Tag Archives: Stevenlitt

Loyalty Programs vs Tech Ecosystems

Two topics covered lately that have caught passion of savvy Seneca students: 1. Ecosystems; and 2. Loyalty Programs.

How many Ecosystem partners does a typical consumer need?

Just ONE! imo it’s critical for Ecosystem players to be present in ALL ‘related’ categories of use, or risk being abandoned for a truly full-service tech partner.

Amazon, fb, Google & Apple all ‘play in’ several of these: file storage & sharing, photo storage & sharing, social media sharing, home security & home device monitoring, interactive voice recognition queries & trivia, home audio speakers, mobile shopping, customer reviews, personal banking, mobile payments, chat apps, mobile phone, film viewing, amateur video production & sharing, facilitating communities for ‘sharing’ resources, skills & time, etc, etc, etc…

Also catching students’ interest: Macro (multi-channel) loyalty programs: eg Aeroplan, AirMiles, PC Optimum. Loyalty players, in contrast to Ecosystem players, need not be present in every category, but typically tether to 2 anchors:

  • a partner providing ‘dreamer you’  an aspirational, indulgent big incentive (a vacation); and
  • a low value (frequent-use) anchor motivating ‘rational you’ to keep that loyalty tag/card on hand day to day.

Case in Point: Aeroplan lost both its Dreamer anchor – Air Canada- and its Rational anchor- Esso- but quickly regrouped, securing an Amazon partnership to fill both roles! (ie use Amazon for daily shopping, or buy yourself a holiday!).

However, the ‘anchor principles’ of critical relevance, don’t constitute the full list of success criteria for Ecosystem players, or for Loyalty programs.

What made this more evident lately? Evidence of their need to AVOID something- Leaks. And evidence they need to SHOW something- Respect.

iCloud leaks, fb leaks, Equifax leaks, etc make some consumers leery of ever joining a loyalty program. And undoubtedly cause others, to drop out.

Loblaws’ ‘transitioning’ of  trusting SDM Optimum & PC Plus loyalty members to a newly consolidated [ ahem- more efficient(!)] program has been awkward for the very customers they should respect & value.  A few years ago, AirMiles not only accelerated point expiry; they also imposed a needlessly complex, restrictive new 2-tier- award redemption structure. The 407 de-certifies members who spend ‘merely’ $3,000/year on their service via a rude letter (“You no longer qualify….”).  I received such a letter; its inept wording prompted a few laughs (a ‘Hall Of  Shame’ candidate, says a nearby CRM expert).

Loblaws, AirMiles and the 407 violate a basic principle of Loyalty programs: treat longstanding customers with some respect.

If you soon encounter press releases or Investor explanations about how tough the Loyalty industry has it, or how consumers are being more difficult, etc, feel free to join me in a laugh or two at their deserved expense.

Of course I could be wrong.

I’d welcome any comments!

Steven

 

Years of work enroute to ‘Overnight success’

This is good! http://business.financialpost.com/news/retail-marketing/luvabella-is-this-the-hottest-toy-of-2018

A fine article & video illustrate how Spinmaster Toys puts itself in a position to be ‘lucky’.

Years of work, and many iterations, to create the next ‘overnight sensation’. (Hmmm – that sure is poetic, or perhaps just pathetic).

This also gives tons of practical insight into the New Product Development process, eg the  iterations of development, costing & cost-optimizing at stage 1,and stage 2 and stage 3 etc; their inspired choices for R&D input for a doll (Mimes! Puppeteers!); and even their thoughts on estimating market size & growth (MRK200 students should def observe 6:00 to 6:33).

Enjoy, baby!  

Steven

 

Practical Progress: converting Eco Intent vs Action

If you view my upcoming videos or have had me as Instructor in Applied Marketing Research, you will know I warn ppl against putting too much faith in respondent survey data on topics that I refer to as Survey Sirens. One of those is ‘eco-intent’.

First- TRIVIA TEST! In what year did  a nationwide USA CPG brand first launch a national eco-responsible line extension? Was it2005? 1999? 1995?

Would you believe… 1990? John Cook, Mitch Gumma, John DePaolis, Marie Blomquist, Mike Ziemke- and  I- were on Kimberly-Clark’s brand team, with tons of logistics help to coordinate 5 manufacturing facilities to source, qualify, test, contract, QA verify and –  eventually – launch Hi-DriTM Recycled Paper Towels. It was an awesome adventure, and an awesome succcess. Consumers actually paid slightly MORE PER ROLL to do the right thing.

Until 1996.

Oh yes, the recession. When it hit, the same consumers would still claim to want to do the right thing- but they looked after the household first- and pennies were pennies! Hi-Dri Recycled retreated as mightily as it began.

The Moral: Don’t always believe Consumer Intent scores about eco-solutions. Intending is not the same as Acting. Intent does not always lead to Acting. Survey respondents may answer optimistically; it validates a more pleasing self-image. And the time gaps & psychological gaps between filling out an at-home survey, and when they see the options in store at shelf – can be vast! Lots of time for cognitive dissonance- ie to escape your own self-commitment!

So it’s delightful to see savvy USA Retailers tighten that time gap & psychologcal leeway. Ahold’s Giant and Stop & Shop banners have installed powerful ‘eco-ranking’ Point-Of-Sale signage- No, sorry, even better, not ‘point of sale’, but ‘place of decision’- ie at the store shelf! Putting those eco-flags in your face, leaves you less room to wiggle out of your own commitment.

 http://www.supermarketnews.com/sustainability/turning-ethical-shoppers-buyers

Ahold- you have earned my endless respect- and let me time travel a bit back to 1990 Wisconsin, to boot! Thanks!

Steven

Knockoff vs Homage

When is a copycat product ‘inspired’ by your proprietary design and trademarks a threat ? When is it a…. partnership opportunity????

Usually the news that your brand is being copied signals the entry of another ‘low-life copycat ripoff’.

Adidas’ actions show there’s room for distinction between types of copycats. imo that makes sense; low-cost options undercut the consumer & constitute a BIG VOLUME threat that must be met with hard, fast litigation.

But an upscale ‘homage’ to your brand ? Not much of a volume threat certainly, and, in fact, kind of a respectful nod. Enjoy this soulful story.

SL

Why is Adidas partnering with a knockoff brand?

Ways to Grow

You can’t beat H&M or Zara at calling the trends right & getting right items to market FAST! That’s ‘Fast Fashion’: on-trend ‘durable enough’ apparel, made with ‘adequate’ construction quality. You wear it a few months, then it’s out of style AND worn out. Defacto Disposable clothing.  A trend that’s taking a toll on other fashion retailers:

https://www.thestar.com/business/2017/07/11/abercrombies-failed-deal-sign-of-retail-industry-woes.html

What’s a fashion retailer to do to compete? Well, for one thing, not everyone wants Fast Fashion. And not everyone wants ‘adequate’ durability. There are segments of consumers who are less interested in being ‘leading edge’. There are others who prefer SOME items to be ‘trending’, but others to be more lasting. eg buy a few casual seasonal clothing items in latest styles, textures & colours- but buy WorkWear that will look better, longer.

Some of you will read about A&F and wonder if they can cut staffing, cut promotion spending, possibly reduce their footprint, etc. Cost cutting is an option- one that keeps the ‘chainsaw’ firms & ‘transition Exec’s quite flush.

imo cost cutting is rarely adequate over the long term. Growth is.

the firm I’m with  http://www.spitfireglobal.com  prefers growth over cutting & hacking. Retail brands might do worse than consider their situation, resources & risk tolerance (‘fit factors’) for some ‘classic’ paths to growth via NewUsers &/or NewUses?

1. sell online.

2. umbrella several generation-specific sub-brands eg A&F for GenX; Hollister for GenY.

3. Product expansion (American Eagle into undergarments; Starbucks serving alcoholic beverages in prime ‘night life’ locations);

4. Control Label &/or Brand Exclusives (Caution: this approach is contractually tough & raises Competition Act (legal) risks!);

5. Sign an on-trend Spokesperson (Burberry w Emma Watson);

6. all-out chain-wide repositioning (new targets for J Crew, Old Spice, Harley Davidson and, more recently, McDonald’s and Axe);

7. ‘Place’/ Geographic Expansion (Buick to China, Caplansky’s Deli to food trucks, Lego & Fashion brands to Flash retail).

8 Offer Services -eg Petsmart makes good money and generates more store visits (& loyalty?) by offering pet grooming & boarding (although Sears’ expansion into Home Reno Services ages ago was poorly overseen & less than a stellar success)

9. Rethink the Business Model- retailers who followed the ‘paradigm’ to own costly real estate are reassessing. eg Banks & Department stores are leveraging REIT’s and/or (aghast!) selling off ‘essential’ downtown corners. WestElm & other upscale Retail brands are plying their brand in the CONDO market.

imo the ‘secret sauce’ is savvy objective Situation Assessment that lets a consultant recommend the right option or the right blend of these. eg Lululemon expanded its product line to Women’s ‘day-wear’ items for use outside yoga studios- it worked. They also started to target Men’s apparel- imo the verdict remains out on that.

Can A&F be saved? Despite their past unfortunate management comments & weak PR efforts? The competition is tough. Very tough. Segment leaders Zara and H&M are adept @ acquiring right items @ right time @ right cost ie predict the trends, then getting product to market fast!

One path to growth I’d NOT recommend, is to try to mimic that strategy and hit’em head on. A&F needs to be smarter than that.

SL

 

Manufacturer sees Space to grow in Green, evolves into a Consolidator!

GreenSpace Brands’ shares are soaring as the firm wins at a role in Canada that SpitfireGlobal long ago urged USA firms to take- ‘Consolidator’ of on-trend ideas.

https://www.bloomberg.com/news/articles/2017-07-07/quinoa-baby-mush-puts-canadian-company-in-takeover-spotlight

There’s nothing really revolutionary about the ‘Consolidator’ role- one could argue that P&G and Unlilever are more truly buyers (consolidators) of brands created by others, more so than inventors of new brands.

From 2004 to 2012,  SpitfireGlobal pushed companies to fill a gap & be a  ‘Consolidator’ in then-new all-natural products; eg sourcing & managing chemical-free & 100% natural ingredient items in Pet Products. Sadly, the companies we pushed thought it too high-risk. It’s nice to see one company has seized the gap (the stock market richly rewarded GreenSpace!)

What does a Consolidator do? At minimum, they …

1. ‘validate’ each supplier’s fit & legitimacy (sustainability, logistical capabilities, etc);

2. administer supplier actions to fit Key Account’s mission, vision, core values, priorities & logistics updates (allowable ship formats, new DC locations, new Vendor forms & certifications); and

3. provide efficient ‘single source’ shipping (eg full truckloads vs multiple part-loads or depot-drop nuisances).

What changes created the Consolidator opportunity? Two big changes:

(i) Retailers destaffed so heavily that many now lack staff on hand who know how to fill out their own New Product forms ( I kid you not!); consequently, they ‘outsourced’ duties to ‘Rep agencies’ who play a growing ‘defacto staff’ role that includes seeking new Vendors, qualifying them, managing category entry, promotion & merchandising activity (far beyond just Control Label decisions). That Rep agency role expansion happened in most categories!

(ii) Now add to this: the complication of traditional-thinking, risk averse Retailers trying to stay abreast of a fast-growing, fast changing, fragmented & risky field such as Natural products-and you have even more reason to hire a Consolidator to answer questions such as “Is this new one-off product line supplier capable of supplying us in full & on-time?”, “Are they aware what’s important to us?”, “Are they legitimately using all natural ingredients, processes?” The risk of selecting an unethical or inept supplier is huge! Because it’s the Retailer who takes the business hit &/or reputation hit, if a supplier fails to deliver, either figuratively or literally.

Are YOU ready to be a Consolidator? It’s not a role for a newbee or casual opportunist: you must know the market & respect the consumer’s preferences. That’s why GreenSpace won; they started as a Natural item supplier who understood Natural consumers’ preferences to be non-negotiable (unlike a baking soda firm that blew a foray into the Natural Products pet category after misreading Natural consumers preferences as ‘optional but not necessary’).

What will you do as a Consolidator? That varies according to how much the Retailer can handle in house & which duties can be done by other Reps/Partners. The firms we advised had to be ready to step up & handle duties as diverse as: document inspection, site inspection, process audits, assistance to ‘remedy or re-source’ any iffy or non-compliant ingredients, graphics upgrades, revised inner pack & outer packs counts & configurations, first-ever logistics models to allow consolidated shipping (many of the small firms had never needed to understand basic Big Retailer logistics -pallet height limits, truck fit calculations, Retailer logistics software, forecasting promotion load inventory, etc).

Yes- there is some hand-holding required!  There’s good reason Retailers hesitate to find & teach unsophisticated firms on Big League Basics.

Are you up to it? Consider: (a) Is the category in which you compete growing quickly (perhaps a bit chaotically?) eg SuperFoods, Craft Beer, Vintage/Hand-Crafted decor, All-Natural, Fair Trade, User Sourced… (b) Are Retailers slow to jump on the trend, due to staffing constraints &/or supplier risks? (c) Do you know that segment’s consumer needs?

If you answered Yes to (a), (b) and (c) -maybe you should think beyond your own business. You might fill a Greater Gap. Seize an opportunity outlined long ago by Spitfire Global, captured successfully by GreenSpace. Be a Consolidator!

SL

ecosystem hits the trifecta

paying a company to own my data

Opposed as I am to   -1 corporation to rule them all, 1 corporation to bind me –(apologies to the late Mr. Tolkien), somehow it seems I’m willing to sacrifice privacy for convenience. I’ve warned students & clients of Applied Research ‘Sirens‘ – a term I use for topics where Research respondents are more likely to lead us astray, intentionally or not.

One ‘Overstatement’ Siren is driven by guilt that drives us to overstate out intent to ‘be responsible’ -eg I may overstate my intent that in future I’ll (mos def!) safeguard my data & enforce my privacy rights.

That intent will, sadly, conflict with an opposing ‘Understatement’ Siren– the temptation of …. convenience! Why do you spend $1.69 for 1 pack of gum or 1 chocolate bar at a Food store checkout, if a pack of such items just 50 feet away in the candy aisle, is priced at 4 for $3? Convenience! Why pay $75 for someone to wash your windows if all it takes is 1 hour work and $2 of cleaning supplies? Convenience! Consumer are rarely honest in advance about how they will  succumb to the Siren of Convenience.

A couple days ago, I gave in – and let a Cupertino CA firm to hold sway over ever more of me. They had my hardware purchase (an iPhone), software purchase (i-everything). They have the perfect Trifecta– I now pay them to own my data!  And presumably, according to the contract, allow them to do with my data pretty much whatever they wish. It’s merely more convenient for me to leave 1 ecosystem in charge. The advantages of integration seemed, in the moment, to outweigh the drawbacks of lost control and privacy.

The Sirens are winning – again.

Steven

California (Dualistic) Dreaming….

Another California court ruling this week defends fb versus another eavesdropping lawsuit. https://www.dailydot.com/debug/facebook-privacy-lawsuit-dismissed/

Many of us see California at a dualistic forefront of tech jobs + privacy legislation. This won’t be the last time we see such an issue contested in court!

Important principles are at stake. I expect more deep-pocketed, highly resolved litigants will again challenge social media data gathering & data sharing practices. As someone who once worked where consumer data was gathered & sold, I think it’s fair to say that…. ethical & legal practice constraints are sometimes at odds with more practical, material temptations. So let’s all watch these battles with interest- and caution.

Steven

Hot Hotel market gets less roomy

On March 8, we discussed Restoration Hardware, West Elm & Williams-Sonoma getting into the hotel biz. Now you can add another name- J.C. Penney.

http://www.chainstoreage.com/article/jc-penney-checks-its-newest-business–hospitality

To be fair, they’re not actually opening actual hotels- just trying to supply them. I doubt that Penney’s wares will compete at places that would have bought decor from Restoration Hardware, West Elm or William-Sonoma. But it is a sign that hospitality – be it the part-time cowboy unregulated tax-dodging sector (airbnb) or the full-time, regulated brands – is a hot sector. Perhaps more competitive than ever – and more fragmented- but hot.

This older article from Skift remains imo a terrific little context-setter on that growth:

5 Charts That Show Why the Travel Industry Is the World’s Fastest Growing Sector

People now travel more. They’re savvy about value, location, decor.  And that travel cements new trade relationships & friendships across borders & cultures. imo the more we travel, the more we learn about the world, and the more we lessen our multicultural ignorance as a species.

So let’s be hospitable. And grow together.

SL

 

Loyalty and Data – decisions galore!

As one of the oddballs who worked in both the ‘product’ and ‘service’ sectors on both sides of the USA-Canada border, I’ve seen many loyalty programs arrive, and others go bust. Researching what consumers want from their loyalty programs may seem easy (compelling savings rate, relevant incentives to redeem, VIP treatment, respect, easy visible point status, instantly redeemable, few ‘conditions’ or delays to redeem, etc).

Believe it or not- loyalty program design is actually fun! What’s not ‘fun’? Running one! ie if you think running a loyalty program is easy, think again!

These are LOYALTY programs- every move you make is visible to your most valuable players (MVP’s); a misstep is costly- a lesson that some Loyalty ‘experts’ seem reluctant to accept (Air Miles?). In fact, running a loyalty program is so daunting that Canada’s largest grocer, Loblaws resisted implementing one (decades after Metro, Sobeys and Safeway all had one), until their I.T. system had been upgraded and they had access to lessons learned on recently acquired (and admirably run) SDM Optimum program. Better to not launch at all, than launch badly and ruin the brand’s  relationship with MVP’s. Props for the patience and maturity to take that path on that timeline!

And now Nordstrom’s is launching a Visa-based loyalty card.

Nordstrom launches Canadian credit card with loyalty rewards

Why not start their own loyalty program, on their own? Because that would be costly in terms of resource and risk, especially…

  1. Infrastructure complexity & costs
  2. Data security responsibilities/ liability

Well, okay, so now it seems obvious that every firm should just partner up with AirMiles, or Visa or Mastercard or Amex, right? Right?

Well now consider what the downsides of a ‘private label’ loyalty arrangement might be:

  1. you don’t own the data – for modeling, or other analysis (you’re always requesting the data)
  2. you probably won’t get ‘full picture’ data (how they shop/behave across categories, payment methods, channels)
  3. you don’t control ways to access consumers

That’s a sobering list of drawbacks to going the Private Label route, as Nordstrom’s seems to have done.

Can’t really have it all, can you? But then again, decades of experience with loyalty programs teaches us that ‘easy’ doesn’t describe loyalty management, nor the decisions that accompany loyalty management programs. Tread with care!

-and a Financial Post  follow up on Loyalty Cards just a day later:

Canadians just can’t seem to quit loyalty cards, despite all of the data breaches and PR headaches

Steven Litt