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How Social Media is destroying brand loyalty

cheating

Last week, I wrote about my trysts with Scotty’s diner. I had been there a couple of times, and rather enjoyed the food and the conversations with the staff. On my walk to Scotty’s I noticed another place called Bloom’s Cafe. Wondering, what it was like, I went on-line to read about it. And there were some pretty good reviews of the place. So the next morning, I went to Bloom’s.

There was nothing wrong with my experience at Scotty’s. I was quite happy there, but the temptation to try out an option was too hard to resist, buffeted as it was with great reviews. Quite frankly, there was nothing Scotty’s could have done differently to prevent me from trying out Bloom’s.

And that is the risk that brands are facing with the advent of social media.

Used to be that there was a category of goods called ‘impulse purchase’ that were always susceptible to consumer moods. Typically candy/snacks and the type, where the risk was low and the financial downside was minimal.

Higher involvement categories were pretty much inured against this. These were considered purchases and the sales outlet, the salesman and word of mouth  of friends mattered a lot.

Till the mid 1990s ones awareness was limited to what we read in the media and heard from friends. With the advent of the internet the choices before us exploded. Brands we had dreamt of, or never heard of were all available at the click of a button. But how do you decide on what you were willing to spend your hard earned money.

Enter the concept of reviews. First on amazon, now showing everywhere. From a pair of socks to apartments there is no shortage of opinions being expressed that is changing consumer decisions everyday.

Emirates or Etihad

Hyatt or a Westin

Mobilio or Ertiga

Sobha or Prestige

And so on..

What we are seeing is that with social media, words of strangers carry as much weight as that of friends.

Much as people are willing to try out new options, bad service from their own brands is instantly shared on-line as well.

It appears that the days of lifelong loyalty are long gone.

So what are brands to do?

I believe it is a combination of 3 elements.

Customer Satisfaction: Ensure that existing customers are happy and their issues/concerns are instantly resolved. Don’t give them an opportunity to complain publicly. If they do, ensure the problem is addressed publicly as well.

Consumer Advocacy: As reviews play an important part in prospect decision making, there is need to run a continual consumer advocacy program. Some companies incentivise consumers to post advisors on trip advisor, for example. Similar programs exist, or should be created, by other brands as well.

Consumer Acquisition: Acquisition has to be a continuous program as there will always be people who drop out, seduced by a good review somewhere else. Hence it is important that brands are always on the hunt for new prospects, who may well be loyalists of another brand.

In my opinion consumer decisions will be shaped by

Advertising + Media (editorial) + Social Media.

Brands will need to play in all these spaces and have distinct, integrated, strategies that work across all.

 

What If : Search in Retail

Brands that operate in the b2c space typically have 2 bricks and mortar retail strategies.

The first is the solus store. This is a store that they either own or franchise and only has their own products. This is typically treated as their flagship store. Most big brands have this channel. Be it Nike, Calvin Klein, Apple and even some FMCG products.

Usually this is where the entire range of products is available. Latest and greatest products are displayed here. This channel is not just for selling products but also plays a big role in brand perceptions. We all know about Apple and its manic focus on retail, and it’s impact on, both, the bottom line, as well as the brand.

Clearly having solus stores is not enough to reach out to the consumers. This channel only addresses those already predisposed to the brand. Additionally, this channel is expensive to set up and maintain, so has limited reach.

To overcome this, brands also adopt the ‘shop in shop’ approach. This typically takes the path of having their own section within a larger department store. Anyone who’s been into a store anywhere in the world would have seen this in operation. On a floor catering to, say, clothes multiple brands have their own corners where their merchandise is displayed. Again, key here is not just sales, but also brand impact.

From my experience this weekend, in addition to several over the years, this is a very inward out approach and is extremely customer unfriendly.

This is the problem.

Say you want to buy a T shirt. Say you have also decided that what you wanted was a full sleeve, white T shirt. This should make for a simple purchase process. But this is the problem. You arrive at the men’s clothing section and will find that clothes are distributed by brand. So each brand will probably have their own white full sleeved T shirt. If you don’t have a brand in mind, this makes shopping very unpleasant. You are forced to go to each section, examine their selection and compare it to what you’ve seen previously. Perhaps, there is a brand you prefer and you make a beeline to it, and find their white full sleeves are out of stock. etc.

Not a happy experience.

Now I take you across the line to the World Wide Web. Go to the world’s favorite store amazon.com and type in white full sleeve T shirt and it throws up an array of options. You can then sort by brand, material, price etc till you get just what you want.

What If this experience can be transplanted to the real world?

In most modern stores, inventory management, billing, warehouses etc are all connected with a strong billing/ERP system. Stores know exactly what is in stock.

So What If stores had Search enabled terminals where customers can key in what they are looking for. The terminal throws up same options as an on-line store would. Customers whittle down their choice and are told which brand, in which area of the store has the T shirt they are looking for. It makes shopping easier. And doesn’t interfere with any existing merchandising plans.

This also doesn’t affect customers who come in to browse. So impulse purchases will continue to occur.

In much the same way many book stores allow you to search for books and tell you if they are in stock and where they are. We still buy more books than we intend to.

Retailers can be creative with the Search options they put on the terminals. While it can have simple ‘store stock’ based searches they can also enable search by occasion (birthday suggestions), ‘what’s new’, ‘special offers’ etc to incentivise customers to explore more parts of the store.

What If the line between off and on-line shopping could be blurred, if not removed?

 

 

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The 50s

August 18, 2011 1 comment

In my younger days going out for a drink had just 1 ambience, quiet, delivered through many outlets.

There were stand alone bars, restaurants and bars in hotels. Typically the drink of choice was beer.

One went with friends and spent the evening chatting.

So be it The Library at The President or the Irani restaurant at Churchgate or Geoffreys at Marine Drive the focus was on catching up with friends.

Then something happened. Perhaps the tax structure changed or prices dropped or something else altogether. But bars discovered music systems.

Bigger the better. Louder the better.

That changed the vibe of a bar instantly. It now became a loud heaving sort of place.

Be it Indipop, or Pop, Rock or Acid Rock it was all at mind numbing decibels. And in case that was not enough they went and installed large TV screens too.

So you can watch Guns N Roses on TV and listen to Floyd on the audio. Or vice versa.

To make it interesting you could also listen to live music after, or before, a certain hour.

Seems all the bars picked up the same virus.

Literally overnight the bar changed from being a place to catch up, to a place to see and be seen.

Not that you can see much because another invention had made its way in to the place. Dimmers. Now lights were down to candle level lighting meaning you can’t read the menu, let alone see who was serving you. I think the staff wear black just to trick you too!!

And no matter where in the world you go to the formula is the same. Loud music, low lights and staff in black!

The ability to have a conversation over drinks has diminished unless you are willing to shout.

Last month this came home when a few of us went out for a drink to chat.

And I wondered if there wasn’t an opportunity for an elegant bar which played decent music that was in the background, modest lighting and brought back the art of the drink conversation.

Come in. Order your drink. Sit on these comfy sofas. And catch up with your friends.

I’d call it The 50s, coz it looks like it would be appreciated mostly by people who were hovering around that age.

Perhaps it’s another idea whose time has come!!

Will let you know after I bounce it off some friends over drinks..at home where I manage the music and the lighting!!

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Varied useful links 1

3 rules to succeed in China retail

Here’s a great post by someone who knows how to win in Retail.

Renee Hartman, is the founder of  eno named by Fast Company as one of the 10 most innovative companies in China for 2010.

Renee says that one of the keys in winning in China is ditribution. Given lack of an existing strong distribution network brands often have to create their own. This results in many own/single brand stores. Apparently brands like Nike and Li Ning have over 6000 own brand stores across China.

She points out 3 maxims for brands operating in China.

1.) Act like a retailer – whether you want to or not : Given low expertise it is important to get down and dirty and contribute and participate in every aspect of retailing. From store design to fixture units to merchandising layouts. Great for brands that are particular about managing the customer experience down to the last mile. A unique feature here seems to be the need for marketers to provide on going support on maintaining the store design and look and feel.

2.) Retailers are not long term investors – make money for them now :  This seems to make complete sense. They are running a business so they need to maximise returns. However, I imagine unlike more developed markets their goals are more short term, and like many big brands are focused on today’s sale to tomorrow’s margin. They know more about their environment and so are far more willing to participate in brand business conversations. Rich resource to tap into.

3.) Look pretty in Tier 1 cities, make money in Tier 2 and 3: Finally, it is about segmentation. Use Tier 1 markets where there is affluence and competition to raise the brand profile, through ‘fashion street’ retail. It’s going to cost more for not adequate immediate returns.  But use the size of the country to generate the volumes and thereby the revenues.

Renee goes on to say that while these maxims are meant for single brand operators , the essence is still relevant for categories that operate in multi brand outlets like electronics and health and beauty. In these categories the challenge is more around getting noticed amongst clutter .

So to win in China it is important to assume nothing and start with the basics of building your retail infrastructure ground up, recognise that retailers are great business men, not brand ambassadors and tier the approach to the type of city.

All good advice and in detail here.

Wonder how different this is in the other developing economies.

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A Retail Question

February 1, 2010 4 comments

Last week I was reading a book called ‘A Perfect Mess‘ by Abrahamson and Freedman. The book talks about the advantages of having some mess in life and says the benefits of order and cleanliness have been over dramatised. Interesting theory and I enjoyed some bits of it though I don’t subscribe to the theory. Not till I can find that note which is in this mess on my table!!

In the book the authors talk about this bookshop called New England Mobile Book Fair. Click here for pics of the store. Yes it is not the order of Borders (;-)). It has tons of books. Al fine. The bit that amazed me was that the books were ordered by publisher!! Not by author or category as normal. So if you want a book and don’t know the publisher, you log on to their catalogues in the store, find the publisher and off you go. That totally took me by surprise. I mean do you go into a store looking for books by a publisher? Or an author? Or reference under a subject?

Even more astounding is the fact that the store does more business than the Barnes and Nobles and Borders in its neighbourhood, combined.

So you can’t knock success. But it led me to wonder about how retailers stock their products.

I have often been to buy clothes and been most frustrated when the department store stocks its clothes by label. Trying to find a shirt, for example, would involve walking across many mini stores making comparisons practically impossible. I wonder, if it is only me, or is it a common phenomenon.

I understand that brands pay for the space and then put up their own store in store. This works well for the brand and the store in question. But as a customer would you prefer to have the products aligned by how you buy?

The whole point of having branded stores is that it is targeted at those who have already decided on their brand and are looking for something within that portfolio. But going into a department store suggests that one is shopping within the category and not reached at brand choice yet. But the way the products are stocked creates conflict with the buying process.

Am interested to know if Retailer evidence/research supports brand wise stocking.

I am prepared to be surprised, just like I was with the success story that is the New England Mobile Book Fair!!

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The last mile loss

November 16, 2009 1 comment

I have worked for all my career in communications.

Call it advertising, digital, direct marketing, crm whatever..It’s all been about building brand preference leading up to purchase.

Millions/billions of dollars are spent on this every year.

Typically one has to buy at the store.

In the case of FMCG brands this resulted in the Point of Sale battle and the Shelf Space battle.

Who could drown the store most with collaterals hanging in every visible spot.

And how much could one pay the shop keeper to ensure your brand was the one upfront and visible when a customer walked in to the store.

In electronics and white goods, there is the little nudge required from the store sales person. What she/he says would sway the purchase.

In Televisions they would/do adjust settings or light so that one TV seems to have a better picture than the other.

Sometimes, it could be a passing comment about after sales service.

I recall, in India, where the painter could decide what brand of paint should be used while painting a house by the simple comment, ‘The other house I painted used this brand, and in 3 months it started peeling’. Damning words indeed.

As shoppers we all have been there and been influenced to change our preference because of what we saw or heard in the store.

Or as it is sometimes referred to. The last mile.

Marketers now run ‘Mystery Shopper’ programs to check a customer’s experience and use the learnings to ensure the last mile is indeed the Golden Mile.

My experience yesterday with two well known IT companies demonstrated very simply why one is a Winner and the other, well..is not!

We’ve had a Macbook for close to 4 years. Recently the macbook’s been having battery problems. On calling the Apple store someone who answered the phone said that the notebook itself needed to be replaced. After 4 years the notebook there was a yearning to replace the notebook anyway, hence Apple’s recommendation sealed the deal.

I was planning to move to a Window’s notebook for reasons of weak support in India, where the notebook is often used, mobile phone software support and of course price. Also my view that if there is a battery problem, we should be able to change the battery, and not the entire notebook.

And so we went to look at buying a Windows Notebook.

First walked into a electronic superstore where we were greeted with an array of brands. About 50 pieces on display, with prices and no sales person to assist. Oh there were sales people, but they were busy chatting. After hanging about a few minutes we walked out to the Own Store of this Top PC brand.

A sales person came up and we gave our brief. He recommended a choice between 2 models. Then I asked the important Q ‘Can you tell me how to transfer data from the Mac to the PC?’. He was nearly offended. His response covered the points

* I have no idea

* I only know about PCs

* We cannot offer that support

* If you are asking about my personal experience, I don’t think it can be done

* Why don’t you ask the Apple store, next door

Sure enough, we left without buying the laptop.

But having decided to get one as it was needed, we went to the Apple store to just get a new macbook.

What a delightful experience.

Someone to attend as soon as we walked in.

We said we wanted to trade in our current macbook for a new one. They immediately suggested a value for it, which was of course ridiculously low.

And then I made the comment ‘Actually I wish I could change the battery’. And immediately the sales staff offered that we should just replace the battery, if the notebook was working well otherwise.

A battery was bought, replaced at no cost, and a quick 2 minute lesson on extending battery life was given. And we were out in 15 minutes.

At no point in time, did anyone in the store try to sell us a new notebook. We had come to buy one, so if they had made the comment ‘yes the battery will keep your machine going for a bit, but what you really need is the new..” we’d have probably fallen for it.

But no.

If the problem was just to do with the battery, then that is all we needed. And that is what we got.

And oh at the entrance of the store there is a poster that quite simply states “How to move from a PC to a Mac”.

The PC manufacturer brand who we went to first, outspends Apple by many multiples in this market. It created preference, hence we went to their outlet. But at the last mile we experienced a road block.

Wonder how many sales they lose in this manner. And what do you believe the typical solution is? More advertising of course. And when it doesn’t show results, there’ll be a new campaign, a new marketing manager and even a new agency

Apple on the other hand, spends far less on the advertising and ensures the last mile is smooth. They earn trust at every interaction and ensures the last mile goes beyond the cash counter to a loop that brings you back into the store.

That last mile can trip brands if they don’t watch out. Many a long distance race has been lost in the final few metres.

Communication strategies need to map the entire customer journey and ensure that there’s not just a seamlessness of brand experience, rather the customer is eased along to the next stage that gets her to the cash counter.

It would be a tragedy if a brand has done all the hard work to get the customer to the last mile only for someone else to whisk them away. Metrics to track them such as foot falls, interest identifiers, price quotations etc should be put in place to catch drop outs.

Make the last mile, the winning mile.

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