No. 4 April 2014

We have all been told that if we would only collect more data about our business or our customers or our industry, we would be so much smarter, our marketing would magically become more successful and we would see instant results in revenue growth and satisfied customers.  If you believe that, then you and I need to talk about a bridge I’m selling. 

Jake Sorofman, in a recent HBR.org Blog, states that “Data, alone, isn’t what makes marketing move the needle for business.”  But he does believe that while “data can play a leading role in developing strategy and bringing precision to execution, it does nothing, absolutely nothing – to stir motivation and create the desire that makes cash registers ring.  Data is important, but it is content that makes an emotional connection (with a customer.)  Marketing leaders must remember that true brand intelligence lives at the intersection of head and heart, where the emotional self meets the analytical self.”

Sorofman lists “four strategic leverage points that allow marketers to deliver the right offers and experiences to the right customer at the right time while optimizing engagement and conversion rates.”  The first leverage point is “observing customer behavior to gain new insights.”  The second is “engagement, where you make impersonal brand messages more humanized, resulting in greater customer acceptance.”  The third leverage point is “inspiration, where moments of human insight and perception are captured, indexed, and harvested for strategic advantage.”  And the fourth is “automation, where speed and precision are used to target offers and experiences across channels for continuous optimization based on measured effectiveness.”

If you are so focused on your data that you misjudge or overlook the emotional connection you must make with your customers with your content and message, your marketing efforts will never be fully successful.

We’ve all heard the description used sometimes to describe a person that states, “He or She is a class act!”  Harvey Mackay says that “Class is hard to define, but easy to recognize.  Similarly, the absence of class is easy to detect – and a serious flaw for anyone who aspires to be successful.”

Mackay continues by saying “class is not an ‘act.’  It’s a deep-seated way of life for those who possess it.  Having class involves good manners, politeness, and pride without showboating, empathy, humility, and an abundance of self-control.  The actions of class-act people speak louder than their words.  You can see it in their body language and the way they carry themselves.  Class always shows without being announced.”

“People can tell if you have class by the way you interact with others.  If you have class, you don’t need much of anything else to be a winner.  If you don’t have it, no matter what you do, it won’t make up the difference.  Money, notoriety or success by themselves won’t give you class.  Class comes from within, not from external sources.”

Jack Canfield, in his book The Success Principles, lists some reasons why being a class act helps you succeed.  He writes, “People want to do business with you or become involved in your sphere of influence.  They perceive you as successful and someone who can expand their possibilities.  They trust you to act with responsibility, integrity and aplomb.  Class acts tend to attract people who are at the top of their game.”

So look closely at your network of friends, co-workers, customers and so on.  Are they class acts?  Whether you realize it or not, they are a reflection of you.

Harvey Mackay says “the good news is that if you don’t like what you see, you can change.  Make a decision to recreate yourself as a class act and see what kind of people you start attracting.  Do fewer things, but do them better.  Change your behavior for the better.  Raise the quality of your attitude.  When you have a higher level of personal standards, you get better treatment from everyone around you.  Once you’re a class act, you can say a lot without ever uttering a word.”

No. 7 July 2013

I know you read the headlines in 2012 about Ron Johnson, the Apple vice president, who was hired away from Apple to become the president of J.C. Penney (“Penney”). By the spring of 2013, he was gone — fired by the Penney board of directors. I wanted to find out why, because I was sure there were some good business lessons to be learned. As it turns out, there is much to be learned from what Johnson did and did not do at Penney.

When Johnson arrived at Penney, he found a culture of sales, markdowns and coupons — exactly the opposite of Apple’s culture of high prices and a very high level of service to go with it. In Penney’s culture, I’m sure Johnson saw that constantly changing prices in the stores took lots of manual labor. At Apple, there were no surprises in margins and gross profit, managing to budgets was easier, and there was more efficiency throughout the enterprise. Inventories were stable at Apple, and there were no whiplash effects of selling thousands of an item one week and none the next week because of discounting and coupons.

The interesting fact was that Penney customers were actually not paying less in the old culture. Penney just kept raising prices and then discounted those prices during promotions. The average markdown was 50 percent. Low consumer prices were really a mirage. But Penney customers were conditioned to wait for deals and sales, partially because they did not have a good sense of what an item was really worth.

Alexander Chernev, a professor at the Kellogg School of Management at Northwestern University, summed up the faults in Johnson’s strategy this way: “By going to everyday low and ‘fair’ pricing with a single non-discountable price, Johnson assumed consumers have some context for how much items should cost. But they don’t. Penney might say it’s a fair price, but why should consumers trust Penney?” Chernev asked. “At the end of the day, people don’t want a fair price. They want a great deal. Consumers infer that they get a great deal based on the reference point provided by the higher, presale price. Social scientists refer to this idea as anchoring, and it applies to all sorts of consumer behavior and expectations. Without that anchor, consumers have trouble determining whether the store is actually giving them a good price.”

A Journal of Retailing study says, “Even the words a retailer uses in its marketing can affect how a customer judges a deal — ‘sale’ or ‘special’ leads people to think the item has a high value, but a straight markdown leads them to think it’s a cheaper item.”

In the old Penney culture, limited-time sales lured customers into the stores, which was very important because Penney doesn’t have a differentiated, high-value product like Apple. Also, coupons were effective in drawing in a broader consumer base — one shopper to buy at a high price, and a more price-sensitive shopper to buy the same item at a lower price.

Which retailers have been able to make everyday low pricing successful? Those that take narrow profit margins like Costco and Wal-Mart. Costco almost never runs sales and doesn’t adjust prices much, but it depends a great deal on annual membership fees for profit. Wal-Mart makes up for low margins with huge volumes of customers that come to its stores. But there was no such clarity at Penney. Penney told its customers to expect low prices — but not the lowest prices. Penney could not communicate exactly how much its shoppers were saving with everyday low pricing, and regular Penney shoppers became confused and stayed away.

Now, we’re reading that Penney employee layoffs have affected employee morale at Penney. Will good customer service be the next thing to go away at Penney?

Harvey Mackay reminds us that one of the most important things employees can remember when they come to work every day is “that their primary job is to provide incredible customer service.” That’s the culture you want in your business.

Mackay goes on to say, “Perhaps the simplest way of creating a service culture is a variation of the golden rule: Treat your customers as you wish to be treated.  Make your customers excited that you’re in business. Make them grateful that they have the opportunity to buy your services and products. Make them feel like they are your most important client. Make your service so outstanding that they wouldn’t even think of doing business with anyone else. And then find a way to make your service even better! Remember: Customer service is not a department, it’s everyone’s job.”

No. 1 January 2013

Did you make a New Year's Resolution for 2013?  Did you keep it any longer than 2012's New Year's Resolution?

It's been a few years since I've even bothered making a New Year's Resolution.  Of course, I'm the guy who's reached the age New Year's Eve means going to bed at the usual time, unless I'm at a party.  And even then it's a struggle keeping my eyes open until midnight.  You may have experienced the very same "symptoms."

But I like New Years Day and always have.  There's something special about beginning the New Year with another opportunity to make a positive difference in the lives of others, whether they be family, friends or employees.  The feeling should be that it's the first bright new day of the New Year.  And that's a good feeling because opportunities abound.  Yeah, we had our ups and downs in 2012.  But that was yesterday.  Just remember not to spend a lot of time looking back at last year, because "back" is not the direction you want to be going in 2013.  Moving forward should be your focus. 

I suppose the most important thing to remember for 2013 is that doing things the same way you have always done them will not change your results for the better.  So shake things up.  Do things better and differently.  If it doesn't work out, try something else.  Have a goal and focus on it for 2013.  You can make it happen.  You can make a difference.  And always remember that smiling is contagious.

"Showrooming" is a relatively new word in the world of retail sales that I told you about a few months ago.  "Showrooming" occurs when someone walks into a retail store, has a clerk demonstrate the features of various products, and then, when they return home or even while they are on the retail floor, they will shop the item they want online, looking for a better price.

Best Buy, in particular, has been really affected by "showrooming."  It is combating this by having sales reps with tablets meet customers as they enter the store.  The sales reps then escort the customers throughout the store as they compare specs on product models that interest them, allow the customers to experience and use the features on the models they like best, and then consummate the sale on the spot.  If the product isn't in stock, the clerk can arrange for same-day in-store pickup using Best Buy's existing warehousing infrastructure or offer home delivery.

Enhanced customer service in the form of knowledgeable salespeople is how retailers are differentiating themselves from online e-tailers.  I can buy an Apple computer online directly from Apple.  But if I purchase the Apple computer directly from a near-by Apple store, I can get all the hand-holding and knowledge transfer that will really make me comfortable with the purchase. 

Because retailers are facing pressure from two directions, Walmart's low prices and Amazon's e-commerce driven convenience, they are reinventing themselves by embracing "omni-channel commerce."  "Omni-channel commerce" aims to deliver a seamless consumer shopping experience through all available channels - i.e. mobile devices, personal computers, brick-and-mortar stores, catalogs, and newer shopping channels yet to come. 

Why am I sharing this with you?  Because you need to know what is happening and what is changing in the retail channel.  When you read that big-box retailers are focusing on enhanced customer service and extremely knowledgeable sales people, you know that you have already been offering these services to your customers for many years.  You already know these are competitive advantages for you.  Focus most on what you do well or should be doing well.  You'll be surprised at the results.

Harvey Mackay suggested in a December Blog that every company should have a Santa Claus attitude.  I wanted to share a few of these Santa Claus attributes with you, because they'll serve you well in your business.  Santa Claus has a great reputation.  He is a magnanimous soul who stands for goodness and generosity.  Santa Claus is a great listener.  He pays very close attention to what you want.  Santa Claus has a great smile.  You know how important I think "smiling" is!  Santa Claus has humility.  He never takes credit for all the happiness he spreads.  Santa Claus has enthusiasm.  He does the same job year after year.  He's a pro.  Wow, let's all be a pro and be the best we can be for 2013.