they offered me an experience that was etched in my mind forever. The experience was simple yet detailed, nothing too complicated yet intriguing, very personal and simply memorable. When a brand has operations so breakthrough, marketing does not have to work extra hard to scream about the brand, instead it should simply take a back seat and showcase the experience.

Please do not get me wrong, I will still visit Starbucks as they have me surrounded where ever I am. But every time I get a coffee at Starbucks I will ask myself, “Hmm, why the machine? Why not hand grind? Did you release all the bad gas? Did you soak the beans? Did you give me a small when I wanted a small? Did you make me feel that I just had the best coffee I could have?”

Brands like Aviano Coffee are few and far between, but they are out there and deserve a place in the Marperations hall of fame.  Next time you are in Denver, venture out to the Cherry Creek area and try Aviano Coffee for yourself.  Let me know what you feel. And if you have experienced a brand that has broken all paradigms for you, please share your story with me too.

Please note: ZenMango has no connection with Aviano Coffee. In fact they do not even know that I am in love with them.

{Focus on the "real people" of your brand}

Pizza Hut goes for slices of real life with employees in ads

 By KAREN ROBINSON-JACOBS / The Dallas Morning News 

In an era when ordering a pizza doesn't necessarily involve human contact, using workers in ads reinforces the message that "these are genuine human beings who are making these pizzas," said Arjun Sen, president of the Colorado-based Restaurant Marketing Group. "For Pizza Hut it's a great strategy to say, 'Our employees: That's the difference.' It ... is celebrating the employee. It's team building."  click here to continue reading

{The Price-Value Equation and Golf}

Arjun Sen was featured in the November issue of PGA Magazine as the expert source on price and value in Don Jozwiak's cover story article. The article keenly applies to industries outside the golfing realm and is well worth the read. Click here to jump to the article.

"Given the current economy, pricing is a hot topic across the golf economy. Knowing what value a golfer expects a given offering - from a round of golf to a lesson or a golf vacation - is an important step in determining how to set prices. That's the firm belief of Arjun Sen, a marketing expert with more than two decades of experience in consumer research and strategic planning..." continue reading

{Does Sports Marketing Really Work?}

 It was a pleasure and honor to moderate a Sports Marketing panel at Dine America hosted by QSR Magazine. We had a great team of panelists that included Tracy White, Senior Vice President, Sales and Marketing, and Chief Sales Officer for the Atlanta Hawks, Atlanta Thrashers and Philips Arena; John Kittredge, Fabri-Kal; and Bruce Skala, VP, Taco Mac. 

Based on the lively discussion among panelists, I arrived at the following five take-away's:

Right fit for the brand
It was very clear that finding sports that are the right fit for the brand is the first step.  Brands should not just go for what is available as this is an area where effectiveness is more important than the efficiency.  To identify fit, there are three areas a brand must look at:

• Fits the brand’s target audience
• Fits the brand’s personality
• Connects with the brand’s target audience

Size of opportunity does not matter

A common thought is that only the big players can play in this field since it is important to play at the highest level.  Based on the panelist discussion, that assumption is not true.  Instead, brands need to find the team that fits best, both the brand and the brand’s budget.  It may mean a less known national sports or a local event or team that could be the perfect fit for a brand.

“Internal Activation” is the key

Getting rights to the coolest sports property is not good enough.  Instead, a brand must make plans to activate the property to market it within the store. When planning a partnership, a brand must allocate key resources for the activation phase, as even a partnership with the coolest property on the planet needs successful in-store activation to bear fruit.  Activation includes using the property (logo and signage) within the store, communicating to customers, and getting team members excited about the partnership.

While measuring ROI, having a clear call to action and patience is the key

Just like any marketing effort, there is no clear answer to the question “does sports marketing really work?”  Instead a brand must compare the sports marketing opportunity to traditional opportunities to identify which has a better chance of sticking with customers.  In many industries where short term performance alone is the key, it is important to develop realistic time lines for the partnership, as it will take continuity to build a partnership.

Maximize your brand’s efforts by continuing to differentiate
Just like in any marketing communication, a brand must continue to strongly brand its sports marketing partnership. This is an opportunity to create something memorable and not just place a brand’s logo next to a sports team’s logo.  Creating memorable association both in communication and events will make this a big success.

A big thanks to Blair Chancey, Editor of QSR Magazine for giving me the opportunity to moderate this panel and for putting together such a great conference.  Should you have any comments or questions, please contact me at arjun@zenmango.com.

{Arjun Sen Published in AdvertisingAge: Keep an Eye on the Back Door}

Understanding Why Customers Leave May Be More Important Than Understanding Why They Come

by Arjun Sen
Published: September 01, 2010

CMO Strategy Column, AdvertisingAge 

The cost of acquiring new customers can easily add up to five times that of retaining current customers. In the new world of marketing, where CMOs are more cost conscious than ever, a focus on customer retention is a necessarily logical pursuit.

This isn't just my opinion; we've done the research to back it up. Our company recently completed our fourth annual study of the restaurant industry, the Leaky Bucket 2010. The study analyzes the return intent of customers to a restaurant brand. Conducted in March, the study included 2,483 respondents and analyzed more than 146 brands. Our methodology analyzes a brand's leak score. The higher a leak score, the more customers that brand is losing; lower leak scores indicate a higher level of customer retention. For the fourth year in a row, the study results overwhelmingly indicate that brands that invest in guest experience retain more of their customer base and can thereby reduce marketing expenses and increase profitability...

click here to continue reading

{Airline Industry: Moving from Hospitality to Utilitarian Retail}

As I sit in a USAir flight from Charlotte to Denver, it dawned on me that the airlines are going through a transition from a hospitality industry to that of retail.

Earlier it was all about hospitality.  Hospitality included a greeting at the door, assisting the elderly to their seat, getting the customer a pillow and blanket, and of course offering refreshments that included food or snacks and beverages.

Somehow in the process of cost cutting, I see a classic case of death by pin-prick evolving.  First the free food disappeared to cut down expenses.  Then some financial genius measured the aggregate payload carried by an airline as a result of all the magazine weight, resulting in the higher fuel cost, and there went the extra magazines. Then went the peanuts and pretzels and the airlines started using captive hungry customers as a revenue generating opportunity by selling food. If that was not the first step to retail, I do not know what retail is!

As airlines move in this format, the big question is the evolving role of flight attendants.  Why do we need them to still greet us as we exit the airplane?  Why the farcical service of walking down the aisle with water once in a three hour flight?  Why not be consistent and completely be a retail service.  In that case the role of the flight attendant becomes more of an enforcer, similar to the ticket collector on a train. We do not expect the ticket collector to get us a pillow, do we?

To be consistent, put some vending machines on the plane, change the flight attendant clothing from hospitality aprons to service jumpsuits and simply offer great service, but don’t try to be in the hospitality industry.  Customers might appreciate the honesty.

Then, if some airlines want to stand out and offer hospitality the old fashioned way THAT would be a true brand differentiator!

{What do You Need to Provide Wow Customer Service?}

After I boarded the flight and sat down in my seat, the flight attendant brought me a glass of cold water.  The water hit the spot.  She saw me with my Taco Bell bag and came to me and asked, “Can I have it?” 

My immediate reaction was, “No it is mine.” 

She smiled at me and said that since I was in the first row I could not have stuff on my lap or in front of me.  She then took my salad and very carefully placed it in one of the stainless steel bins for takeoff.  I watched her closely and was not sure if I should approve of her actions.

As the flight reached cruising altitude and the seat belt lights turned off, she came over and opened my table for me and put a linen table cloth on it. Then she very carefully brought my Taco Bell salad to me with another glass of water. The white linen, the silverware, and the fact that I was the only person enjoying this salad made this a memorable dinner. Thank you, Taco Bell, for making it happen.

But the magic in the air was just beginning.  Mrs. Adams, the flight attendant, tied her apron tightly around her.  She took out a wicker basket and started arranging chips, nuts, and Biscoff cookies.  She arranged them in the basket with ultimate care then with a white cloth over one arm, she came to serve us snacks. I would have never looked twice at pre-packaged snacks on a flight, but her care and pride in the way she served them made me sample some nuts.  After she was finished with the basket of snacks she walked up and down the aisle making sure no glass of water, wine, or soda was empty. Her level of service and desire to make our flight a wow experience was no less than that of a renowned Nordstorm employee or a waiter in a high end restaurant.

I kept thinking about what the airlines provided for her to provide wow service.  Some chips, some nuts, some cookies, a basket, some linens, and a limited beverage selection that includes coffee, tea, water, soda and two kinds of wine. Instead of complaining about the airline not giving her the opportunity to provide wow guest service, she took it upon herself to make the best out of the situation and put customers first.

Wow Mrs. Adams. You were a simply amazing flight attendant. United Airlines should be proud of you and I am so glad that I got to experience your wow service.

{Store Closing Time: For Customers or Employees?}

In today’s tough economy, every store is trying to find ways to increase its guest count.  Sometimes, the smallest of gestures or actions makes a customer walk away.  What is worse is there are times we set an expectation to the customer and then disappoint the customer.  A disappointed customer of course is very unlikely to return.

Think about the store hours that are posted outside any store.  In today’s world customers can access store location and store hours from the web or their smart phones before making plans to visit the store.  How much of a customer base could be saved by simply swapping out a couple numbers on the front door of the store and on the website? I don’t suggest increasing labor costs by extending store hours. All I suggest is setting the right expectations to help brands retain more customers. The ZenMango Leaky Bucket study has consistently reported that an average of 20% of customers who leave a brand and don’t come back do so because of service.  When a store advertises a closing time then regularly cuts off customer transactions 15 minutes, even an hour prior to that time it disrupts the guest experience and frustrates the customer into choosing another brand. The store is effectively pushing its customers to try its competitors by closing early.

Let me put things in perspective with a series of events I recently went through at the DFW airport.

MY SEARCH FOR FOOD: At the end of my three day business trip to Dallas, the anxious-to-be-home, the road warrior in me got to the airport at 5:30 PM although my flight didn’t leave until 7:26. I headed straight for the airline lounge until the announcement came that the lounge would close at 7:00 and last drink orders at the bar would be served at 6:45.  It was nearly 6:30 and I was sure they wouldn’t feed me on the plane so I headed out to search for a grilled chicken salad before my flight.
 

Right in front of the lounge was a Taco Bell, but that evening I was on the hunt for something slightly more gourmet. I walked past the Taco Bell and came to a Mexican restaurant with a Grilled Chicken and Mango Salad on the menu. Perfect. I found an employee near a computer and before I could finish my request she told me they were closed.  Hmm, the sign in front said they close at 7:00 PM and my phone said it was currently 6:35 PM. I tried to reason with the person but to no avail.

My reaction: You baited me, you teased me, and then you turned me away.

MY SEARCH FOR FOOD (CONTD.): I quickly left the restaurant so I could find food somewhere else to eat before my flight left. I found a barbeque restaurant and this time I asked the right question.  “Are you open?”  

The lady behind the counter smiled and said, “Yes we are.”  I looked at the menu, spotted a chicken salad, and placed my order.

As I reached back for my wallet she interrupted me and said, “Sorry, we don’t have salads now. You can only get what we have here in the display.” I looked in dismay at the display. After some conversation with the employee I discovered that the restaurant stopped making food at 6:00 PM, an hour before closing.  In the last hour they try to sell out everything they have made.

My reaction:  Is there some unwritten rule I missed?  Am I doing something wrong?

MY SEARCH FOR FOOD (CONTD.): In sheer frustration I walked to my gate. It was nearly 7:00 PM, there was no chance for any food in my life that day.  As I passed Taco Bell, I decided to go and give it a try. The lady behind the counter was full of energy when I hesitantly asked if I could have a chicken salad, she smiled and nodded.  I was amazed as she took me through the ingredients and made sure I only had what I wanted in the salad. Then I asked her if I could add some extra chicken. She said of course, but it would add $1.25 to the order and asked if that was alright.  I gladly paid, and was very happy to receive my Taco Bell salad as I dashed to my gate. Third time’s a charm.

My reactions:  Wow that was unexpected.  I feel bad that I walked passed Taco Bell the first time! Will I get this treatment at every Taco Bell, every time?  Now that would be cool. I know exactly what I will pick up next time I am at the DFW airport.

When a store says that they close at 7:00 PM, shouldn’t that be the last minute they are ready to serve their customers with a complete guest experience? Are they not telling a customer that if you can make it by 7:00 PM, we will make it worth the trip?  Or does that mean that employees will leave at 7:00 PM and need to do all the store closing before that, effectively closing the store 30 to 45 minutes early?  The same way when we send a coupon out to a customer stating that it expires on June 30th, we do not decide randomly to stop taking it a week early so we can report accurately in the half yearly statement.  So why do we do this with store hours?

Closing early may be a great way to manage labor cost and reduce food waste and in a captive environment like an airport.  Hence the restaurant sales at the airport locations most probably will not be impacted by these practices, in fact the store may be more profitable as a result of this. But after this kind of “compromised guest experience” will the customer visit the brand outside the airport ever again? Was it worth losing all of a customer’s future business just to save 30 minutes of labor?  I think not.

MY SEARCH FOR FOOD (CONTD.): The story does not simply end here.  Still to come is my United Airlines flight from Dallas to Denver with my Taco Bell salad. You will be pleasantly surprised to learn how in an industry marked by cutting costs, one team member decided to stand up and provide a wow customer experience.

{The New Apple iPhone and Brand Insistence}

My daughter, my niece, and I woke up at 5:30 in the morning to get to Cherry Creek Mall on June 24th because the new iPhone came out.  Of course as a dad I did not want to miss the opportunity to get the first iPhone on the first day just to make my daughter smile.

We got to the mall at 6:15 and to my utter surprise, we were sitting in a line behind at least 100 people.  There were other dads and moms with kids, business professionals ready to go to office, young couples, people with colorful hair, and people from all walks of life standing or sitting in line. The Apple team was out walking around with bottled water, coffee, and breakfast from Einstein Bros Bagels. As I looked around I saw a few things in common among all of us. All of us either had an iPhone or an iPod in hand and some of us were sitting with Macs or iPads on our lap, but there was no one with a PC around. I am starting to understand that it was the coming out of the cult of iPhone followers. All of us could have waited for two weeks to get the new iPhone without any line or wait, but somehow all of us felt it was important to come out and show our support for the favorite “working toy” in our life.  Now that I get it, I am surprised that there was no one with their face painted; no banners or cheering.  I guess we, the iPhone gang, are a group of somewhat quiet introverts who were just happy to be there.

The store opened a few minutes before 7a.m. and iPhone sales started at 9a.m.  Even if I couldn't have gotten my iPhone that morning, I was glad I was there, out with my daughter and my niece, out with other members of the iPhone gang. I get it. This is what brand insistence is.  We were not there for a phone, we were not there for an upgrade, we were there to celebrate a way of life around our Macs, our iPods, our iPhones, and our iPads that we all discovered in our own ways. Marketing gurus may call it a brand insistence but to me it is truly a way of life.

{How a Lose-Win Strategy Can Help You Win Customers}

In the classical business model, we all say we want a win-win relationship. But is there such thing as a true win-win relationship? Isn’t there always an ending where one party feels that he/she could have gotten more?

But traditional marketers and operators as well finance team in organizations reject the concept of lose-win immediately.

Recently, when I was helping a few restaurant chains find the next big local store marketing idea, I suggested a series of micro-ideas. One of the micro ideas I proposed was:

A SIMPLE LOSE-WIN IDEA
Instead of approaching the high school athletic director and signing the school up for fund raising, why not target for individual students. Every high school student will arrive at the age when they are able to get their driver’s license. That means if we have two high schools in a trade-area, and each high school has a class of 150, then every year the restaurant has opportunity to “touch the lives of “ nearly 300 students in a very special way. So what was the recommended in store promotion? A student gets to eat for free with two friends on the week they get their first driver’s license.

WHY THE IDEA IS BRILLIANT (my personal opinion, of course)
This is a simple idea that needed no media dollars to promote. Successful implementation in the store is what one needs to spread this viral message.

Now why with friends? We all know that teens today move in herds, and there are hardly any occasions in which a teen goes and eats alone. Only giving the teen with a new driver’s license the free meal, and not their friends too, would fall in the win-win category and not lose-win, as the teen who eats free will be bringing business to the store as their accompanying friends have to pay. Teens will see through it and realize that this is another marketing gimmick, where, in other words, the store is promoting a much used buy one and get one free offer. That discovery completely takes away from the teen-connectivity to the offer.

Instead, an unconditional eat free with two friends offer is slightly bizarre in today's world, and the teens will be trying to figure out  the catch. There are no catches, and the no-catch part will make this deal an emotional connection for the brand.

So now that we have a teen with their two best friends enjoying a free meal at the store, the experience will be etched in the memory of the teen forever as “one of the cherished firsts in my life.” And in that cherished first memory, the brand gets planted in a unique favorable positioning.

REACTIONS

MARKETING GUY: How can I do this without capturing the information from teens? The promotion fails as students will come and take advantage of the offer. Effectively we will be feeding every school in the high school three times.
Marperations Response: Teens today build relationship on their very own terms. Instead of looking at the lost opportunity to collect teen information, this promotion is capturing a lifetime moment in the teen’s mind. The teen will think, “the day I got my first driver’s license, I ate free with my two best friends at restaurant xxx.” Isn’t that priceless?

OPERATIONS GUY: Can we do it at off-peak times only? I do not want more stress of ‘comping’ (meaning free food) during times when operations is stressed. Can't we do the new driver eats free IF a friend pays full price? And, what if 40 teens come the same week? That will really hurt that week’s sales.
Marperations Response: A celebration cannot have limitations. Offering this only at off-peak is very transparent, and teens will see that they are offered the special when the restaurant has surplus food. And the idea of friends paying full price is another way of doing BOGO (buy one get one free) offer and that is already there. That cannot be the gift for a special moment. And now about the unlikely event of 40 teens getting their license the same time, isn’t that a jackpot for the brand? The synergy of the positive energy will be more than individual teens coming on different days.

FINANCE GUY: This would result in a $15 loss or write-off per occasion. On an average we would feed every student in the high school nearly twice a year and that makes it nearly a $6000 loss. What is the ROI of the $6000 spending on LSM?
Marperations Response: Yes, ROI can be calculated very easily. All one needs to do is to calculate the lifetime $ that the teen will spend at different similar restaurants and then estimate how much this “special moment” will make the teen choose the restaurant. If this makes the teen spend $20 for just one month at the restaurant and assuming there were 200 students in the high school, every year this has the potential to generate $4000. And of course that is for one year. Hence the lifetime ROI of this well over break-even.

{Happy Team Members Make Happy Customers }

In one of my early projects in the corporate world, I built a team member satisfaction measuring tool for the company I was working for. As I built the questionnaire, I covered all areas from hiring to training, from on the job satisfaction to the role of the supervisor and compensation.  

Once the data was collected and broken down by region, I tried to correlate it to sales for each region but to my amazement, there was very low correlation. That seemed quite strange. Certain Senior Management members started questioning the need for the survey as it was not connected to the top-line key performance indicators of the brand. The reports generated on the project made their rounds among different regional VPs and then got put in their designated folders. I was quite bummed for not being able to provide the company with actionable data, or making the company feel that they can act based on the data.

Six months later, when I was between projects, I decided to run the correlations again. But this time I used current sales and compared it to team member satisfaction data collected six months back.  The results were simply astounding. The relationship was strong. Then I enhanced the model by putting monthly sales changes for the last six months and soon realized that the team member satisfaction data was a crystal ball, as it was the leading indicator of future sales.

I could not believe I missed this one. This was right in front of my eyes and I failed to see it. I remember growing up in India; my mother was a great cook. But on days she was upset, the food was not the same.  Of course my brother and I never complained, not because we did not want to complain, but complaints got us a few smacks on the head. In short, my mom, a great cook, could not cook to her full potential on days she was unhappy. So in order to get a great meal, our job was to make sure mom was happy, at least when she cooked.

That same lesson now was in front of me, on a bigger scale. I realized that only happy team members can make customers happy. Empowered by the new information, the team member satisfaction data found a new life in the corporation. As most of you can imagine, in the corporate world we judge today on yesterday’s sales, a trailing indicator. In that scenario, to be able to provide a system-wide and regional level leading indicator for sales is very valuable.

At the same I came across another piece of information. In most experience industries, nearly 70% of the reason for revisit (repeat sales) was the customer’s experience. The remaining 30% was marketing, branding, message and other factors.  And who controls the customer’s experience? The front line team members. Wow!  I realized we had information that would allow us to favorably influence the guest experience.

The next few months, I traveled to present the data to each region and would also do focus groups with team members to understand the drivers of the data.  Here are my top three big learnings:

1.   It is better not to ask what is wrong, than to ask and not do anything about it. 

Asking sets an expectation, and not doing anything creates an unfulfilled promise.  It is just like a relationship where earlier your spouse accused you of not asking him/her of how the day was.  Now that you asked and he/she is talking, you are accused of not listening (and not caring) as you were doing something else at the time.

Solution:  Within three months of collecting team member satisfaction data, all team members should receive the following:

a)      Top-line summary data so they feel included

b)      List of actions that will be taken

2.   Compensation is not the number #1 driver of satisfaction.

Of course fair compensation is necessary, and fair is defined by:

a)      comparable industry salaries

b)      salaries within the company

c)       incentives that reward performance

But what was more important on a day to day level was work place situations and interactions.

3.   Finally, team members worked for a person, not a company.

The data always has a strong correlation with how a supervisor treats a team member.  Hence when a team member decides to leave a company driven by dissatisfaction, the primary source of dissatisfaction is “how my boss treats me on a day to day basis.”

{Toy Story 2009: Where will America buy toys this holiday season?}

Let us take a stroll back in time to see how America has bought toys during the holidays in years past.

In the 1990s, Toy R Us was the category leader. The holiday toy sales started the weekend of Thanksgiving, with Toys R Us newspaper insert, in which America learned about the coolest toys of the year. Also in the newspaper insert was coupons for the hottest priced toys of the season. America used to wait in anticipation for the insert and then rush to Toys R Us. Toys for holidays was synonymous with Toys R Us. They were the information leader, the price leader and the “place to go” for toys.

In 1998 the toy industry had its first major shakeup. Internet was becoming more mainstream and America did not need Toys R Us to know what were the coolest toys of the year. Americans also did not need to wait till Thanksgiving to learn about the coolest toys of the year. And WalMart did the unthinkable.

WalMart realized that if toys can become a commodity, then the price leader will be the category leader. WalMart also realized the 80-20 rule, where 80% of the sales comes from 20% of the toys. In 1998, WalMart decided to extend its toy selection to carry top selling toys and discounted them right after Halloween, nearly four weeks before Toys R Us started their thanksgiving promotion. And when Thanksgiving 1998 came, a sizable part of the population had already purchased their toys. Toys R Us was ambushed.

At the same time, in order to grow the category, Toys R Us had launched Kids R Us and Babies R Us. Kids R Us eventually went out of business. Babies R Us still exists. But instead of trying to create three brands, Toys R Us should have focused on answering the question “Why Toys R Us?”

- Do you get toys that are exclusive to Toys R Us?

- Do you get toys released at Toys R Us before they are available anywhere else?

- Is the toy buying experience totally out of the world that kid must go there and no where else?

If it is none of the above, then a toy is a toy and buyers had no hesitation to go to the closest and cheapest retailer of toys. And WalMart had everything to gain as buyers went this direction. Another gainer from this has been the online retailers. For toy occasions that do not need an instant gratification, they started to become the best option.

In 2008, the toy war has gone to the next level. WalMart Announced in October its 100 Toys For Just $10 sales. Based on WalMart’s internal research, “70 percent of consumers report planning to start their holiday toy shopping before Halloween, and 2 out of 10 will have finished by that time,” (WalMartStores.com)  Toys R Us responded by “setting up 350 temporary stores and toy boutiques that will stay open during the holiday season, in many cases taking over shuttered retail space in shopping malls” (Wall Street Journal).  But what does this strategy mean? Is Toys R Us conceding the price war to the buying power of WalMart? Is Toys R Us trying to outplay WalMart by being the most conveniently located toy retailer? Even Toys R Us succeeds in becoming the most conveniently located toy retailer, they have to watch their marginal returns, taking into account the costs for the new 350 temporary locations. They also have to worry about branding. Will these new temporary locations be branded the same way as their regular stores or look like nameless pre-halloween retailers who pop up every year. If Toys R Us takes their eye of the branding, five to ten years from now, we will be telling our next generation about the magical toys store, with a cute giraffe as their icon, a magic land that simply became extinct.

{Brent Green on Boomers and the Future of Luxury Brands}

While having coffee with one of my colleagues one afternoon, I asked for his views of the future of luxury brands and Baby Boomers. “Luxury brands are dead,” he said, pointedly.

I was taken aback by this cryptic pronouncement. Probing further I asked him to reconsider such a pessimistic position. Entire companies and industries depend on middle- and upper-middle class Baby Boomers pursuing occasional luxury splurges, whether diamond earrings or day-spa packages at a Mobil Five-Star hotel.
He nevertheless remained resolute. An unprecedented economic recession had swept a pall of fear and frugality across the nation, and for this generation, it was here to stay.

In an Adweek article entitled, “Boomers Caught in Squeeze Play,” which assessed Boomer consumerism in difficult economic times, the future does indeed appear bleaker. Eric Almquist, a Bain & Co. partner, observed that a very large group of pre-retirement Boomers are entering a life stage of traditional economic parsimony.

The current Boomer mindset revolves around a nearly universal question: “Can I live off my savings and social security for the rest of my life?” This gnawing question leads to greater risk aversion, obsessive price shopping, and an urge to preserve equilibrium in the current life situation.

Ben Kline with the Leo Burnett agency in Chicago believes that consumers were not just cutting back on spending; they’re reassessing what is important.

Also commenting for Adweek, Kline said, “We’re seeing shift from a trade-up culture to a trade-off culture.” Kline believes that Boomers view discretionary purchases from a newly emerging framework. They are seeking more than value, where a product’s bundle of tangible and intangible attributes reach an optimum balance with price.

According to Kline, consumers are undertaking something akin to brand triage, where they assess discretionary purchases as either indispensable or dispensable, based on more deeply held core values.
David Wolfe, co-author of Ageless Marketing and Firms of Endearment, insists this behavior is being driven by more than distressed economic times. In an email to me and a few colleagues, David wrote:
“The spirit of materialism wells up in youthhood to incline behavior toward outwardly visible messages to others. It takes different forms in different cultures, from body markings and piercings to outlandish clothing and other eye-popping possessions acquired with the intention of increasing one's influence, power and wealth.”

Wolfe insists that thriftiness in middle-age is not just a byproduct of lifestage; rather, middle-aged adults seek new priorities, driven at the root by fundamentals of human development.

“For most, the onset of midlife is accompanied by an ebbing of narcissism and materialistic appetites because the social and vocational aspirations have typically become trimmed. Now, people begin talking about ‘simplifying’ their lives and putting their lives in balance. All in all these shifts are less rooted in volition than in our genes which anticipate the milestones of personality development. The zeitgeist (reflects) a shift away from narcissistic and materialistic values.”

There you have it. Today’s luxury industries are confronting convergence of two forceful trends: Boomers entering a lifestage when traditional materialistic values become less important, plus a recessionary economy that for many has decimated idealism around retirement.

So I return to the question I asked my colleague, “What is the future for luxury products?”

I believe well-run companies producing products of true quality and uniqueness will not confront inevitable dissolution. Badly run companies will tumble in an unforgiving economy. However, the rules for marketing luxury products must change, and those failing to adapt branding and advertising strategies will suffer grave consequences.

In a recent interview with Women’s Wear Daily concerning the future of discounting, I provided reporter Valerie Seckler with a hopeful analogy using my recent purchase of a luxury white button-down dress shirt at Nordstrom’s.

First, I shopped for a white shirt, as opposed to some other color or stripe, because a difficult economic climate has been influencing men to return to white shirts as an outward statement of prudence and pure business focus. This trend was recently covered by CBS newsmagazine, 60 Minutes.

Second, I knew I could walk across the mall to Macy’s and find white dress shirts on sale for more than half the price of the Nordstrom’s product. But I justified paying double, not because I’m feeling flush but because I know their products and legendary reputation for customer focus.

Third, from experience I know the Nordstrom’s brand shirt will look new and unwrinkled even after 50 washings. When I unpack in a hotel room, the shirt will barely need touch-up with an iron before wearing, and as I wear it all day, it will maintain a crisp appearance. Should the shirt ever show a defect, such as a splitting seam, Nordstrom’s will replace it without hesitation.

This is the future of luxury brands: not just value but core values; not just low prices but product longevity; and not just surface bling but deep customer connection.

Accordingly, here are a few strategies my firm has been recommending to purveyors of luxury products:

Build communities around your products. The legendary Harley-Davidson has always commanded higher prices than foreign motorcycles partly because of HOG (Harley Owners Group), a network providing powerful referential reinforcement.

Differentiate with values that address emerging Boomer needs to seek higher purpose in lifestyle choices. A watch is more than a watch when acquired as a future heirloom for a grandchild. This understanding has been among implied underpinnings in marketing of luxury watches for Swiss manufacturers such as Breitling.

Make an unassailable quality and durability case. Most Boomers have been burned many times by shoddy products that seemed like a good deal but then break shortly after purchase. Boomers generally believe the adage: You get what you pay for.

Consider tiered pricing. Just as airlines such as Frontier are unveiling tiered ticket prices in coach class, luxury class products can be offered to consumers as good, better and best (not cheap, cheaper, cheapest), without compromising upscale brand stature or differentiation.

Strategic Implications: These are but a few of the strategies my company has been helping clients implement. Many opportunities exist to convert luxury into longevity and superb into sustainability — core values Boomers seek today with their discretionary dollars. And don’t be misled. Boomers still have billions of discretionary dollars to spend yearly, even following one of the deepest recessions since the Great Depression. By far they have greater economic clout than any other generational cohort, so to eschew this market would be economic suicide.