Monday, December 14, 2009

Spend this holiday season with Hilbert’s Paradox of the Grand Hotel (and other tales of the precious customer)

19th century German mathematician David Hilbert described the concept of infinity this way: first, you must picture a hotel so vast, so overwhelming that it has an infinite number of guest rooms. This hotel is not only large, it is also full, with every guest room occupied. One evening, a sojourner enters the lobby, seeking a room in this hotel with absolutely no vacancy. Despite being sold out, the traveler gets a room, since the hotel is not limited by any finite number of accommodations. So the guest in room 1 is moved to room 2, the guest in room 2 is moved to room 3, and so forth, ad infinitum. The newcomer is put into room 1. The hotel can repeat this procedure any number of times whenever new clients happen to show up.

Would that this were so for retailers—a steady line of customers snaking out the door, waiting to come in, every section packed, every aisle occupied, a hub of activity 24/7/365, one shopper after another after another with no end in sight.

While this isn’t real, we’ve often observed sales associates who believe that customers are an endless resource. Like it’s no big deal if they don’t sell customer 1, because a customer 2 will be right behind. There’s always one more and one more after that. Take this incident at Best Buy, in which an employee told a customer, without checking, that a hard drive was out of stock. When he ordered the same item online for in-store pickup, less than an hour later, it was miraculously available. Or this customer service fiasco at Men’s Wearhouse, in which a saleswoman insulted a customer with lines like “I don’t know why you’re here,” and “I can’t help you now.” Even in the best of times, it’s foolish not to treat every single customer as if they are critical to the success of the store—because they are. And to do otherwise in this economy, it’s deadly. If enough customers are lured away, whether it’s by lower prices or better service, stores that treat customers as expendable will find themselves on the road to oblivion.
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Wednesday, November 25, 2009

The Crowds of Black Friday

2009 has been another rough year for the retail sector, as it continues to be battered by rising unemployment, pessimistic consumers, and newly thrifty shoppers. As Black Friday, the traditional start of the holiday shopping season approaches, retail observers are placing their bets. Will customers continue to sit on their wallets, refusing to budge until they see massive discounts? Or will they capitulate in a Christmas shopping frenzy as retailers try to hold the line on prices?

One thing is certain: come Friday, stores will be mobbed as about a quarter of American households shake off their tryptophan-induced stupor and hit the stores (latest one-upsmanship schtick: Old Navy stores will open at 3 a.m., maybe because you can never know the extent of the pent-up demand for cargo pants at that hour of the morning). Last year, Black Friday was marred by a tragic death when a Wal-Mart worker was trampled by an out-of-control bargain-seeking horde. This year, writes the New York Times, stores are taking steps to better manage crowds. The Times reports that Wal-Mart is taking a page from experts who manage throngs at major events like the Super Bowl and the Olympics to prevent crowding. There’s a poetic irony in the fact that as consumers are purportedly pinching pennies, they literally can’t storm the stores fast enough.

Time reports that this year, retailers and shoppers are engaged in a game of chicken as shoppers wait for discounts and retailers try to dig in their heels. But do you think this game of double-dare is the new normal? From now on, might the contest go something like this:

Phase 1: people sit at home on their hands, stubbornly refusing to consume.
Phase 2: retailers put deals and discounts lower and lower and until they finally hit the "magic” percentage off number;
Phase 3: floodgates open; aisles full; cash registers sing; everybody happy; life is good.
Phase 4: retailers quickly repeal the dramatic offers because—oops—they’re too costly.
Phase 5: consumers go back to being unhappy—give retailers the cold shoulder and sit at home, waiting them out until the next time.
Phase 6: see Phase 2.
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Thursday, November 19, 2009

Agape in the aisle

It all became clear in an interview a few years back with a man named Sherwood Schwartz, the television producer who created the dubious passel of 1970s-era comedy shows like Gilligan’s Island, Beverly Hillbillies, and the Brady Bunch, among others. The interviewer asked him to explain why every one of his shows always began with an expository theme song---a song that would explain in vivid detail the premise of the show (“So this is the tale of the castaways….” and “Come and listen to my story ‘bout a man named Jed….” and “Here’s the story of a lovely lady…”). Schwartz said he believed this was the essential week-in-and-week-out ingredient to the success of his television comedies because, as he put it, “the puzzled cannot laugh.”

Cut to the aisle of your local supermarket. We use video systems to capture and code shopper styles and behaviors in retail stores. This lets us see thousands of repeated behaviors, many of them eye-opening to ourselves and our clients. But whether the study is about diapers, dog food or analgesics, we too often see a hidden segment of shoppers perhaps best described as “the puzzled.” These shoppers stand perfectly still. They stare at the shelf and—I’m not kidding—their mouths are usually open. When it seems like divine Providence will not explode off the shelf to help them find the brand answer they seem to be looking for, the following sequence usually takes place: they reach for a product, they heft it, they turn it over in their hands, they return it to the shelf, they reach for a competitive brand and go through the same “heft, read and regard” routine before putting it back. Then they walk away, shaking their heads ever so slightly (this is one of the reasons we also do intercepts—a way to learn what that whole last bit was all about.)

Obviously marketers need to make sure they’re not losing sales because something about the product or the package or the brand is causing head-scratching in the aisle. But it’s never a bad idea to apply the Schwartz Admonition to the point of sale because of a truth we’ve documented too many times: the puzzled cannot buy.
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Thursday, October 29, 2009

Fiddling while commuters rush by

A young musician is in a Washington DC metro station. He wears jeans, a long sleeved T-shirt and a Washington Nationals baseball cap. It’s Friday morning. A violin is in his hand. The case is open at his feet. A few coins and dollar bills are inside as seed money to stimulate contribution. At 7:50 am, he begins playing. He continues for 43 minutes. During this time, he plays through six classical pieces, including the stunning Bach Partita in D minor. His music resonates through the entire metro arcade.

About a thousand people pass by. Almost all ignore him. Twenty three of them glance momentarily and wait. Seven people stop to listen for more than a minute. He collects a total of $32.17.

The violinist is Joshua Bell. He is one of the great musical virtuosos of our time. He sells out concert halls. He plays to capacity audiences all over the world . Now, here he is, in the Washington Metro, playing an 18th century Stradivarius violin, and just seven people stop to listen for more than a minute. (Interestingly, according to Washington Post reporter Gene Weingarten, who concocted this Pulitzer-prize winning experiment, every time children walked by the performance, they tried to stop and listen. And each time, a parent swooped them up and kept walking.)

What does this experiment show us? It depends on your perspective. Are we too busy to appreciate beauty? Was Bell just a bad busker?

One lesson to draw from the story is how much we can learn from well-designed, rigorous real-world experiments. When the reporter first proposed the experiment, he anticipated that the music would draw a throng, perhaps even create problems with crowd control. Instead, he learned that only a very few classical music fans (and children) would stop to enjoy the music. No focus group or interview would have provided the same insight. More importantly, the experiment demonstrates the central role of context in generating a reaction, whether it’s a crowd of commuters or shoppers. Humans have a hard time assessing product quality on its own merits; rather, the environment powerfully shapes decision making. Imagine if someone were to set out a cheap folding table in downtown Chicago displaying piles beautiful couture shirts with a hand-lettered sign selling them for $10. Most likely, people would ignore the display on their way to Macy’s or Nordstrom, because there would be no cues, such as designer labels, admiring sales associates, or piped in classical music, alerting them that these shirts were in fact valuable. For stores, carefully designed research could help figure out what in the environment causes shoppers to line up and what makes them walk on by.
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Tuesday, October 6, 2009

Back to the hedonic treadmill?

What happens now that Fed chairman Ben Bernanke has officially declared the recession “ likely over?” Consumer spending, still sluggish, is finally on the rise. Nobody is yet breaking out the champagne – and as bloggers and cartoonists among others have warned, the economy won’t truly rebound until jobs return, and right now it’s still not a pretty picture. But is a new frugality here to stay, or will we soon return to some of our old ways? It may depend on your rung on the ladder. While working stiffs grabbed private label bread and took staycations, the rich curtailed their purchases of fine art and sold off the private jets. Sure, the recession slammed the fortunes of rich and poor alike – Bill Gates is out $3 billion -- but the families who had $20 million before the recession and then found their assets depleted to $14 million were never in jeopardy of going hungry. To some extent, the wealthy went on a time-limited spending diet because of a jarring hit to their balance sheet, and because for at least a while it appeared unseemly to flaunt lavish purchases when so many people had fallen on hard times.

But here’s a truism which bears repeating: the rich can only hold out for so long. They really do need, or at least, really, really want what others may call non-essentials , like couture, art, and second homes. Once the stigma lessens, as Michael Silverstein of the Boston Consulting Group says, “…the rich will realize they're rich again and start to spend.” According to the 2009 Mendelsohn Affluent Survey, nearly a third of wealthy households purchased fine jewelry and a fifth purchased artwork or collectibles in the past year. As the recession slowly begins to thaw, the rich are very likely to go back to their old acquisitive ways, driving the recovery further and faster.

Luxury brands are salivating at the prospect they can woo affluent shoppers as they trickle back into the store. MarketWatch reports that at the Saks Fifth Avenue flagship store, the personal-shopping service area is ready and waiting and lavishly appointed with stunning views. In addition, the store is limiting stock and focusing on exclusive brands and lines. High-end brands are also focusing on offering top-notch quality and design; for example, Restoration Hardware has hiked prices 20 to 30 percent to distinguish its offerings from its lower-quality competitors. Exclusivity and great design have also kept Louis Vuitton and Hermes growing impressively, even during the recession. Some luxury retailers are toning down the flash a little, such as Fabergé, which has launched an online venture to allow shoppers to participate in “inconspicuous consumption.” While some have criticized these attempts to lure back the luxury market with high prices, exclusivity, quality, and discretion, we think they just might be enough to get the rich spending again.

Any chance the well-heeled are going to help spend us out of our troubles?
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Tuesday, September 22, 2009

Reports of Sears’ death slightly exaggerated (for now)

Not many people are seeing the softer side of Sears these days, or the harder side for that matter. Tech Ticker reports that Jeff Matthews of hedge fund RAM Partners says the much anticipated Sears turnaround story may never happen because Sears Holding Corp. Chairman Edward Lampert doesn’t know how to run retail. Barron’s recently ran a story pointing out Sears’ many problems -- sagging sales, shabby stores, inattentive service, uncompetitive pricing – and suggesting the company’s stock price could fall another 50%. Beyond frightening. Credit Suisse analyst Gary Balter wrote an earnings note titled, “Put A Fork In It.”

Are the naysayers right? Is Sears done?

Sears has certainly gotten close to the max in cutting costs – there have been reports of only one sales associate per floor. In a world with where national big box stores provide competitively priced appliances on the one hand, and local dealers lavish personal attention and customer service on the other, Sears needs to be competitive on some dimension to survive, since there’s no net over the abyss of the middle.

Sears could focus on a smart reinvention its stores. The company still has some fabulously reputable brands, like Kenmore, DieHard, Craftsman, and Land’s End. Sears has actually made a number of good decisions lately – a plan to start selling toys and to offer a Christmas Club card, where consumers add value beforehand and get a 3% bonus on the funds. This has some old-fashioned, Big Book Catalog-style appeal. On the 21st century front, Sears’ MyGofer experiment, which merges online shopping and the ability to pick items up at a brick and mortar location, might allow Sears to unlock some value of all those Sears and Kmart stores. (But note to Sears: if you’re going to position yourself as a serious Internet player, make sure pranksters can’t rewrite your content and punk the living daylights out of you.)

It’s always hard to see around corners, but it’s an interesting question to ponder: what would a successful Sears look like in five years?
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Tuesday, September 15, 2009

Shhh… Abercrombie is Cutting Prices

Last night at the mall, we saw what it looks like when retailers who don’t want to discount do the dirty deed in hushed tones. Just a few feet inside the lease line at an Abercrombie & Fitch store, we saw fleece tops at 50% off—a whacked price put onto a tasteful little sign no bigger than a postcard. We saw this throughout the store, motivating price points on merchandise clearly meant for the upcoming fall/winter season. This A&F store even had a sign at the entry announcing a back-to-school sale (odd, since prime back-to-school shopping season is behind us). Deep discounts? On current season merchandise? Is this really “we will not become promotional” A&F? Since the onset of the recession, shoppers have flocked to low-price retailers like T.J. Maxx and Ross. Nearly every clothing chain has aggressively discounted to try to win over penny-pinching shoppers. But in the face of all this discounting, A&F has stubbornly held onto its loftier price structure to protect its “aspirational” brand.

Last week, A&F announced that its sales dove a frightening 29 percent in August – the eleventh straight month of double digit sales declines for the retailer. Sure, times are tough and the teen (and parent) clothing budget has been squeezed, but rival Aeropostale, with its less expensive, but still fashionable, apparel managed to increase sales a very respectable 9%. A&F has finally, reluctantly, quietly capitulated to shoppers’ demand for a deal (while still clinging hopefully to the idea of an aspirational brand). “It (discounting) is not the primary vehicle nor will it be the primary vehicle for driving business, but it is part of the balance at this point… but it is not the driving force of this business. The driving force is fashion, quality, aspiration, and will continue to be so,” Chief Executive Officer Michael Jeffries said on an Aug. 14 conference call.

A&F may have done its job of creating a high-priced brand image a little too well. Despite a current move to more price cutting, the company’s success ultimately depends on the willingness of teens to drop $50 on “Perfect Butt” sweatpants once the economy rebounds. Still, now that teens have learned that for the same $50 they can get a pair of sweats and jeans at Aeropostale and still have money in their pocket for a couple of tickets to a movie, it may not be so simple to get them to return. Habituation is a tough monkey to overcome.
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Wednesday, August 26, 2009

Sara Lee’s bread is making less dough

Somebody doesn’t like Sara Lee. It almost seems unfair. After finally recovering from the low carb diet craze of the 90s, the company is feeling the squeeze from private label, especially in the bread aisle. Thanks to the recession, customers are shunning name brand loaves (and cakes) in favor of cheaper private label starches in order to stretch their grocery budget. Sara Lee must also compete with price-slashing name brand rivals.

Not to pick on Sara Lee – other packaged-food companies are getting pinched – but you have to wonder whether Sara Lee fully understands the customer motivations and behaviors played out at the shelf that might be causing sales to plunge. The company knows profits are down, but competitors Kraft and Kellogg are turning in respectable numbers as shoppers trade takeout for meals at home. Does Sara Lee know why buyers are reaching for the doughy store brand whole wheat instead of Sara Lee’s innovative Soft & Smooth loaf? Does the company understand on a volumetric basis those who have come to the store fully intending to buy the brand, but then bail in the swirl of the last three feet? And why they bail? Is it price, promotion, packaging or an intriguing blend of yes to all that? Or maybe is it some other lure or allure?

Sales are an important, obvious, but crude measure of how shoppers interact with brands. If companies hope to stop the slide toward private label, they need to be where the in-the-moment calculations of the shopper occur. They need to take hold of the in-aisle thinking of shoppers who buy the brand, don’t buy it, and most tellingly, the ones who intended to do so and then decided in favor of another.
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Wednesday, August 5, 2009

Gilly Hicks – We’re Not Sold

When it comes to Gilly Hicks, the lifestyle lingerie emporium aimed at teens and the newest brand in the Abercrombie stable, there’s one thing we can all agree on: the store itself is beautiful, luxurious, and sexy. The look of the space has won raves from fashion bloggers and stock analysts alike. The branding is brilliant, although entirely fictional: Abercrombie CEO Mike Jeffries concocted an elaborate Australian back story for the entirely American underwear brand (who knew “down under” had other meanings?) A portrait of “Gilly” hangs in the stores, to add a faux vintage feel to the shop. Gilly Hicks hopes to be younger and hipper than, but just as successful as, Victoria’s Secret.

The opening of Gilly Hicks has been controversial. Although Citigroup analyst Kimberly C. Greenberger praised the store’s “cute and sweetly sexy” image and said, “We believe Gilly Hicks could be a more wholesome alternative (to Victoria's Secret), and mothers would not mind taking their 15-year-olds to Gilly Hicks to shop,” an assortment of critics have attacked the whole notion of trying to sell sex to teens. Everything from the store’s racy ad campaign, featuring 7-foot-tall posters of naked men, to the website, which broadcasts a video showing women swimming topless, and the effort to sell sexy lingerie to teens has drawn complaints.

But the ultimate question, indeed, the only question is, will it sell? Gilly Hicks represents a huge per store investment, from the home-like front porch exterior to the dimly lit Ralph Lauren-on-steroids interior, with a huge amount of square footage dedicated to selling a tiny passel of products that would fit comfortably inside the closet of a New York City studio apartment. On the one hand, other companies have made big profits using edgy, sexy ads to sell to the teenage set. The other companies in Abercrombie’s stable, Abercrombie & Fitch, abercrombie, and Hollister, have deftly won over their target markets. Unfortunately for Abercrombie, we think it’s highly doubtful that Gilly Hicks is going to help the company bust out of a recession-fueled slump, despite the store’s gorgeous environment. Luxury undergarments for teens are not a natural sell in the best of times, and right now, the retailers that are thriving are mostly value brands aimed at the prudent. Add in the store’s sales crew – the young-side-of-20-something associates look as great as the store, but are without the years of experience in fitting bras and selling intimate wear – and it seems like an even bigger, and more expensive, misstep. What do you think?
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Monday, July 27, 2009

Drop a quarter in the jar if you like this post

Maybe I wasn’t in an especially charitable mood, but I thought I had seen it all when I recently spotted a styrofoam cup duct taped to the delivery window of a Dunkin’ Donuts, a sight which gave off the weird vibe that drive-through customers should offer a reward to a forearm for handing them a bag.

There are a few topics that are guaranteed to generate heated arguments on the internet. Is it rude ask people to take their shoes off in your house? Is it tacky to have a cash bar at your wedding? And today’s subject, should behind-the-counter employees solicit tips in a jar next to the register? Anywhere you see counter service, you’re likely to see a jar or cup filled with dollar bills and coins. Cold Stone Creamery has raised the tip jar to an art form – workers break out into loud goofy songs when you drop a bill into the jar. Even teachers have gotten in on the act – one instructor conducted an informal experiment by setting a tip jar on his desk, and found that a few of his students threw in some (promptly refunded) change. Nowhere is the tip jar more ubiquitous than the coffee shop, whether it’s the indie rock dive around the corner or corporate behemoth Starbucks. There’s a certain logic behind the coffee shop tip jar; after all, say baristas, bartenders get tips, and making a latte is at least as complicated as pouring a draft beer.

Tip jars have their supporters. Counter service employees are delighted to get a few extra dollars for their efforts. Store owners and managers are happy to have their employees rewarded without having to raise prices or wages. And some customers don’t mind the jars, or even find some of the more creative hand written signs amusing. But other customers are angered by the creeping spread of tip jars. According to internet tipping guru James G. Lewis, “most people hate” the jars, and “tip jars are out of place at any food-service establishment that does not actually bring the food to your table and keep your drinks refilled.” According to a study by the Emily Post Institute, only 30% of respondents feel obligated to deposit money in a tip jar.

There’s been plenty of research on tipping – we know that younger people tip more than older Americans, people in the Northeast tip more than Southerners, and that people tip more when it’s sunnier outside. But the tip jar is a bit of a black hole. We have some anecdotal observations -- according to business psychologist Larina Kase, “Patrons can feel uncomfortable when there is a tip jar for services they feel do not deserve a tip.” But does the tip jar’s potential customer discomfort outweigh the morale boost for employees? It may be time for a well-designed study on tip jars that could determine whether they help or hurt the top and bottom line.
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Wednesday, July 8, 2009

The not-so-gullible consumer

Imagine a patient who goes to the doctor for help with sleeplessness. If the doctor were to prescribe a medication saying, “this may or may not do any good, it’s not especially strong, but let’s give it a try to start out with and see if it helps,” it’s not very likely that the patient’s sleeplessness will be remedied. But if the doctor were to prescribe the same medication with the admonishment, “This is very powerful, so make sure you don’t leave the bottle on your nightstand. You can’t take the chance you might take an extra one while you’re half-asleep. Keep it well inside your medicine cabinet” -- it’s much more likely the patient will get to dreamland.

The power of suggestion can be surprisingly effective. For example, research on placebos has found that they can alleviate pain, depression, and anxiety, lessen the symptoms of Parkinson’s disease, and have even shrunk tumors. John Tierney's recent New York Times article ”Calculating Consumer Happiness at Any Price” explores the power of suggestion in the consumer realm: do we place a higher value on items that we’re told are more costly? According to social psychologists’ and behavioral economists’ research, it depends.

In the lab, there’s evidence consumers respond better to items they’re told are more expensive. If you tell participants the wine they’re tasting costs $90 a bottle, the reward centers of their brains will light up more than if you tell them it’s a $10 bottle. But when customers are spending their own money rather than the hypothetical dollars in a laboratory, it turns out to be difficult to sway people from following their own tastes. Two behavioral economists in Tel Aviv monitored the choices of people who ordered from a prix fixe menu where the actual cost of each entrée was noted next to the items. After three months of testing various combinations of prices, the researchers found they couldn’t sway the customers. They were no more likely to select the entrée with the highest perceived value than any other entree. As one of the behavioral economists said, “Maybe when it comes to food, people do have reasonably stable preferences. Some people like shrimp and some don’t, even if it’s worth a lot of money.” (The fact that Israeli researchers were testing pork shank and shrimp gnocchi as part of the menu experiment is another story…..)

Despite the mountain of laboratory evidence that variations in sticker prices sway consumers, the effect fell apart in the real world test at the restaurant. That should serve as a warning to those of us who study customer behavior. While techniques such as focus groups and virtual reality shopping may provide some insights, it’s vital to watch how consumers actually behave when they’re spending their own money in the store, not just in the lab.
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Friday, June 26, 2009

Judge a book by its cover at your own peril

One hundred and ten years after its 1818 founding in New York City, venerable retailer Brooks Brothers opened its second store, in Boston, on that city’s famed Newbury Street. A cautionary tale for the ages happened one morning when a man entered the store in tattered clothing, wearing rubber boots, and smelling a bit rank. The “up” salesman would not wait on him (the associate whose turn it was to help the next customer). The other salesmen looked away, busying themselves with anything else to avoid the unwelcome stranger. When the man finally asked for help from anyone within earshot, he was pawned off on the most junior salesman, who had no choice but to offer some assistance. Then, in the next two hours, the stranger ordered up $10,000 in custom-made suits, shoes and furnishings. (As you might guess, the “up” man tried to claim the sale as his own, to no avail). When the young salesman began asking the stranger about himself, he learned the man just arrived in town from his home in Vermont, where he was the owner of a highly successful hog farming business.

Fast–forward to the reverse situation. What happens when customers are the ones judging salespeople? According to a recent article in the New York Times, a new study found that people give higher customer satisfaction ratings to white male employees than to women and members of minorities, even when their performance is the same. In one test, about 12,000 patients in an HMO rated their doctors. The number of follow-up email messages doctors sent to patients increased their patient ratings only when the doctor was a white man. In another experiment, students watched videotaped interactions between a bookshop sales clerk and customers, and were asked to rate the customer service. Three actors played the part of the sales clerk—a white male, a black male, and a white female. All used the same settings and scripts. The subjects shown the white male clerk rated the bookshop’s service 19% higher than subjects who viewed the other two actors. Even women and people of color gave white males higher marks. Since over 60 percent of employees have at least some of their pay linked to customer satisfaction results, these biases are not just socially undesirable, they hit female and minority employees squarely in the pocketbook.

According to David R. Hekman, the lead author of the study and professor at the University of Wisconsin, Milwaukee, “Someone needs to call customers out on their biases.” Hopefully, if people are made aware of their subconscious biases through coverage of studies like these, they will be less likely to penalize female and minority employees on satisfaction surveys. Another possibility would be to create employee evaluation tools that are truly objective. Techniques such as video analytics can deliver a bias-free analysis of the customer experience. Any other ideas on how we can eradicate the hidden biases that occur when shoppers evaluate employees (or vice versa)?
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Tuesday, June 23, 2009

Hyatt’s random walk down service street

Last month, Hyatt Hotels’ C.E.O., Mark Holamazian, announced that Hyatt Hotel employees will be performing “random acts of generosity” for some customers, such as comping a bar tab or waiving charges for a family breakfast. Bloggers have noted that conducting a publicity campaign around gestures hardly seems random, and runs the risk of angering those who don’t receive the largesse.

Rob Walker’s Consumed column in this week’s New York Times Sunday Magazine points out that the Hyatt campaign is an effort to leave the customer grateful. Walker cites a coming paper in the Journal of Marketing which argues that a customer who is made to feel grateful is likely to become “enduringly loyal.” Humans enjoy reciprocating out of gratitude, and we feel guilty when we don’t, which is a phenomenon that businesses can exploit. But, as Walker writes, in order to inspire gratitude, favors must be performed “as a function of free will,” not merely in service of company rules. Loyalty programs sponsored by hotels and airlines do not automatically inspire gratitude; instead, frequent customers feel entitled to the free flights and hotel nights, and strategize to gain the most generous rewards for the points they’ve earned.

It’s not wrong for Hyatt to be ramping up customer service, especially now. Service has always driven loyalty, especially when customers are giving more thought to how they spend each dollar. One recent study found that nearly half of all customers feel service has declined since the recession started, and more than that said they’ve recently cut ties with a company due to a service lapse. It’s no coincidence that Nordstrom, with its legendary customer service, has recently trounced competitors such as Macy’s and Saks in terms of sales and stock performance. But we question whether Hyatt’s scattershot, random approach is the best way to go. Hyatt, and other businesses, might be better off building a reputation for top-notch customer service available consistently to all customers. What happens to customers who – having read about the plan – expect but then don’t receive any random generosity? And what about those who receive it a first time but may not “randomly” ever get it again? What happens to their loyalty? What do you think?
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Tuesday, June 9, 2009

Saturday morning at the hardware store

I walk in and a clerk approaches to ask if I need help. I tell him I need a flashlight, just something basic. He walks me to the appropriate spot in the aisle, and begins describing the selection.

“We’ve got your Eveready. $3.95. Not the greatest, but does the job,” he says, starting at his lowest price point. “Then there’s this Energizer. Better grip. $6.99. Or we’ve got a Sylvania. Good for the garage. It’s $12.99.”

He takes a step to the right, moving toward something else, as if he’s signaling that we’re about to enter a special new universe.

“Of course,” he tells me with a knowing look, “you could get this.” He begins hefting a powerful looking cylinder of silvery black metal and then starts thwacking it slightly menacingly on the palm of his other hand.

“This,” he pronounces, “this is the one the cops carry.”

Of course, he had me at the product demo, but the law enforcement piece put me all in. I buy two of them……at $49.99—each.

There are a number of lessons here, not the least of which is the incalculable sales value of story in the store. This was a pitch-perfect bravura performance, and in case you’re thinking today’s workforce isn’t trainable in this skill, you need to know that this associate was not some old-timer hardware store guy—but a 20-something “kid.”
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Monday, June 1, 2009

Starbucks goes “sophisticated and upscale”……?

In the you’ve-got-to-be-putting-me-on file, MSNBC and Starbucks just announced the launch of a special marketing initiative between the two companies whereby the Seattle chain will become a name sponsor of the cable news programmer’s “Morning Joe” show, with Joe Scarborough.

The deal allows for on-air Starbucks brand plugs, announcements, and visual references within the body of the weekday news-and-talk program. Future remote broadcasts may take place within Starbucks locations around the country.

Starbucks CEO Howard Schultz, in commenting on the deal, said the “Morning Joe” show makes great sense for his company, calling the audience “sophisticated and upscale.”

Let’s get this straight. With its business suffering in profound ways, with hundreds of stores closing, with its reputation as the place where the urban elite go for lattes, with millions of consumers forced to cut back on even small indulgences and others avoiding even the hint of conspicuous consumption as bad manners in a reeling economy, with the company doing everything it can to say its $4-per-cup image isn’t deserved, with all that……they’re now ballyhooing a deal to reach the posh and polished?

I'm only slightly kidding to wonder if they'd be better off doing a deal with NASCAR.
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Friday, May 29, 2009

Would you like pantyhose with that ceiling tile? (and other retail oxymorons)

Perhaps you were taught this instructive “stick-to-your-knitting” story of some years ago. It starred an over-eager Home Depot executive who came up with the idea that millions would drop to the bottom line if only the company could see its way to introducing L’Eggs hosiery displays at checkouts in all its stores. After making his case to the top ranks of the company with a convincing argument about potential financial gain and a not-very-convincing plea for the company to use this as a response to the increasing presence of female customers, he was quickly asked to abandon the idea—of course, right after being told to abandon his seat from the meeting. The teachable moment—seized on by the chairman—was that just because you could sell it doesn’t mean you should sell it.

Apparently not everyone has heard this entrenched business lesson—including some more recent Home Depot executives, who two years ago brought about losses with a similarly ill-fated decision to sell flat-screen televisions during the holidays.

This week, Best Buy announced plans to sell patio ware—furniture, fire pits, grills and heaters. It’s their attempt to make up for lost sales in bread-and-butter categories like movies and music.

This has all the makings to be the pantyhose story of 2009. We’ll be watching this one especially closely, as this is a retailer which has done many things right.

Supermarkets used to fall prey all the time to the allure of selling higher-margin items—that turned out not to sell, like television sets.

A recent sighting of candy bars at the checkout of a garden center store struck me as a stretch, and a rather sad attempt to presumably get something back from a decline in boxwood sales.

Unexpected products in the assortment can delight customers. Urban Outfitters does serendipity masterfully. Probably until it was deemed illegal or immoral, Sears stores used to create endless Easter excitement with displays of live baby chicks…..for sale. But these examples are schtick—not fundamental assortment strategies.
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Tuesday, May 26, 2009

Prescient retail

What if there were a store that knew everything you wanted before you got there, and all of it was waiting for your arrival, ready to go?

It sounds like some parallel universe you may not have yet experienced, but it may well be in a future just up the road.

I first witnessed a stage 1 example of this kind of “no-shop shopping” at Bed Bath and Beyond, which allows customers to select and purchase merchandise in any of its stores, but then has everything ready at any other Bed Bath store anywhere in the country. It’s a service near and dear to the hearts of parents of college students, allowing them to make all the in situ summer selections of sheets, wastebaskets, pots, pans, and bath mats for the far-away dorm room or college apartment—ready and waiting for the start of the fall semester. In this example, the shopper still needs to shop a store, but is able to do so in a more leisurely way, when product availability is high, tension low, and move-in deadlines don’t loom—and simply shift the pick-up to another time and place.

A more recent entry is, a new venture from Sears Holdings Corporation, which allows customers to shop online for groceries, electronics, apparel and more, and then pick up the designated items at a My Gofer store the same day—presumably a defunct Sears or Kmart location, now re-purposed as the bridge between the online and bricks and mortar worlds. This service also offers a delivery option and guarantees product availability.

Interestingly, these hybrids acknowledge an important positive of the traditional retail experience—in one case, the customer desire to see and touch the merchandise, and in the other, the need for immediate gratification. At the same time, they both endeavor to minimize what consumers don’t want—crowded aisles, vapid sales associates, out-of-stocks, and long waits at the checkout.

Inherent in these new constructs, however, is the sad element of partly throwing in the towel on some negatives of the in-store experience, with the retailer now at least tacitly admitting it may no longer be able to heal all of thyself.
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Monday, May 18, 2009

Seduced and abandoned

In days gone by (any time before the current recession), the shopping cart was a customer’s rolling possession holder, containing all the selections that were as good as bought and paid for. With its vertical bars, the cart gave off a warning to other shoppers to keep out, contents contained within this high-security traveling metal fencing are “my stuff.” At the same time, each product placed within the cart represented the shopper’s (almost) solemn commitment to purchase—nothing would leave the cart until checkout. Sure, once in a great while you might see a vaguely embarrassed customer beg off an item at checkout—to the tsk-tsks, tut-tuts and clucking sounds of others in the queue, a chorus of muses who sensed some important cosmic code of shopping conduct had been violated. But mostly, the mighty mobile fortress simply served as the shopper’s purchase conveyance until their items could be taken out to the parking lot and put in the car.

No more. In a recent study we did for a large retail chain, upwards of 500 items were abandoned every day in each of the stores we were in, relegated to a corral of carts in the corner whose sole purpose was to house these rejected products (looking rather forlorn, anthropomorphically speaking, like abandoned puppies at a shelter). A cottage industry sprang up in the stores to sort and re-stock these “re-shops”—a thankless, never-ending task for the associates. Clearly, customers had exploded the idea that moving an item from the shelf into their cart represented any kind of implied purchase agreement.

Yesterday’s New York Times featured an article on abandonments in the online shopping world, highlighting a new web service which remarkets to those who might put an item in their electronic “cart,” but not finish the transaction. It’s an interesting approach to nudging people to re-consider, but certainly loaded with complications, not the least of which is the highly intrusive annoyance factor.

Perhaps the customer contract in bricks-and-mortar retailers will be re-initiated, and shoppers will once again follow the age-old Cafeteria Rule—take all you want and eat (buy) all you take. Or we may be witnessing something that has already changed forever—good or bad economy notwithstanding—the cart as nothing more than a carriage of considerations.
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Tuesday, May 12, 2009

Will McDonald’s drink Starbucks’ latte?

Is it any surprise McDonald’s has brewed itself boldly into the coffee business? The McDonald’s menu has evolved dramatically since its founding days in the 1950s, back when it was a simple spot to get a burger, fries and a drink. The company has adapted to shifting consumer tastes, wants, and demands, and has become a major player at breakfast, in chicken, in snacks, salads, and more. There have been a few flops along the way, but in the last six years, McDonald’s menu innovations, better service, and improved atmospherics, have pulled in new customers and boosted profits. Now, thanks largely to Starbucks, Americans now crave fancy coffee drinks, and want them for breakfast, in the afternoon, and even after dinner. It’s no surprise McDonald’s is seeking to capture all these newly evolved coffee cravers.

McDonald’s mochas, lattes, and cappuccinos have gotten positive buzz; even people who prefer Starbucks have given the McDonald’s drinks pretty high marks. And coffee drinkers who get their caffeine fix at McD’s can pocket the savings over the same drink at Starbucks. In recessionary times, that’s a powerful advantage. One survey found that 60% of consumers will trade to McDonald’s if the coffee drinks are cheaper and made faster. There’s also the convenience factor – you can grab a latte while picking up a happy meal for your kids, in a part of town Starbucks hasn’t yet hit, or on a road trip. Starbucks is fighting back against the McCafe invasion with an ad campaign focusing on quality adherence; they’re also experimenting with a breakfast value menu and one dollar coffee. However, we’re betting plenty of consumers will choose McDonald’s premium coffee along with its iconic food offerings over coffee at Starbucks accompanied by its made-off-premise bakery items and microwaved sandwiches.

On the day premium coffee at McDonald's debuted, my wife’s comment after taking her first sip: "Starbucks is in trouble."
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Wednesday, April 29, 2009

We’re All Shopper Marketers Now

Spending on shopper marketing, along with agencies and consultants that have popped up to support it, has grown rapidly. Is shopper marketing just a “gussied-up name for trade promotion”, as a recent article in Ad Age suggested? After all, as the Ad Age piece points out, shopper marketing lacks even a commonly accepted definition. Within shopper marketing, there is no hotter bandwagon than neuromarketing. Since the publication of Martin Lindstrom’s Buyology book, there has been a spike in print, internet, and blog coverage of neuromarketing, a field of marketing that considers consumers’ brain response to marketing stimuli.

Perhaps neuromarketing can offer some interesting insights into how people view, interpret, and act on advertisements. However, the flashy science and technology sometimes gets too far out in front of practical reality and actionable results. Adweek reports that Japanese advertising agency Hakuhodo has taken a stake in Buyology, a new neuromarketing consulting company established by Lindstrom. Perhaps neuromarketing is the future of shopper analytics; after all, Japan is the country of the future, where scientists have developed robot exoskeletons to assist aging farmers and robot teachers that they hope to activate in the next five years. However, it’s all too likely that high tech brain scans and electronic imaging won’t be able to replace careful studies of shopper behavior any time soon. As David St. Hubbins said in Spinal Tap, “It's such a fine line between stupid and clever.”
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Wednesday, April 22, 2009

The camera never lies...

...but lots of people do, especially when they’re talking to researchers or otherwise responding to surveys. A part of it might be attributable to the Lake Wobegon effect, from the mythical town of Garrison Keillor, where it is said all the children are above average. More technically, another driver is social desirability bias. This is where the respondent wants to provide an answer that will be looked at by others as favorable.

• A recent poll asked Americans who they voted for in the last election. This poll showed Obama thrashing McCain by more than 20 percentage points -- far greater than the actual Obama margin of victory on Election Day.

• When people are asked if they voted in a presidential election, the percentage of self-reported turnout is inevitably 10-20 percent higher than actual turnout.

• About 40 percent of Americans say that they attend church regularly. Counting and tracking methodologies used to determine true church attendance found that about half that number can actually be found in the pews.

• A number of years ago, a survey found that upwards of five million people claimed to be New Yorker magazine readers—an unlikely number given that circulation was barely above half a million.

People want to be on the winning team, and want to look virtuous and smart. So when we ask them to self-report, we often get responses that are wildly inaccurate. Researchers are exploring tools such as anonymous online polling and expressionless computer avatars in order to obtain more accurate survey results. But no matter how sophisticated surveys become, there is no substitute for the careful capture of actual human behavior, as we do with video-enabled behavioral analytics to see into the realities of shoppers in the shopping aisles.

As Yogi Berra once said, “You can see a lot by observing.”
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Thursday, April 9, 2009

The focus group: dying a slow death?

How much useful information can you get from a room full of twelve people being paid $75 to eat cookies and talk about a product, place or campaign?

According to a recent Catharine Taylor column in Social Media Insider, the focus group is dead. Taylor points out that focus group testing failed to predict customer outrage over Tropicana’s packaging change, the complaints of baby wearing moms about a Motrin advertisement, or the howls of protest over the Sci Fi channel’s name change and Facebook’s new terms of service. According to Taylor, focus groups are “contrived” and encourage companies to listen to “customers who were either not invested in their brand very much or not invested in it at all.” Taylor comments that “the very idea that a focus group is valuable is ridiculous -- when compared with the real conversation taking place among the people who really care about your brand.” Is Taylor right? Can the focus group, often as stale as the potato chips served to participants, really be replaced by following the conversations of brand loyalists on blogs, Twitter, and Facebook?

Focus groups can indeed be a problematic way to get information. Participants are often distinguished more by their desire for a cash stipend than by their insights. Some people habitually lie about their background and past participation in focus groups in order to gain access. There is little that is natural or realistic about a forced discussion conducted in a bland office room. Often the companies conducting focus groups have a desired result, and interpret the data selectively to support their preferred outcome. However, as participants in the lively comments following Taylor’s post point out, the marketers can’t only listen to the opinions of the most intense fans garnered via social media channels, because they could be overly intense and atypical. In addition to paying attention to loyal customers via social media, marketers should be devising ways to make focus groups more relevant, realistic, and reasonable.

Our argument is that focus groups can play a role in information gathering, but are too far removed from reality, and that being
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Tuesday, March 24, 2009

Message to retailers: stop hyperopia now!

Bill writes: Is the American consumer dead or just dormant? An incessant barrage of news reports suggests that we have officially begun a new age of frugality, trading shopping mall binges and dinners out for saving accounts and home cooked meals. Shoppers are clipping coupons, switching to store brands, and picking out cheaper cuts of meat. The tried-and-true, knee jerk way for retailers to appeal to the newly frugal customer is to compete on price by issuing coupons and holding yet another sale. An intriguing article today in the New York Times suggests they might want to pursue a smarter alternative.

According to the story, we are experiencing a rise in a phenomenon that consumer psychologists call “hyperopia,” or excessive obsession with preparing for the future. According to the piece, we’re likely to regret our excessive frugality. “People feel guilty about hedonism right afterwards, but as time passes, guilt dissipates. At some point there’s a reversal, and what builds up is this wistful feeling of missing out on life’s pleasures,” according to Ran Kivetz, a professor of marketing at the Columbia Business School. The story reports Kivetz and a colleague found that consumers who were asked to imagine how they would feel about their purchases in the distant future shortly before Black Friday spent more money and bought more indulgent items than consumers who were asked to imagine how they would feel the following week. In the fable of the Grasshopper and the Ant, Aesop described “two types of people: the virtuous Ant who saves for the winter and the improvident Grasshopper who’s punished with starvation.” Another consumer study found that even the most disciplined Ants found ways to “pre-commit to indulgence” -- more than a third of participants selected a less valuable spa gift certificate instead of cash so that, as one participant wrote, “I’d have to pamper myself and not spend the $ on something like groceries.”

Retailers need to change how they think about their stores. If they pursue a purely transactional approach, merely bringing in merchandise and promoting it in hopes of a sale, they will miss an opportunity to appeal to the more hedonistic Grasshoppers among their customers. Retailers might consider finding their Grasshopper customers, inviting them in for open houses where representatives from the retailer and various manufacturers demonstrate products and experiences. These open houses would allow people to come into stores and see, feel, think and experience without obligation. Retailers could give the visitors a small gift certificate for use at another time. This would appeal to the indulgent, hedonistic Grasshoppers, and even to the more frugal Ants, awakening the “inner Grasshopper” in all of us.

Other thoughts on treating hyperopia?
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Friday, March 20, 2009

Can we do an MRI in Aisle 11?

Ron writes: The search for the perfect predictor of advertising effectiveness continues. According to a recent story in the New York Times, a Yale undergraduate is using magnetic resource imaging to “study brain waves and determine why people respond to some advertisements but not others.”

Emily Yudofsky became curious about the potential of neuromarketing in high school, when she worked in a laboratory that did research on the consumer response to Coke vs. Pepsi. Yudofsky’s neuromarketing company will specialize in research on public service advertising, hoping to develop anti-smoking or don’t-drink-and-drive campaigns.

The article suggests neuromarketing is “tremendously controversial,” both because it is seen as “creepy” and, as scientists point out, “just because a neuron fires does not mean a consumer likes Coke better than Pepsi.” If neuromarketing is indeed effective, we will see it used for more commercial applications. It is tempting to believe that brain scans can provide a complete understanding of how consumers make decisions. However, no matter how refined this technology gets, it won’t be a substitute for the observation of behavior and the resulting insights that bring true understanding of the consumer. At least not yet.
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Tuesday, March 17, 2009

In the trenches

Bill writes: Best Buy’s incoming CEO Brian Dunn started with the company 24 years ago as a salesman, and in some ways never left his roots. He still spends a great deal of his time on the sales floor, “where the rubber meets the road,” he says (see Wall Street Journal article “Best Buy Confronts Newer Nemesis,” March 16). In his quest to now differentiate Best Buy from competitors Wal-Mart and (now that Circuit City is history), Dunn has used a series of store visits to provide inspiration.

In the olden days of shopkeeping, owners minded their stores at all hours and lived upstairs when the lights were out. Nothing got past them since they were always there. In a world of multi-unit retailing, bosses are far removed from the action of the floor, often held hostage in meetings to consider new companywide dental plans and how to defer equity awards. Still, they take it as an article of faith there’s no substitute for being in the trenches, and “make time” to do store visits as often as they can.

While Brian Dunn’s efforts should be applauded, there may well be a limit to how much inspiration can occur when a CEO makes a guest appearance. Certainly there is value in talking with the troops, where good ideas might arise and unaddressed problems can surface. At the same time, these are all too often staged as goodwill/PR events to rally the troops, and the real value back to the CEO is diminished. One legitimate substitute for management’s inability to be in stores all the time is the use of video-enabled behavioral analytics, which provides a volumetric assessment of how shoppers use the stores and what are the effects of the experience the employees provide. It’s an interesting way to fuel inspiration and find out what’s really happening with thousands of customer actions, interactions, and transactions, when you can’t be everywhere—or anywhere—at once.
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Friday, March 13, 2009

On second thought, bring back the lasers

Ron writes: Getting a hard count of how many people pass through New York’s Times Square every day is an important measure for a number of commercial interests—setting retail rents and outdoor advertising rates most particularly. According to this article in the New York Times, the Times Square Alliance pays $100,000 a year for a team of Russian immigrants who are paid $8 an hour to count the masses. The NYT reports that high-tech gadgets such as video recordings, vertical cameras, and even lasers have been considered, but that the immense volume of traffic overwhelms the technology. Instead, the human tide is counted by “dozens of Russian immigrants armed with clipboards, folding chairs and counters.”

Still, the low tech hand clicker approach employed by the Russians doesn’t work perfectly either. According to one of the counters, “When people walk en masse, it’s useless.” So when Times Square is most crowded, and counting accuracy is most important, the low tech method breaks down, too.

Having worked with many companies to help them understand customer traffic and behaviors, I know the best results come from employing both higher tech solutions such as video cameras, along with a low-tech, more labor-intensive approach. Perhaps if the Times Square Alliance employed this one-two punch, they would be able to get true head-count fidelity.

Even so, the most crucial assessments would still elude them—like how many people are actually stopping into the stores and buying, and who and how many are actually looking at the billboards. Those are the numbers worth real money.
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Tuesday, March 3, 2009

Getting out of line

Bill writes: It’s becoming less necessary, but going into a bank to conduct business is sometimes still unavoidable. You’ve certainly noticed how increasingly rare it is to enter the queue without the guys-in-ties from branch management trying to short-circuit the wait time by asking if they can be of service. “Do you have a straight deposit?” they will ask. “I can help you over here.” When I first began observing this, I thought I was seeing an especially perspicacious new generation of bank officers—ones seemingly well-schooled in queue dynamics and the importance of efficient transaction flow.

That was then, but today it’s all about skimming cream from the queue. Once they have you one-on-one, sitting at a desk to get your deposit processed, it’s open season—an opportunity to cross-sell, up-sell, and otherwise create awareness for a wider, profitable range of financial products. Customers are part of this dance, willing to give up the drudgery of line-waiting in return for listening to a brief spiel. It’s actually not a bad trade-off. There may well be a new product or service worth hearing about, and the customer at least gets the transaction accomplished and a comfortable place to sit.

It’s not altogether different from the trade-off people make when they agree to attend a time-share pitch—a 90-minute commitment in return for a gift or free trip or other incentive (not that I want to conflate bankers with those who hawk condos in hotel ballrooms).

But it brings up an interesting idea, especially in today’s economy. In return for you doing this, I’ll do something for you. Horse-trading, barter, swapping—call it what you will—it may be how things get done with increasing frequency. And then you won’t need any money. Or to go into a bank line.
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Monday, March 2, 2009

Success beyond accidents of the marketplace

Ron writes: It might be easy to dismiss McDonald’s strong sales performance as nothing more than the result of a heightened consumer desire for inexpensive food during tough economic times. But having worked with the company for more than a dozen years on a number of advanced analytic projects covering operations, marketing and HR, I know this is only one of a host of even more salient factors contributing to the very positive numbers coming out of McDonald’s. A recent story in the New York Times explains how the company has won over skeptical customers with its thorough, nearly obsessive effort to get things right. Here are a few of the key ingredients that have contributed to McDonald’s supersized success, even as the economy and the rest of the restaurant industry have struggled.

A clear, customer-focused goal: McDonald’s has single-mindedly united its people behind “Plan to Win,” an internal playbook that encourages employees to “focus on quality, service and restaurant experience rather than simply providing the cheapest, most convenient option to customers.”

Adjustments based on brutal facts:
McDonald’s discovered that customers were becoming more interested in dining early or late, so stores were opened earlier and stayed open later. Executives “pored over data to determine what consumers were eating and drinking and where McDonald’s could expand to capitalize on changing trends.” McDonald’s transformed beverages from an afterthought to a central offering, resulting in higher sales and plaudits for its coffee quality.

Grounded, open leadership:
McDonald’s selects leaders who have restaurant experience, not merely academic credentials. Jim Skinner, McDonald’s CEO, never graduated from college but rose steadily through McDonald’s ranks. He’s comfortable mingling with everyone from coworkers to restaurant staff. According to John W. Rogers Jr., a McDonald’s board member, Skinner has “created an environment where these guys have been allowed to shine.”

Patience: Some changes at McDonald’s took time to implement, such as rebuilding restaurants, improving employee training, and reconfiguring the drive-through. Luring skeptical customers back to the restaurant took years, not months. As McDonald’s president, Ralph Alvarez says, “The lesson there is, be patient.”
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Tuesday, February 17, 2009

One in a row

Bill writes: A woman walks into a store and takes a cart and a shopping basket. This moment is a retail ethnographer’s wet dream. It’s a weird and interesting shopper behavior and may be something big. HUGE. Like………? Maybe it’s that the shopper doesn’t trust the cart to keep the breakables unbroken, so she’s taken the basket as a “side carrier” which will provide a more gentle ride. Hey, there’s an idea here—let’s suggest they put in padded carts. Wait. Better yet—padded compartments within the carts to hold the eggs. But that could lead to walk-offs, with customers conveniently “forgetting” their eggs until after they’ve checked out. That would be bad. Hmm. Maybe it’s that she’s a germaphobe, and thinks the basket is less apt than the cart to have dried snot or microbes of baby poop on it. That’s it! We need entry door shower mists which spray liquefied Purell all over everything that passes by.

And so on.

What’s unknown from this little tableau is whether a shopper who takes a cart and a basket is a party of one or really one representative of unseen millions. Maybe it’s that she’s the only one today, but the trend setter who millions will be copying any day now. Or just maybe, since this is something I happened to witness, she arrived at the store and was meeting her husband back at the meat department.

It’s one of the reasons we like to use in-store video along with ethnographers when we do store studies. It’s good to be able to see things thousands of times in addition to once.
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Friday, February 13, 2009

Who may I say is calling?

Bill writes: When the volume of rings got completely out of hand, I joined those already on the roster of the do-not-call list. It has helped some. But I still get plenty, with caller ID displaying the name of the company, charity, political organization, call center or the mildly intriguing “unknown caller.” I don’t keep a log next to the phone to make sure this is an outfit I’ve recently done business with, and like most everyone else, simply assume the caller is inside the boundary line of legal—however barely.

But I take these calls every time. I’m in the customer experience business and want to hear the script. Most are delivered in that breathless way, a non-stop recitation of the “premise.” Once it’s established they’ve got the right person, there’s no pause—or what could be my one opportunity to get a word in edgewise—like “goodbye.”

These scripts have been tested over time, so the companies know what “works” and what doesn’t “work.” Still, it’s hard to get motivated when the delivery has that rote and robotic thing going on.
It was notable during last year’s political season that the Obama calls, highly scripted to be sure, still seemed…..earnest. And, in a good way, they had an amateurish feeling—however studied they may have been behind the scenes to make sure a dialogue was started and a human interest in the caller seeded.

Maybe there’s a different way for telemarketers to evaluate their outbound call scripts. Instead of using the blunt instrument of compliance—the rote adherence measurement to a set of words by the solicitor—companies should hunt for those associates with lousy compliance scores and high conversions. Perhaps they hold the secret to a new non-scripted “script.” Like the Obama boiler room gang, who raised almost $800 million over the phone.
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Wednesday, February 11, 2009

Keeping the customer

Bill writes: I can’t remember where I heard it first, but an expression I’ve always liked --- it’s used to describe how fast calamity can come – is the one about someone who just “pulls a single thread and the whole sleeve falls off.”

Cut to me at Whole Foods on a recent shopping sojourn. I had a grocery list of more than 50 items, one of which was watercress, that tangy leaf vegetable with the slightly bitter peppery taste that doesn’t have many uses beyond being filler for ladies’ tea sandwiches. With produce as the first department along the perimeter from the store’s entry, it was my first stop. After several futile minutes attempting to find the item, I asked for help. The clerk couldn’t find the watercress either. He went to the back room and looked. Nothing. Sorry, sir. I looked at the rest of my long list and my completely empty cart, and weighed my options. I could continue shopping and then go to a second store for just the watercress, or bail now and get everything done together at a single (other) store. I chose the latter, and with that decision, Whole Foods was out more than $225--what I ended up spending at the competitor.

What the Whole Foods produce guy might have asked is what I needed watercress for. Had he done so, he would have found out that it was to act as nothing more than a garnish for a plate of Super Bowl deviled eggs, a green bed on which to splay and display these old school treats. Then he would have been able to suggest Italian parsley or arugula as worthy substitutes, and I would have stayed at the store.

Is this asking too much of employees? Maybe, but I’m not so sure. Taking an interest in the customer has to go beyond “we’re out of it” or “it’s over there.” Finding out a “why” beyond a “what” is always a reasonable goal.
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Monday, February 2, 2009

Retail charm offensive

Bill writes: In his early stand-up days, Jay Leno used to tell the story of the frustrations of being in line at the supermarket. He waits. And waits. And waits some more. Then it’s his turn, and the checker doesn’t even look up to say hello. She’s got her head down in scanning mode. When it’s time to pay, he – thinking he’s a valued customer at a store where he’s just forked over more than $200 – still doesn’t receive an acknowledgment. Not able to contain his frustration, he says to the checker that a simple thank you would be nice. “Why should I?” she says, scoffing, “it says it right here on the receipt.”

Over the years, I’ve seen plenty of cluelessness and rudeness in stores—maybe not quite as bad as the Leno story. I once asked a clerk to help me locate an item that was obviously not in the aisle where I sought his help—he just happened to be the only person anywhere in the store I could find. He stood very still, pivoted his head around to be able to see everything within a three-foot radius of his body, and then proudly proclaimed the item was not there. I suppose it’s not so different from being in a restaurant and asking a passing waitperson for a spoon, only to be told this isn’t their station.

Times are different. There’s a charm offensive going on everywhere. Store traffic is thin—and precious. I get a greeting like royalty as soon as I walk in almost anywhere—even big box stores, where sucking up to customers has never been part of the operational orthodoxy. Employees are now dropping what they’re doing to help and lead and show and answer—and thank. It’s all rather nice, although sometimes a bit desperate—and annoying. I was at Walgreens the other day, needing “navigational remediation” as we sometimes call it in the shopper analytics business. I was taken to the item I sought, and then given a “helpful” two-minute discourse on all the reasons why another brand would be better than my selection.

Oh well. It was better than being taken for granted.
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