A History of Customer Loyalty
January 17, 2012BON MARCHE MARKETING STRATEGY 1992
January 18, 2012Survival Guide for the Marketer
in the Next Millennium
speech
CHANGE IS CONSTANT — THERE IS NO FINISH LINE.
I believe it was about 4 or 5 years ago that I saw a 60 second commercial of a runner running through the streets of a large city. As he passed buildings, statues, bridges, and abandoned warehouses, “Nike’s” name would be billboarded in a texture that suggested the creative had been done many years ago. I was waiting for a conclusion, and their now famous tag line “Just Do It,” but an interesting thing happened — the runner just kept running and a new tag line appeared “There Is No Finish Line.”
At first I was shocked. I thought they had done it again. The Wieden & Kennedy creative team had captured my gut reaction. Here I was in my early 40’s: looking at two kids to finish high school; put through college; I had just finished my divorce; and there was my inner-most feeling. There seems to be no finish line, only an ongoing litany of continued problems and issues to solve. I also was struck with the fact I was tired. The idea that goal setting, skill training, and education did not make life easy. They just seemed to create a high level of expectations that seemed even more difficult to accomplish / I had reached the point where I knew there was no finish line — and Nike had said it.
Well, the curious fact about that commercial is that it never ran again. I would love to know why they chose to stop the campaign, but I can only guess that it was too real and that the majority of the baby boomers hadn’t hit the wall yet. Quite possibly, Nike figured out that the message was too real and all of those runners might choose to stop running. All runners set goals for distance or time, and to have someone affirm that there is no finish line could send you into depression. Then you wouldn’t need the shoes.
So you might ask why I open a speech about Survival Guide for the Marketer in the Next Millennium with a story about mid-life realism? I will leave the answer to that question to your own thoughts and hope as we think about marketing and the future, you will shape your own individual answers.
In August of 1993, I wrote two major documents that, at the time, I felt were state of the art thoughts about:
1. How to Market a Department Store, and
2. A survival Guide for a Marketer in the 90s.
Well, two years later, with the delivery of this speech, both strategies have been re-written. In two short years, things have changed so fast those fundamental strategies needed to be adjusted to reflect the change. The department store business continues to change at a greater pace with retail competition growing every week and consumer habits and expectations jumping from traditional values to what I believe are major radical changes.
I was with the Seattle Chamber of Commerce a few weeks ago for a visit to the Silicon Valley to study how San Jose looks at high tech businesses. At one of the presentations, a venture capitalist stated that every 2 years, the New York Stock Exchange trades the quantity of its entire stock portfolio, which is down from 7 years just 5 years ago. Theoretically, that means that all companies on the NYSE have new owners every two years. I found that idea to have incredible ramifications for the pace of change and structures by which business thinks and works.
I am also intrigued by how close I feel we are to the much discussed Informational Society. As that time between the ?? Agrarian?? Society to the Production Society, things changed so much people had trouble adjusting. I believe we are now right in the middle of the shift from the Production Society to that of the Informational Society, and surviving in this no-mans-land can be both rewarding and distressing. As had been said, these are the “best of times and the worst of times.” Change is rapidly redefining our world and what you have learned may be the very reason you may not succeed.
For the next 15 minutes, I am going to discuss what I believe are the four key factors that marketing business / leaders — people who plan to be successful in the future — need to think about. After that, I will offer some personal beliefs of what you can do to affect or help control the outcome of your journey. I don’t know if it will answer the question about the finish line, but it may help.
Any of you that have heard me speak before and talk about marketing, you might remember that to me, marketing is a holistic approach to doing business. That every business, no matter what, has to deal with five basic factors to create an entity to create wealth. It’s location. It’s product. It’s customer service. It’s visual approach. And, it’s advertising. Encompass those factors that the management must integrate into a comprehensive market approach that needs to be focused and edited into consistent and comprehensive message that acts in harmony to attract customers and, in turn, pay for the expenses this market entity creates. The factors that create success in the past may be some of the very factors that will destroy it in the future. The opposites may attract — the yin and yang — will be a reoccurring theme throughout this conversation.
The Product:
I remember when I was a kid, and we were thirsty, we had a choice: Pepsi, Coke, or 7-Up. If you wanted ice tea, we bought some instant mix or boiled some water and put tea bags in the water and then placed in the “ice box” — ice was delivered two times a week — and 3-4 hours later, we had real ice tea. It was Lipton Iced Tea and we used Lipton tea bags. Because of this project, I went to a couple of stores and found the following drink stories:
A super QFC had 80 running feet of pop with over 60 flavors of aluminum canned beverages. There was Snapple iced tea, ten products with over 7 other different combination drinks, All-Sport and Power-Aid in the cooler case for high energy electrolyte replacement for people who exercise vigorously. There were 8 different lemonade products, and when I looked at the tea bags, there were 10 different brands and each brand had many flavors to choose from.
Think of beers. It used to be Bud vs. Rainier. Now, I have seen a list of over 100 beers with many micro brewers that I can’t comprehend the difference.
My parents used Mogan David for medicinal purposes, and Lord knows what a good wine store will do .
I recently bought a few new outfits — under the heading of “Corporate Casual.” It was all linen from AKA Eddie Bauer — guaranteed to wrinkle while at the same time I own 3 pair of non-wrinkle Dockers.
It used to be you went to a store like Target for cheap and The Bon Marché for quality. Now, if you want a one pocket T-shirt, you might find that the same beefy fabric available in both stores, and the only thing that differentiates the product is in one store you carry the product to stand in line near the front doors, and in the other, you stand in line to buy the product close to where the product was located. Target used to represent cheap and The Bon value. Think about those words — Cheap and Value. How do you define the difference? How many of you have paid over $100 for a pair of shoes, hiking boots, running shoes, cross-training shoes, or some specialty product for something you were interested in and spent $4.99 for a plain pair of cheap walking tennis shoes to knock around in? Both representing a value; one being cheap.
The consumer today understands commodity and special. The consumer today understands value and cheap value. The consumer today understands that a super Target is as special as a $30 million remodeled downtown Bon Marché.
The markets of the past had product differentiation as a major reason for being. Today, the product falls between commodity and specialty — the Yin and Yang. TV news, beer, wine, financial transactions, cars, and on and on. The historical perspective is cheap and good, or good, better, best. Today, products are commodity or specialty. Everything in the middle is trying to decide which to become — a commodity or a specialty.
I believe one of the interesting things that seems to be happening is many of the businesses that are doing well have been very aggressive in marketing product “launches.” The biggest local story is Boeing and its 777. And, Microsoft continues to hype Windows 95. Starbucks uses launches; The Bon’s cosmetics business has been consistent with new product launches; and Intimate Apparel was a very flat business until the launch of the Wonderbra, which has up-lifted the entire foundation business.
The idea is customers are looking for new products and if you look at this thought in relationship to commodity products, it is obvious that commodities are sold by price points and new products allow businesses the opportunity to make money. Being a marketer, I would much prefer to market a launch versus yelling price for a commodity product.
The Customer:
Never in the history of mankind has one group of the society influenced that society as much as the baby boomer. As I look in this room, I see a great deal of what the population looks like. The baby boomers have redefined everything they have touched. When we were young, we created businesses that served our needs. When we become old, we will do the same.
It is interesting that in an effort to balance the Federal deficit, the medical part of the Federal budget is the area that has been identified as the place to get the most savings toward the future. It could be that in the next 15 years, people over 65 years of age will grow by 75%. Combined with our longevity, its easy to see that we must control health expense or the baby boom will break the bank.
At the same time that people are getting older, there is a second baby boom — almost as large as the original — sitting in early childhood, that will be 13 in just five years. Think of the interesting dynamics of having the original baby boom have an average age of 39 and their kids be 13?
Because of The Bon’s extensive customer base, we have just concluded an extensive research project that looked at, talked to, and researched our customer base to try to determine what is happening. Here are just a few of the observations that we have discovered:
There is a split in the society between old and young. The baby boomers are entering a time in their life when their consumption needs are rapidly changing from ego based products to value based products. The older — that’s you — part of the consumer base has been consuming for over 20 years and understands the value of things. Sale works for the older consumer because they remember regular price. The younger consumer doesn’t believe the word. Most of us network to find information and make decisions and the younger people use the internet. I will discuss this more in a later portion of this presentation.
The society is becoming more rich and more poor. We are starting to look more like all of the history of mankind prior to America being discovered. Middle class is disappearing. But, in the old days of consumerism, the rich bought the best product and the poor bought the cheap product. Today, we all buy cheap and we all buy better.
The society has developed clusters of lifestyles and value groups that are becoming more distinct. The religious right, the militia, the immigrant, the social welfare, the actualized?, the achiever, the experiencer. People are choosing to behave as they believe. The Jones’ are no longer important. We seemed to have developed a group of victims that blame others for their problems, while at the same time, there are groups of highly self-reliant people judging others by their standards.
I could go on and on, but the point is, I am not telling you anything you haven’t already heard or know. Society is becoming more polarized, more distinct.
In my early days of retail, the society was becoming more homogeneous, more similar. Items would sell to large parts of the baby boom. Today, these segments are more separate, yet the population has experienced massive selection of products for a long period of time and we have trained them well.
The point of this is that there seems to be a split culture developing. We used to be able to develop a single policy or product that would serve the majority of needs for the majority of people. Today, things need to be individualized. Levis, the largest producer of pants in the world, has just opened a business to offer tailor-made jeans for individuals. Mass individualism is a new idea that, once again, takes the idea of the yin and yang and makes them work together.
The State of Customer Service:
As customers have changed, so has their expectations as to what service is. To define this thought, let me define two of my past experiences, both of which I thought were excellent customer service.
The first was, I needed a new suit and I had a short time-frame to buy the suit and go on a trip. I called Dave, who is my personal service person in the men’s suit department, and said I need a tan suit to take on a trip in three days. Dave, who knows my size, found a suit at our Bellevue store and personally drove by the store that night to pick up the suit to bring it back to Seattle, where I went down to have the tailor make a few minor adjustments which were completed in a day and I picked up the suit to make my trip.
The second experience was when I needed a specific Power Ranger for a friend’s child’s birthday. I drove to Toys R Us, parked just a row from the front door, walked in, went to the very well-marked section that had the Ranger I wanted, I went to the check-out area, the associate scanned the ticket and the correct price was charged. The Ranger was put in a bag and I left the building in less than 5 minutes. I hadn’t talked to anyone, no one was chatty, just efficient, fast and easy.
Both of these experiences represent quality customer service. The first was in inter-personal experience. The second was an efficient operational experience. In both cases, I had expectation as to what I believed the standards of that experience and, in each case, the experience exceeded what I had expected.
The key to these thoughts is that as educated consumers, we have different expectations and we are pleased if our basic standards or expectations are matched or exceeded.
In many ways, the nature of these experiences tells a direct story as to a company’s expense structure. The first experience is built around intense labor and inter-personal skills. The second is build around operational efficiency and commodity pricing. Combine this conversation to our discussion of what is happening to the customer, and the matrix of possibilities between priced commodity and differentiated product — personal service and operational efficiency. Think how each of us defines, by the nature of the business, what we expect and then we judge our experience based upon those expectations.
I believe the best example of this change in consumers definition of customer service is demonstrated by the airline industry. Just a few years ago, Alaska Airlines had the reputation of being the best airlines in the business. Friendly, inter-personal service, great food, leg room, and on-time service defined the standard for service in the airline industry. Then came Southwest Airlines. Service was redefined as friendly service, zone boarding, no hassle baggage, and now has extended to no tickets. Alaska’s profits dropped like a rock and the consumer redefined the service values and expectations of the business.
And now, United has introduced Boeing’s new 777. Suddenly, mass individual technology will change again the standards and expectations by which we, the consumer, judge airlines. Each seat will allow you to choose the idea of work, play, or leisure. The choice to use the phone, fax, plug in your PC and get connected to your home data base. Play video games, and chose your option to have a menu of movies to choose from as well as have a telephone to call home or a friend. So, now, on top of motivated employees, zone boarding, valet baggage check in, Frequent Flyer upgrades, individuals will be able to individualize their experience all in the face of a price war.
I find the interesting thing about this conversation to be the fact that the consumer will find the best value in airfare and then go the best hotel or resort to enjoy the rest of the experience. Again, the yin and the yang must be understood together. People now choose the most expensive and blend it with the cheapest to design their best value. They expect different standards from different experiences and know when their expectations are not being met.
The underlying new addition to this overall equation is Technology.
Technology:
The 777 has been the most important new product launch of the decade. Here is Boeing — the world’s most experienced and trusted airplane producer — betting the ranch on a new plane that is entirely dependent on all new technology that had never been used at this scale. From design to the final installation of individualized passenger seats, every step, every employee, had to deal with the new world of technology.
As I mentioned in the opening of this talk, I suggested we, in 1995, are stuck in the middle of a transformation period between the production society and what we have called the informational society. We can see it coming, we just aren’t quite sure what it will look like. I actually think that in 1995, we are close enough that by the start of the next millennium, we will all be confronted with defining our existence completely dependent upon the management, caring for, and use of information.
Let me describe a thought about things that are possible today and we are only a step away from being engaged.
By the year 2000, your computer platform will be of no consequence, and that includes your TV. You will be able to interface all visual screens from any form of work station. Historically, the major industries in America have been dependent upon owning the infrastructure and charging a fee for its use. Phone lines, pipe lines, roads, tracks, ships, printing presses, runways, were the base capital investment that allowed for a constant flow of revenue that allowed industries to expand, grow, and prosper. The informational society will be no different.
Today, fiber optic cable is the only true interactive, infrastructure that would allow this new society to exist. The technology for cellular short ban airwaves, (McCaws new investment) compressed digits on phone lines and coax cable, all provide the possibility that the infrastructure is already in place.
This, combined with the networked PC configuration of shared platform, work space, and the future is at hand. What do you think the internet really is? Its a low performance look at the future — but it has already established a whole set of new addresses to send people mail. We call it E-mail and the next huge event to happen to pull this all together will be video conferencing.
So, think about your job – where your lap top you carry is connected to your cellular phone, has video conferencing, is in constant touch with our base work station, and you can manage, care for, and use all of your information all of the time, in your car, in the airplane, at your home, or if you have to, at an office. The conversations will be personal in that video conferencing will mean we will both be efficient as well as personal. The yin and yang will be present in all of our work and play communication.
This starts to truly define the challenge to the marketer in the next millennium. You see, the five factors that managers get to control — location, product, service, visual, and advertising — is really a comprehensive communication package that takes all of the senses in hand and packages the business entity into a focused and comprehensive statement of what you are and what should be expected. Then, the customer judges these expectations as to whether they are clearly defined and well executed.
So, the word “Communication” becomes the issue.
Media:
Today, marketing uses a limited definition of how to communicate. The Media Buyer buys print or broadcast while the creative or art department creates communications specifically designed for traditional modes of communication. The world is changing and people of the future will receive, use, manage, and care for information differently than in the past. The implication for the future is therefore before us. We need to be part of the next millennium’s communication patterns while still managing to perform at our current level.
Let me define just a couple of your life’s experiences that have made significant changes in the last ten years.
Think about your car and the basics of using it. The car has become a personal statement of value and life style. Great sound systems are blended with four wheel drive to redefine rugged individualism. The selection of cars is amazing. And, based upon the fact that we almost own one car for every person in the area, many of us have two cars, one each for our different parts of our personality. The density of cars to drivers has created traffic congestion that has not only produced sprawl but also a cellular phone necessity — what else are we going to do with our time driving in congestion, out to our sprawl. We used to get gas at a service station — we now get gas at a convenience center. We used to pump our gas and then pay a person who enjoyed grease and oil — now we put our gas cards in the outdoor payment center and only go into the convenience station if we need a convenience. Our car used to need to have the oil changed every 3,000 miles — cars now offer no tune-ups, no oil changes for 100,000 miles. In fact, there is a system that can be installed on your car that uses a new oil filter system that means all you have to do is change the filter — never the oil.
Think of the ramifications of these new products to the people who service automobiles. Grease Monkey, Speedy Lube, Goodyear Auto Repair, will all under go a dramatic change in a very short time frame. The customers’ attitudes, customer service expectations, and business structures will all change. And, if that wasn’t enough, what will the salesman do when his cellular phone allows his PC, fax machine, his printer, all work in his car? So, what might happen to the office buildings that no longer are needed?
Let’s look at banking. Just recently a large bank in Chicago changed its policy to suggest that if you wanted to speak to a real person, it would cost you $3.00. The bank felt that their automated tellers were easy enough to use — that all customers, old and young, could figure it out. I might suggest that this might be the standard in the next five years. The technology will be the standard and inter-personal communications will become the exception and will cost you a service charge. Think what this means to banks — the number of employees, what the employees do, how much office space a bank might need. What will really make this industry change will be the ideate that you can do your banking on the internet — that you would not carry cash but a debit card and that it is not beyond belief that we could live in an almost cashless society.
My favorite, current state-of-the-art business that has integrated customer attitudes, customer service standards, commodity and diversified products with pricing structures to match, that uses technology to the current state-of-the-art and communicates in a holistic marketing business approach. Their location, product, service, visual, and advertising all communicate the same focused message and they understand the yin and the yang of our current consumer market. That business is Larry’s Market.
So, now the questions remain: How do you survive as a marketer in the next millennium? How do you survive in a massive societal change between the production society and the information society?
Conclusion:
Here are a few thoughts:
See where we are headed? My hope is that this presentation helps redefine the vision of what is really going on. Know that “your” customer’s may not get it, and that survival is understanding where you are going. One of my favorite lines is, “If we continue in our current direction, we may end up where we are headed” and “any direction will get you somewhere.” Sales relationships in the coming years will be sustained if today’s decisions last through the technologic change to come.
Spend lots of time listening and get the skill to being able to articulate needs. IBM used to be famous for customer assessment and then finding the solution. But that was in the days when the only computer was a main frame. They lost their franchise when the technology changed and they tried to impose their current investment as the solution. When we visited Intel a few weeks ago, they planned to lose 30% of their business every year. They just didn’t know which 30% it would be. The point is, as technology changes, something you are doing will disappear, but something new will appear. Listen and find the new solution.
Get into technology. Your current skills will take care of the old business but you are part of the obsolescence is you don’t get connected. You have joined a marketing network group to stay current. By definition, you have started to become obsolete. Join a PC network group, get PC World or Mac World. Get comfortable or perish.
Learn the new language. It’s fun to talk about psychographic, demographic, niche, reach, frequency, and on and on. But, these are the terms of yesterdays media. Learn about digits, internet, home pages, and networks. Tomorrow’s solutions are blending the language and skills of the past to the language and skills of the future.
Build alliances. We use to call it networking but that usually implied the nature of this group. Alliances refer to making relationships with people that need to know what you know and you need to know what they know. This is a wonderful way for adults to learn. It’s social, structural, and educational..
Learn to be quiet and at peace. Answers we have been told come from thought, but we tend to think and process problems from what we know. The nature of meditation is that the mind, if left to its own process, sees more, hears more, and knows more. Sometimes you need to get out of its way.
Finally, find your sense of humor. The stress of this time in society punishes people who have no humor. There is an answer — it’s just hard to find.
So, here we are! Headed for a new society will all new solutions to issues and problems, and as we have dealt with these transitions in my division, we have come to embrace a thought that best expresses our feelings:
Adapt — Perish — or, Find A New Career
I started this presentation with a story about Nike and a line of “there is no finish line.” I asked the question about why I would open a speech about Survival Guide for the Marketer in the Next Millennium with a story about mid-life realism / of no finish lines. I hope you have determined your answer.
But, I do have an idea for Weiden & Kennedy — they could use this commercial going forward. At the end of the spot, the tag line could come up and the runner could start walking, and the line could be . . .
“There is no finish line, so why not try walking?”
SPEECH.CB June 30, 1995
