Push “blend”

It wasn’t very long ago that engaging with most brands meant dealing with their disparate pieces. One 800 number for order status, a different one for delivery. Websites and physical stores that often bore only a passing resemblance to each other. Getting bounced from one department to the next to resolve a customer service issue or get a question answered. And then needing to start over again with each person with whom we spoke.

Then–slowly at first–some companies began to realize that customers didn’t care how we were organized. Customers didn’t want to hear about the limitations of our “legacy systems.”  We may talk about channels, but customers don’t even know what that means. And they don’t care.

Upstart brands challenged the incumbents by attacking the friction in consumers’ path to purchase. Companies as diverse as Nordstrom, Amazon, Bonobos and Warby Parker made it their job to integrate the critical pieces of the shopping experience on behalf of the customer. They challenged the traditional verticality in retail and embraced the notion that brands are horizontal.

They assembled great ingredients and then they pushed “blend.”

As retailers we may be organized by the parts and the pieces. We may make decisions on discrete components. We may measure and tweak each variable in the equation.

But at the moment of truth, when the customer decides to enter our store, click on an ad, put another item in their cart or recommend us to a friend, she’s thinking about the whole blended concoction.

 

 

Your customers don’t care

Your customers don’t care….

…that your e-commerce operation and physical stores division are run separately…

…or that your systems don’t “talk” to each other…

…or that you say “your call is very important to us” over and over again.

Your customers care that every aspect of the shopping experience–and that includes returns–is as close to frictionless as possible.

They care that they don’t have to re-start at the beginning every time they interact with someone from your organization–and that they don’t get a different answer based upon who they happen to speak with.

They care that if say “your call is very important to us” that you hire enough people to answer the phone quickly and that the person on the other line can actually resolve their problem the first time, every time.

Customer-centricity is rooted in an outside-in perspective and starts where the customer is, not where your brand happens to be.

Customer-centricity means a commitment to really knowing what customers want, showing that you know them and showing them that you truly value them. Through actions, not words.

When your customers stop caring about what you say, or they see a disconnect between what you say and what you do, it won’t be long before they stop caring to spend any time or money with you.

So what do you care to do now?

 

 

 

 

 

Untethered

In the first decade of e-commerce’s ascension, with rare exception, the consumer was sitting in their home or office using a desktop computer to do their online shopping. It was a completely virtual experience where the advantages were clear: 24/7 access, wider selection, often lower pricing and so on. So were the disadvantages: inability to try on the product, no instant gratification, no sales help, etc.

Even as e-commerce began to chip away at brick & mortar stores’ dominance, the physical retail experience stayed basically the same. To reap the advantages of in-store shopping you had to travel to the store. Once there, if you wanted product information you had to track down a sales associate and hope that he or she knew what they were talking about. What you could buy had to be in-stock in that particular location. And when you wanted to buy something, you went to a sales register at the front of the store or located in a merchandise department.

With the explosion in mobile devices and smart phones the consumer decision journey is rapidly becoming untethered. Previously a digital shopping experience by definition meant you weren’t in (or close to) a store. But, more and more, what we once counted as an e-commerce shopping trip or sale, versus one made in a physical store, is a distinction without a difference. It’s now a bricks and mobile world.

Increasingly, store sales associates are untethered from their POS registers, lending them the ability to work with a consumer at the real point of sale and arming them with the digital tools that can meaningfully enhance the customer experience.

Today’s omni-channel leaders are keenly aware of how the un-tethering of retail is profoundly altering the consumer and competitive landscape.

For others–the relentless defenders of the status quo–it’s their thinking and willingness to act decisively that needs to be untethered. Hopefully that occurs before their business model becomes unhinged.

 

 

Easy or good?

It’s far easier to run your business with a paint-by-numbers operating model.  Why risk the vagaries of human interaction?

It’s far easier to craft a one-size fits all marketing plan. Why invest in complicated customer analytics and the complexities of managing vast numbers of different campaigns?

It’s far easier to focus on efficiency rather than effectiveness. Doesn’t Wall Street reward brands that run a tight ship?

It’s far easier to remain product or channel focused. Organizing your business around customers–and the realities of the omni-channel blur–means blowing up many existing processes, metrics, incentives systems and management structures.

It’s far easier to focus on the certain short-term fix, rather than commit to a long-term program of testing and learning and building foundational capabilities. After all, how can we be sure we will ultimately generate sufficient ROI?

The problem is that easy is not the same as good.

And good enough is rarely good enough anymore.

Remarkable. Relevant. And built for me, rather than built for everyone, is what it will take for just about any business that cannot win by price alone.

And like it or not, easy is not going to cut it.

 

The retail war of attrition

Walk through just about any mall this time of year and you’re met with a visual cacophony of promotional signs adorning every window.

Enter just about any store and it quickly gets worse. Circulars with “special” coupons cram the entryways. Racks and tables are laden with signs shouting the latest discount. 30% is good, but 40% is better. And hey, why not 50% off?

At the register, sales associates beckon you to save an extra 10% when you open a new credit card account.

“Door-busters!” “Lowest Prices of the Season!” “Super Saturday!” “Exclusive Offer!” “Family and Friends Special Savings!” And on and on.

It’s no better online. The same discounts one finds in-store dominate most retailer’s home pages, complemented by a nice smattering of free shipping deals. And our in-boxes are chock-a-block with daily promotional emails.

Of course, retailers brought this promotionally intensive world upon themselves. They stuck the endless discount needle in their arm many years ago and, like a hapless junkie, they go back to it again and again even though they are keenly aware of the damage they are doing.

Consumers caught on long ago. It’s a pricing game of chicken and we’d be stupid to pay the sucker price? There’s always a better deal around the corner and we’re determined to get it.

The one thing we can be sure of is that this isn’t going to end any time soon. As long as retailers perceive that it’s largely a zero sum game, and they risk losing a marginally cash positive transaction, they will continue to discount early and discount often.

Unless you are the lowest cost provider trying to own “discount” is a fool’s errand. A continuing race to the bottom just makes this a retail war of attrition.

And for marginal players that is a very bad thing indeed.

 

 

 

And you thought you were in the gum business . . .

They tell us it’s all about product.

But then lots of people pay premium prices for demonstrably mediocre stuff.

They rattle offer a litany of purportedly superior features and benefits to appeal to our rationale minds.

But then the “better” mousetrap comes along and we stick with the tried and true.

They give us all the reasons we should buy the drill.

But what we really want is the hole.

Sure, how it works, how it’s made, how it compares to the other’s guy’s offering is part of the story.

But the other part of the story is the story. How it makes us feel. The experience.

And if you need an example, here’s a great one.

JC Penney: Trouble on the home front

Ron Johnson’s tenure at JC Penney is the (horrible) gift that keeps on giving.

Amidst recent rumors of another CEO change, continuing Board drama and potential liquidity issues–not to mention the little challenge of pulling the core business out of its steep descent–now we have Johnson’s much vaunted Home strategy landing with a resounding thud.

And this blunder is, in many respects, the most misguided element of the “transformation”, the biggest opportunity wasted and the most vexing to fix.

The boldness of the new strategy was admirable: rip-up a chronically under-performing large section of the store, add new experiential elements, upgrade presentations and, most critically, bring in exciting, differentiating brands. Yet here too the misguided thinking evident in Johnson’s vision for the rest of the store is made abundantly clear.

After months of construction, tens of millions of dollars in investment and lots of hype, what we discover is a well-organized, beautifully designed space with lots of unproductive, poorly conceived merchandise. And don’t get me started on the Martha Stewart, Macy’s fiasco.

As I’ve opined before, at the core of Johnson’s erroneous strategy was trying to change Penney’s customer base too quickly. That huge miscalculation is evident in spades in the Home re-think. Brands like Jonathan Adler, Bodum, Conran and Ordning & Reda may have immediate recognition and appeal to some affluent consumers and design aficionados, but the notion that they would quickly be relevant to the Penney customer is simply nuts.

Even a brand like Michael Graves, which certainly had some success at Target, might be expected to convert reasonably well at the outset, but it’s hard to imagine it has much drawing power in the grand scheme of what is desperately needed.

Aside from these broader strokes, there are many major tactical blunders. The Bodum shop is a case in point. While the section is distinctively and attractively presented, much of the product is way too expensive. Did somebody really think many people were going to buy $200 coffee makers at Penney’s from a brand they’ve never heard of?  Other choices would be funny if they weren’t so costly. The Bodum shop (and website section) seems to believe the world is ready for a French press revolution. Maybe Williams-Sonoma or Sur la Table can lead that movement, but at Penney’s it’s just a big mark-down waiting to happen.

The Happy Chic by Jonathan Adler shop is also eye-catching, but the product assortment is way too specific to have the impact and productivity it needs. The Michael Graves and Martha Stewart shops are filled with a bunch of random stuff at odd price points.

Throughout the rest of the home section there is ample evidence of Johnson’s specialty store strategy taken too extremes. Some product is just too expensive for Penney’s core (Conran), some product is so narrowly focused in design point of view it can’t possibly be productive or contribute to a coherent view of Penney’s desired positioning.

Another issue throughout much of the new areas is lack of product density. The design does a nice job of showcasing product, but it’s Retail 101 to be mindful of having enough product and enough transactions to give yourself a chance of being profitable on the space. At Apple this “negative space” mentality works when you have strong traffic and products that cost hundreds (or thousands) of dollars.  But when one is selling $15 picture frames, $20 throw pillows and $3 dinner plates, well, not so much.

The investment in space for product demonstrations, design advice and customer service is just sad. It’s clearly an expensive exercise in productivity drain and customer irrelevance.

Some Wall Street analysts have been acknowledging the serious problems with Penney’s home business, but minimizing its magnitude because home represents “only” about 12% of revenue. And given the damage that’s been done to the rest of the business it’s fair to say that in the immediate term it’s hardly the #1 priority. But that misses the broader point.

Let’s remind ourself that prior to the Ron Johnson fiasco, Penney’s did not have a sustainable long-term strategy and plays in a retail market sector that’s been growing slower than inflation. They need a ~30% sales increase and vastly improved margin performance just to get back to where they started pre-Johnson. That means that all aspects of the store have to work. It’s also important to note that the Home store represents more than 12% of the space, and even though Penney’s has a huge opportunity in e-commerce, the reality is that today they have a relatively high fixed cost business and there is tremendous financial leverage in making the brick and mortar Home business productive.

For any department store developing top-of-mind preference and driving cross-shopping is paramount, so success in Home–or any department for that matter– is about more than traditional financial mechanics.

The most vexing issue of course is what does new (kind of) CEO Mike Ullman do now? In the immediate term he’s been focused on the right issues: trying to pull a rabbit out of the hat for the Fall season, driving more urgency and impact through promotions and creating near-term financial flexibility.  And to be fair, it will really be the Spring season before we can get a good read on whether Penney’s is getting any real traction on un-doing the mess that Ullman re-inherited.

Unfortunately for Penney’s the home category may well be the hardest and costliest piece to fix. Going back to where they were (which is largely the path they are now on for the apparel business), is not a viable option. More investment will be needed, either to build consumer interest in the new brands while they evolve the assortments, or to re-envision the space to be consistent with whatever JC Penney 3.0 turns out to be.

Regardless, a few things are clear. First, there are no easy or quick fixes. Second, immediate concerns over leadership (CEO and Board) and liquidity aren’t making the task any easier. Third, and most critically, for Penney’s to claw back lost market share and have any chance to fight and win in an intensely competitive omni-channel world, patience, new thinking and significant investment will be required.

Let’s hope they get that chance.

 

The world’s first omni-channel executive

The world’s first omni-channel retail executive was probably me.

In 1999 (not a typo), in a shockingly rare moment of forward thinking and risk taking, Sears’ senior leadership decided to launch an enterprise-wide initiative to glean how e-commerce and digital technology would alter our business model and to design a strategy to meet customer needs “anytime, anywhere, anyway.”

Millions of dollars were allocated, full and part-time resources were assigned from various business and support functions, a big name consulting firm was hired to help with systems integration, governance structures were created, and yours truly was plucked from the relative obscurity of running a small division to become the Vice President of Multi-channel Development & Integration.

Over a 15 month period, our renegade bunch of retail futurists executed a ton of analysis, unearthed scary findings (we had over 200 different 1-800 numbers!), delivered PowerPoint presentations bursting with jargon and coined memorable catch-phrases (my favorite: “silos belong on farms”). We also gained a deep appreciation for the barriers erected by organizations steeped in product and channel-centric thinking and behavior.

Once we wrapped up our work–and having blown through something like $7 million– we couldn’t point to many immediate high ROI recommendations. But our work did lead to an acceleration of investment in sears.com, building systems to create a single view of the customer and the formation of a central CRM group that yielded a lot of actionable customer insight.  We also developed the confidence to make pioneering investments in critical cross-channel capabilities such as ordering on-line and picking up in-store.

Personally I gained a very firm understanding of what is required to design a customer-centric strategy and implement a frictionless, channel-agnostic experience–which I was able to leverage once I moved on to the Neiman Marcus Group and in the years since I’ve been a consultant.

The purpose of this story, however, is not to regale you with my multi-channel bona fides.

The real point is that despite all the recent fervor around omni-channel this and omni-channel that, if you were really paying attention at any time during the past ten years or so, it has been blindingly obvious that digital technology was going to dramatically change the retail customer experience.

If you were really paying attention, you would know that Sears (and others) were publicly discussing the higher spend and engagement rates of multiple channels shoppers as early as 2003.

If you were really paying attention, you would know that companies like Nordstrom have been investing heavily in channel integration technology and processes for nearly a decade.

So if you are just starting to take customer-centricity seriously now–if you are peppering your earnings reports, industry conference presentations and investor meetings with little anecdotes about cross-channel customer behavior and the omni-channel blur as if this all just started happening–all this proves is that you were not paying enough attention years ago.  One has to wonder what other game-changing stuff you are years behind on.

Of course as Seth reminds us: “The best time to start was a while ago. The second best time to start is today.”

Leading through innovation starts first with awareness. Which needs to be followed with acceptance.

It’s a choice what you decide to pay attention to. And it’s a choice to act and to act boldly. Ultimately nothing matters without action.

It’s later than you think.

No pottery, no barn, no crates, no barrels

Is Crate & Barrel a good name for an upscale home furnishings store?

Does it bother you that Pottery Barn has no pottery for sale and that their stores look nothing like a barn?

In my experience, one of the most frustrating experiences one can have in business is to go through a naming exercise for a new product or service.

I worked on developing a new specialty store concept several years ago and during the search for its name, our CEO came into my office virtually every day to either throw out some idea he came up with the night before (“what if we call it ‘Cool Stuff’?”) or to get my reaction to some existing store name that baffled him (“what’s up with Banana Republic?”).

Of course the issue is that so often we become obsessed with the name, rather than focusing our attention on building a brand. A name without a relevant, differentiated and compelling set of experiences, delivered consistently, over time, risks becoming just a meaningless description.

Now, experts in branding will tell you that there are qualities that make for better names–things like being unique, memorable, easy to pronounce, evocative, supportive of your positioning and the like. And, I certainly recommend that you incorporate this advice into your naming process. By now it’s clear that BlackBerry was a better choice than sticking with the product’s original more literal name PocketLink.

So go spend some time on finding a “good” name. But spend far more time and effort on creating and executing a great brand.

And if you need some inspiration, go do a Google search on your Apple.

 

 

 

 

 

When the vehicle becomes the destination

If you read most marketing magazines, attend a typical industry conference or listen to professional service firms pitching their latest offering you hear mostly about tactics and techniques.

Whether we’re talking about social media, mobile apps, big data analytics, cross-channel integration–or whatever the buzz-phrase of the moment happens to be–there is a tendency to glom on to how something works and whether whatever is being sold can deliver ROI as a stand-alone investment.

Yet the reality is that your journey toward impactful customer-centricity, toward being truly channel agnostic, and ultimately delivering on the promise of a frictionless customer experience, isn’t merely about picking the right individual component pieces that move you closer to your vision.

This is not to say that individual investment decisions aren’t important or that one should completely ignore ROI calculations.

But the remarkable brands of tomorrow are likely to be run by leaders who understand where they need to get to and are committed to work through the ways to get there. They realize that their brand is an eco-system and creating it requires ruthless experimentation, making some bold investments, driving a culture that puts the customer first and aligning the organization and metrics against that end vision.

In an ever-changing and fast-moving world the vehicles we choose are likely to come and go.  When we hold too tightly to them we  risk losing sight of the destination.