Shopper Culture

Starbucks caffeinates sales with a shot of CRM

After two quarters of declining  sales and  executive-level scrutiny on brand health following reports that the company is straying too far from their brand roots, Starbucks is introducing five new initiatives to realign the company with their true identity. Interestingly, the most attention is being placed on CRM (customer relationship management) approaches to reward their most loyal customers and better understand their needs and desires. One of these initiatives is a standard customer loyalty-rewards program at retail, and another is a new style of website for customers and employees to share thoughts with the people who run the company.

It appears Starbucks is practicing these concentrated CRM tactics to reclaim their position of being the customer's "Third Place" with home and work being number one and two. Third places are social environments generally revolving around beverages. Starbucks is fulfilling on this mission as having become a nationally accepted "Third Place" where consumers spend lots of money, time and collaboration. With their now declining sales, Starbucks recognizes that they must take consumer interaction and entertainment  to  a more subtle but effective level without being too obvious. Who wants a "Third Place" that feels uncomfortable, forced or inauthentic? But that doesn't mean you have to be home-grown and primitive in your communication or approach.

Consumers will soon be seeing something new in Starbucks retail environment with a loyalty-rewards program starting in mid-April. These "on the house" perks are for anyone who buys a Starbucks card and registers the card online, because Starbucks knows they can convert them to loyal users once they get to know them better. Participants will get free refills on coffee, a free cup of coffee when they buy a bag of whole bean coffee, hours of free Wi-Fi a day and "on the house" upgrades including syrups, soy milk, and extra whipped cream on all lattes. The in-person experience will also integrate online through monitoring and MyStarbucksIdea.com.

MyStarbucksIdea.com will initially include about a dozen categories. People can post, discuss and vote for ideas in categories such as coffee, atmosphere, food, music and social responsibility. Forty-eight Starbucks employees will respond to the posts then channel suggestions back to management. "Their job is to show up every day and engage with customers about their ideas," says CTO Chris Bruzzo.

We see two important aspects of CRM at work.

Better understanding core customers. Starbucks is embracing a highly streamlined approach in communicating to and understanding their customer with this online initiative maximizing on a CRM tool which is a smart way to "get to know" your customer, communicate directly with the customer, increase their purchases and monitor and enhance their overall brand experience (Starbucks is using Salesforce which is a top CRM/Sales tool with over 800 applications like these.)

Creating a customer-feedback protocol. Starbucks is getting great ideas directly from their customers creating a sense of involvement in the experience and overall ownership and participation by the customer. They actually show when the consumer's suggestions are "under review" or "coming soon". Each suggestion is acted on; people can view results by participating in this forum. While the suggestions are a form of user-generated content that others enjoy to read, vote on and celebrate successes when Starbucks adopts the new ideas, these comments are also indicative of Starbuck's general business model. The comments imply that Starbucks moves fast and get things done.

Other companies like Dell have joined Starbucks in implementing these innovative tools. Visit www.dellideastorm.com to see the Dell CRPM application taking hold.

We suggest more brands step outside of the comfort zone and taste-test CRM and digital technologies to understand how simple and straightforward they can be. Cost-effective technology is at your fingertips where consumers literally "tell you" what they want, and the tools allow easy customization of direct communication to niche audiences. These techniques could make a venti difference in your sales.

- Contributed by Tracy Kollker

Point De Ventre - Paris

Paris recently hosted a Retail Marketing event called Point De Ventre. Ian Whitney from our Paris office went along, shot some video and made a quick presentation of some of the innovative technology that delivers meaningful shopper engagement. 

Great sign-off Ian!

The Biggest "Bundling" Deal Ever

 

 

Retailers offering sustainable products and habits continue to grow and gain momentum – and more and more retailers are thinking of innovative ways to engage consumers on becoming Green. 

Sam’s Club, like so many other retailers, is focusing their retail efforts around sustainability and Saving Green. They offer great eco-friendly products and tips both in-store and through their catalogue – but are now taking their sustainability efforts to a whole new level, by offering a “for purchase” Eco Home Makeover. For just $44,000 all of your eco-dreams can come true. The package includes solar panels, a wind turbine, high efficiency appliances for your kitchen and laundry, and energy efficient lighting. All of this aside, you also get put up in a luxury eco-lodge in Maine during installation, and you come home to a house-warming party to celebrate your eco-wonderfullness! Now that's what I call a package deal!

"Bundling" seems to be a relatively new concept, at least in its current context. Companies are bundling/packaging their services left and right. What began with vacations is now being offered by companies like Comcast, the largest cable company in the United States. It seems to make sense. As our lives get more and more complex, the more we want (and need) to simplify.

This offer is quite unique, however. Never before have I seen such a 360 degree approach. Comcast is certainly not sending you for a mani/pedi while they sync up your wireless to cable to tv to music. In fact, your schedule is at a disadvantage by opting for their services. Sam's Club, however, has pretty much covered every possible excuse you could think of to not do this. For example:

    1. "I don't want their unsightly appliances in my kitchen."

    With Sam's Club, you can choose the appliances yourself.

    2. "Where are we going to go while they tear everything apart?"

    Sam's club will not only put you up, but fly you so far away that the sound of wrecking balls is the furthest thing from your mind.

    3. "How am I ever going to clean up the inches of dust they're going to leave in order to show off our new home?"

    They're not only going to clean, they'll throw the whole darn thing for you! And bring PBS camera men!

It will be really interesting to see what kind of traction this gets in the marketplace. This is clearly not a "bundle and save" offer, nor is it a "go green, save green" initiative. This is pure convenience for the eco-minded shopper.

In this lies the potential to change the way we offer services. Is there a limit to what people will pay for this type of worry-free experience? Will brands/companies/services be forced to turn into experiencial machines to stay afloat? Time will tell. But it seems as though the gap between "do it yourself" and "have it done for you" is getting wider and wider.

Read more at http://www.samsclub.com/shopping/navigate.do?catg=11606

White Paper: Point of View on the Impact of P.R.I.S.M. on the In-store Media Landscape

Each year billions of marketing dollars are spent in-store despite the lack of any significant industry metrics or standard gauge of effectiveness. The P.R.I.S.M. initiative, led by Nielsen and the In-Store Marketing Institute, aims to change that.

As we look back at the history of all major media today, we see that industry metrics have played a critical role in the adoption and maturation of every media vehicle.

So with this white paper, we take a look at the next frontier: in-store media and the impact of the development of the P.R.I.S.M. research approach. How will this marketplace evolve as we move ever closer to the standardization of language and measurement?

Download the White Paper here.

Toshiba after HD-DVD: Down but Not Out

If you read the recent post on Sony's Blu-Ray's recent victory over Toshiba in the HD-DVD space, you know Toshiba pulled out of the race the moment they calculated they couldn't win. In today's Wall Street Journal, Toshiba's CEO, Atsutoshi Nishida commented on the move:

"One has to take calculated risks in business, but it's also important to switch gears immediately if you think your decision was wrong. We were doing this to win, and if we weren't going to win then we had to pull out, especially since consumers were already asking for a single standard."

Moving quickly on bad news is bold step, especially for Japanese CEO, many of whom might have postponed a decision even in the face of the inevitable, in order to save face. Building on this, the Wall Street Journal cited five management tips from the Toshiba CEO:

For those of you who are concerned about Toshiba's future, don't worry too much. CEO Nishida reminds us that HD DVD was one of 45 strategic business units or "areas of growth" and 44 still remain.

The Diaper Dilemma

As a woman just over a month away from having her first child I am continually awed by the strategies marketers use to target new moms; continually taking advantage of their emotional highs and lows, their raging hormones, and their fear that they won’t have everything they need to care for their new arrival – it is no wonder that this is a booming industry. I receive non-stop ads in the mail for the myriad of things that new parents (allegedly) need. How did our parents ever do it without all of this stuff?

Having just completed a trip to Wal*Mart and Babies R’ Us, I was overwhelmed by the back wall of diaper options. From Huggies, to Pampers, to generic brands. Although I did not see any eco-friendly options the choice is amazing. Where does one begin?  All of my “green” friends keep asking me if I am going to use cloth diapers, or find an eco-friendly route? As an overwhelmed pregnant women, the thought of cloth diapers is not very appealing at the moment. (Ironically none of my "green" friends have children). But in a time when sustainability and environmentally friendly are becoming everyday terms, what are my eco-friendly options and why am I not seeing them?

There is no doubt that we live in an era and a culture where convenience and time are extremely important. Cloth diapers might not be an option for me, but there have to be some choices out there for biodegradable, or green products that are still convenient and easily available to me. I started searching and found a couple options. My goal was to find things that were easily accessible and didn’t cause me a trip out of my way.  Seventh Generation was the most readily available and is a disposable option. They market chlorine free / toxic free diapers. Obviously I have not tried them yet, but if they are anything like Seventh Generation toilet paper or paper towels, then I won’t want them touching my newborns sensitive skin! The price is slightly higher, and there are still conflicting reports on whether they are actually that much better for the environment than regular diapers. The other interesting option available is G-Diapers. The idea around this is that you purchase cloth velcro pants and then insert flushable refills into the pants  - making the diaper.  The flushables are plastic free and have no toxins. They are marketed around the convenience of flushing them down a normal toilet. The cost is approximately 35 – 40% more than regular Pampers or Huggies, and I can only purchase them online. It is here that the Diaper Dilemma begins!

In the baby category, filled with toys, clothing, swings and all the “must haves” for a newborn, the environmentally friendly diaper options are limited and the marketing for these products appears to be sparse (or, maybe it is just getting lost in the clutter of everything else).  New moms are easily overwhelmed and are looking for convenience, cost savings and ease of use.  It appears to me that there is a huge opportunity here, one that will make the Diaper Dilemma a little easier to solve. 

Images courtesy of DailyClipArt.net
   
- Contributed by Tera Gill

Ikea - 1 to 1 with Shoppers

Here is an interesting in-store device that comes via Unplugged.  Spotted at Ikea in Seattle was this Mobile Kiosk where you register to recieve product info. and coupons. 

We all know that non of us can live without our cell phone anymore and it's role continually changes. No longer just a means to call home now it's your weather reporter/news aggregator/social networker/information hound.

With Ikea it can be a tool to know when the newest products are available in-store, and a mechanism to deliver digital coupons so you can save cash.

What is also interesting about this technology and the use Ikea is making of it is that it delivers a relevant brand-to-individual consumer (1-to-1) communication - 'Since you bought a couch last month, how about this coffee table to go with it?' - rather than a brand-to-masses communication - the usual 'Hi everyone, here's all of our stuff'. So it becomes a great brand use of data and the deigital medium in the retail space. But is it cool, or will it be annoying to get these texts about a new sofa once a week?

- Contributed by Brian Crawford

How much of our shopping behaviour is pure habit?

As a relatively recent arrival to the USA, my family was put through some major changes to their lives, one of which was a change in how we undertake our weekly grocery shop.  We came from a city where we had shopped on-line for most products, including weekly groceries, for the last 5 or so years.  The convenience of having what we ordered delivered to our door within a two hour time slot is fabulous.  However, we moved to an environment where that is no longer a viable option, having instead to drive to a supermarket and walk the aisles. (And as I am at work most of the time, I confess that my role in this activity is now non-existent!)

We were discussing this with friends the other week though and I was amazed at quite how quickly my wife had fallen into a pattern of behaviour that, when we thought about it, is driven purely by habit.  Very quickly she fell into a new routine - she uses the same supermarkets, walks the aisles in the same order, buying the same brands, on the same day of the week at about the same time.  It's clockwork.  She doesn't even particularly like one of the supermarkets she uses - it is cluttered, cramped and not the nicest environment.  Yet there is little incentive to change going there, and when I asked her about why if she is not that impressed, she doesn't go somewhere else, she hadn't really thought about it. It's just part of how she lives her life now.

So how much of our shopping behaviour is actually driven out of habit? How sedimented do we become with regular purchases like this?  How much more difficult is it to change our shopping behaviour than to establish it?  When was the last time you thought about and changed how you shop? 

And what impact would a change in the store environment have on our shopping basket? I guess the impulse to act is not that great for my wife, but how much better could shopping be (and how much more money a supermarket, in this case, might extract?) if they could break down this cycle of habit? What could the store and/or brands be doing to make this a better experience, to help her discover new things and make it interesting?

Your Shopping Cart Powered by Microsoft

A number of recent articles, here is one, covered the announcement of Microsoft's partnership with MediaCart and Wakefern Foods (ShopRite) to deliver interactive shopping carts into ShopRite stores. Working at a retail focused agency, it is always interesting to see investment in our arena by major media players, e.g. CBS buying SignStorey.

Along with the creation of Nielsen In-Store and P.R.I.S.M., these types of announcements bring increasing credibility to the industry and attention to the power of in-store marketing. Further, this represents a marrying of online technology (Atlas) and an in-store vehicle, which shows a very positive evolution of thinking.

However, all that excitement aside, I have a certain amount of skepticism about the success of this vehicle. I think for a select group of early adopters, it will be embraced. But for many shoppers, are they really ready for this? 

Grocery shopping used to be simple; go to store, get cart, put stuff you need in it, sometimes there were signs that told you what was on-sale.  Now, you can enter your shopping list online before you go, it'll download to your cart computer; and tell you about specials on a contextual basis when you hit the right aisle. As a marketer, again, think this is fantastic. Love the blend of technology and context to deliver truly targeted ads. However, I'm just not sure your average shopper will think they "need" all this, but that's just my opinion. Time will tell.

On a side note, (and I owe this to a colleague at another in-store company) what happens when carts are stolen? Your average shopping cart costs something like $150 (i looked it up). What happens $1,000 shopping carts start disappearing?  How are retailers going to feel about losses in that arena on a daily basis?  I mean this in all seriousness, and would love to hear how the deals are configured and if they account for loss like this.

Macy's push poll

I recently made a purchase at the Macy's here in Denver's Cherry Creek Shopping Center. Everything was seamless and expected, including an overly cheery clerk at a cosmetics counter (the registers at the Men's Store were all occupied). 

But things went slightly south when, at the end of the transaction, the clerk urged me to fill out a survey that rated her performance.  She openly told me that if she received high scores she would receive a $25 gift certificate to Macy's.  She presented me with a laminated sample of the survey that highlighted Overall Shopping Experience with a red X in the box for Outstanding (see picture).

Perhaps what I saw was the handiwork of a renegade store clerk and a laminating machine.  Or maybe it was actually a store-issued program. 

Whatever the case, it feels emblematic of a larger abuse of customer service "research" that is growing in line with consumers' demand for high quality service. 

Another example from my own experience is at the dealership where I get my car serviced.  They must call me twice a month reminding me how much they are committed to my full satisfaction.  Urging me to be on the lookout for a survey call in the future.  Bludgeoning me with kindness. 

Not only is the research that comes of these studies flawed, but it must have a boomerang effect for some shoppers. 

So what's going on here? Are political research's infamous push polls leaking into the retail satisfaction space?  Where's a good brand cop when you need one?

I suspect it's a natural byproduct of the separation of sales and marketing.  And the simple fact that these are large companies, and it's no one's explicit job to be the enforcer.

But it all serves as a warning to those brand stewards working the floor, manning the counter, making the sales calls, designing the online checkouts: Beware the blurry line between serving and selling.

Who's Hungry?

From a macro point of view we know that we feel good when we purchase a product that helps contribute to a cause.  From Susan G. Komen to (PRODUCT) RED, a lot of marketing support is put behind these efforts to make us aware and encourage us to purchase these products.

From an in-store perspective I think this is one of the best executions I've ever seen.  Leo Burnett Canada and Campbell's soup teamed together in the grocery channel for local foodbanks.  Here is a description of the program from directdaily:

In a grocery store 4,820 can s of Campbell's Soup were used to build an installation piece that spelled HUNGER. Signage beside the piece encouraged shoppers to buy one and donate it to their local food bank. As shoppers bought cans from the display the word HUNGER slowly disappeared. This allowed people to see how their individual effort could help bring an end to the problem of hunger.

This example works on a variety of levels, it 1) increases sales of Campbell's products 2) supports a great cause 3) provides a visual example of the difference one person can make.

- Contributed by Todd Cameron

Retail Surveillance

As I was reading the December 6, 2007 issue of the Economist, I couldn’t help but think of the irony involved as retailers attempt to create more personal environments for their customers.  The article, Watching As You Shop, points out the very impersonal technologies being developed and utilized by retailers around the world to learn more about their customers in order to provide them with a better shopping experience.

Customer monitoring software can now measure how long queue lines are at registers, which parts of the store are the most traveled, and how long customers stay in one place.  From Tesco in the UK to Walgreens, Best Buy, or Abercrombie & Fitch in the US, the channel is irrelevant as retailers are employing the technology to create a point of difference, and for good reason. 

In addition to a more pleasurable experience for customers, retailers are hoping to increase sales by learning what types of promotions are working and what areas are “hot spots” in the store for traffic flow.  Combine increased sales with more efficient staffing and retailers are not only increasing sales, they are cutting costs.

The players specializing in customer monitoring software range from companies such as Irisys and Brickstream to a consortium including manufacturers such as Coke and Procter & Gamble (P.R.I.S.M.) to university initiatives like VideoMining a spin-off from Penn State.

With this kind of focus already placed on how we shop, the technology to understand our actions in-store is only going to get more specific and actionable, begging the question: As consumers become aware of the technologies used to study their behavior, will they care? 

There is a lesson to be learned here from American Express.  When they openly discussed how they review cardholders' spending patterns to tailor offers to them, they faced a significant consumer backlash.  Even though they had been doing this for years, their cardholders felt betrayed.  My guess is that we as a culture are getting more comfortable with this type of information being gathered about us and as long as we believe we are getting a better deal or experience we won’t mind too much.

[Image: Irisys]

- Contributed by Todd Cameron

Building your brand on secondlife.com?

Although this YouTube video is primarily focused on highlighting the paradigm shift in mass communications to 1-on-1 communication, the more important message here is about the opportunity to build a brand in a virtual, social environment.

Check it out:

Consistent with characteristics of a community, second life is made up of residents that create their world, their identity, and choose their friends. More importantly, they thrive on word of mouth recommendations. As viral communication thrives, Secondlife provides yet another platform for sharing.

Residents create avatars reflecting their personal identity in this virtual world. And many brands are already taking advantage of this. Avatars can visit the American Apparel virtual store to view the latest clothesline, buy Dell computers, and read news updates from Reuter.

And you thought is was all for online gamers, recently Secondlife became one of the cutting edge virtual classrooms for major colleges and universities including Harvard, Stanford, and Princeton. Administrators host lectures, inform students of projects and chat live outside of the traditional classroom.

The future of the virtual platform is at its infancy.  At a virtual world conference in October 2007, IBM and Linden Lab announced plans to develop open standards that will allow avatars to roam from one virtual community to the next. The goal is let a person create a digital alter-ego that can travel to many virtual worlds, keeping the same name, look and even digital currency.  And Secondlife isn’t the only opportunity to get involved.

If you’re not sold yet, there are hundreds of ad, design and marketing agencies dedicated to creating destinations and opportunities on Secondlife. If hundreds of companies are being created to simply service this platform, it’s definitely not a fad.

With the increase of clean-store policies, companies must build their brands out of store to influence that purchase decision before they walk in the door. And with consumers spending less time with traditional media and more time online, companies must shift dollars to reach them.  Promo Magazine Industry Trend Report for 2007 reported that marketers are spending 32% of their promotional dollars online (only higher medium was Direct Mail) to generate promotional support. 

From tracking consumer “IM” relating to your product to testing a new product before it hits the shelf, Secondlife provides research capabilities as well. These residents are early adopters and will champion new products if you give them the opportunity. Building brand loyalty takes time and trust, and Secondlife provides a highly-targeted medium to reach current and future customers.

Afraid of jumping in and taking a risk? You should be more afraid of getting soaked on the sidelines from your competitors' cannonball.  It’s just a matter of time before your competitors announces their presence. Andrew McGregor expressed this in the YouTube piece, but I agree. “In five years, the brands with the most social presence online, will also be the most competitive in the marketplace.”

- Contributed by Kelly Walz

Can you really tell shoppers what to buy?

An interesting piece in the Weekend Wall Street Journal this Saturday prompts a question regarding how shoppers are engaged to buy a product.  The article talks about high-end boutiques and retailers in New York City calling or emailing consumers to tell them which expensive items their loved ones would like or might be interested in.  It's part of a growing trend by these retailers, both on and off-line, to increase their holiday retail sales...and for some consumers it's a god-send, yet for others it's an unwanted intrusion.

While the article depicts a fairly "narrow" circumstance, it does point to the opportunity to engage consumers differently.  The idea of reaching out to consumers to guide their purchases is not new - we've all received Catalina coupons in grocery stores that offer an incentive to buy a like (or competitive) product based on our purchase the clerk just scanned, and it's hard to avoid Amazon's "If you like this, you might also like this" approach to suggestive selling (which, by the way, really works).  Starbucks this past year began leveraging Apple's iPhone and the iTunes music service - shoppers walk into a cafe to buy a latte, hear music in the store, and are automatically contacted via WiFi on their iPhone with a message "If you like this song, please hit 'purchase' " and the song is downloaded to their phone. 

There are new technologies coming that will further enhance these opportunities to reach out to consumers and "help" their shopping. The advanced mobile phones from Europe and Asia that store credit card data on handsets and read RFID tags are coming to the U.S.

And the ability to scan UPC codes at shelf with a mobile handset and automatically receive product information and, more importantly, consumer reviews to help select (or worse de-select) a particular product at the exact moment of purchase decision is right around the corner.  The downside is that consumers can also then determine where to go to find the best price for that product, which might not be in that particular store.  But rather than feel defensive, brands should embrace that "moment of choice" for the shopper to proactively engage the potential buyer with information (and better yet an experience) that helps them close the sale right then and there.  And ideally sets up a repeat engagement with that same buyer the next time they're in the market for the product.

Brands need to think about a broader range of influences on their shoppers.  The myriad of communication vehicles traditionally deployed to reach consumers will continue to be important.  But it's the combination of those elements with new, different contact points that will create the newest, best ways to influence purchase behavior.  As shopper behavior shifts, so the need for brand behavior to change increases, and finding ways to effectively reach out and "suggest" a specific purchase is something to add to the communication arsenal.  While right for some brands, it is appropriate behavior for all?

Contributed by Marc Ducnuigeen

The Cosmetic Worlds Collide

It used to be that one had two options for cosmetics and skincare - the drugstore or department store. Both had their advantages and disadvantages. At the drugstore, you had a multitude of choices, all at reasonable prices. But, there was no opportunity for experimentation or exploration. If the lipstick shade you bought was within three shades of what the picture looked like, you considered yourself lucky.

On the other hand, department stores were just waiting for you to come in and try. Unfortunately, they were crawling with pushy, overdone sales people committed to their lines, not to you.

Enter Sephora. The current Mecca of cosmetic retail, Americans are absolutely spellbound by endless rows of testers, hard to find products, and unbiased staff. It's like the Super Bowl of makeup. Each store is a mad house during every single business hour. They're opening new stores across the country like they're going out of style.

But there's still something missing. What happens when you do need advice? You can stick your hand in that shiny gooey stuff, but where the heck do you put it on your face? And what is the difference between that $100 eye cream and that $100 eye gel? Even if you can find a staff member who's not running around like a chicken with their head cut off, he or she's probably not going to be much for education. It's high-end product with low-end experience - like shopping Neiman's at Target.

If you're a lipstick whore (meaning you know your stuff), this is your spot. If you're a novice, god speed.  I still think there's opportunity in this market for a different kind of retail. Space NK, a British upscale Beauty retailer, is opening 4 stores in the Tri-state area by the end of the year. They have 60+ stores in the UK, and are bringing their unique retail approach to the US. Hallmarks of Space NK are hard-to-find lines, education and trial, makeup-trained sales staff (that aren't commissioned by line), and a chic, upscale atmosphere.

According to Space NK,

"We provide a highly edited selection of the best products from true innovators within the industry and this offering caters to many different lifestyle choices. We employ highly educated sales associates and expert make-up artists who enjoy working with customers."

While my guess is that nothing about this store is a bargain, you do get to test the products with trained, unbiased staff in the kind of environment you'd expect when you drop $250 on 12 oz of goodies. Here you can escape the madness that is Sephora, and the stuffiness that is (enter favorite department store here).

While we wait for the right balance of self service vs. trained staff, of get-in-get-out vs. stay-awhile, and of try vs. don't try, I can't wait to see how Space UK does. It's about time the beauty market went boutique.