Posts Tagged ‘retail’

Kroger Shows Loyalty to Customers (from #DHI09)

Wednesday, September 30th, 2009

Kroger mymagazine

One of most exciting things about the DHI Non-conference last week here in Cincinnati was a session by The Kroger Company, one of our clients at Bridge Worldwide. Through its various banner stores, Kroger is a major player in the retail food business, capturing 10 cents of every dollar spent on food in the United States. The company is not secretive, but it doesn’t go around regularly beating its chest about how it is winning in a very competitive market. In a session titled “Innovation and How to Meet New Expectations for Media Delivery,” RW (Kirk) Douthit and Angie Rose from Kroger shared several nuggets about how they are working to evolve to digital marketing by putting their customers in the center.

The main focus of the discussion revolved around Kroger’s work with its database marketing partner, dunnhumby, to provide personalized messages and offers to its loyalty cardholders. The company has the second-largest database in the U.S., after the Census Bureau. Kirk kicked off the discussion by reframing how Kroger thinks about the loyalty program:

“It’s not about customers’ loyalty to us; it’s about Kroger’s loyalty to its customers.”

This message permeated everything in the company’s session. Kirk and Angie spoke about the company’s use of quarterly coupon magazines (such as the one pictured above) that are personalized for its top shoppers based on their purchase habits. This helps the company drive sales of new products and larger baskets sizes from the 20% of customers who drive up to 60% of total sales.

The Kroger team spoke about how it is gradually embracing digital tools where it makes sense for its customers. They admitted that progress is slower than some customers want, but that it takes time to get things right. And while some shoppers are ready for innovations such as mobile coupons and online circulars, the company still has to provide mailed offers for the many who are not living in the digital future yet.

One of the really interesting digital services that Kroger is planning to release soon is the chance to pull up your Kroger shopping history. It’s a way of giving people a digital receipt and something unheard of in the industry to date. This could help people, say, track their spending on pharmaceuticals over the course of the year so that they can be properly charged back against flexible healthcare spending accounts. It’s a great example of how customers can see additional benefit from using their Kroger loyalty cards.

Finally, I also appreciated the Kroger team’s willingness to share how the decline of traditional media is happening faster than digital is ramping up. For example, a staple marketing tool for decades has been the daily newspaper. When sales needed a boost, Kroger has frequently used newspaper ads to drive traffic to stores on specials. But the decline of newspaper subscriptions is seriously weakening the impact of these ads, and there is no digital solution with the same scale impact. It’s another example Bob Garfield’s The Chaos Scenario come to life.

The entire audience really enjoyed Kirk and Angie’s open and honest communication about the opportunities and challenges in digital marketing. By better understanding their world, those of us who serve them can do much more to help Kroger crack the code.

Best Buy Plays a Meaningful Note with Instruments

Wednesday, September 23rd, 2009

best buy pandora

In my final post of takeaways from last week’s iMedia Brand Summit I wanted to give props to a competitor who I admire, Clark Kokich, Chairman of Razorfish. Clark got the second day of the conference started by asking the room to think less about digital tactics and more about marketing strategy. He shared a handful of examples of work that brands are doing that start with big, strategic ideas that happen to lead to some killer digital work. For example, the Nike Human Race 10k, and Fiat’s new tool that allows people to upload information about how their driving is impacting CO2 emissions. But my favorite example, and something I just had to share here, is that of Razorfish’s work with Best Buy in selling musical instruments. This story shows how getting into a new product category is a great way to launch with meaningful marketing at the center.

Business Challenge

Just a little more than a year ago Best Buy first announced it was getting into the musical instrument business after a successful pilot in a handful of stores. This seems like a no-brainer. After all, Best Buy has one of the largest selections of music and music equipment, and its vast stores certainly have enough room for some instruments. According to Kokich, “They could have just run ads telling people that Best Buy now sells instruments.” But the reality is that this is not a big market, and it is currently dominated by specialty retailers such as Guitar Center. So the challenge for Best Buy was: How can we stand out in an existing market that needs a lot more buyers?

Insight

Best Buy saw huge untapped potential among adults who always wanted to learn how to play an instrument. The rise of games such as Guitar Hero and Rock Band showed the potential.  But the biggest barrier is that many people are afraid and intimidated. People who work at guitar stores are mostly “stoners… who resent you for being able to buy the instruments that they cannot afford.”  So many potential buyers hate even going into the leading instrument stores.

Solution

Best Buy’s strategy was to “become a partner in helping you rediscover your love for music.” And by starting with this overall, customer-focused strategy, it was clear that just running a 30-second ad wouldn’t work.  The company started with the purchase point, and created a “store within a store” with trained musical instrument specialists. Each store also offers group and individual lessons. In terms of marketing support, digital has a leading position. Barry Judge, Best Buy’s CMO said this about the company’s approach:

“Our musical instruments department (in about 100 stores nationwide) is all about experience. Everything is plugged in and ready to play. The staff is friendly, knowledgeable, and approachable. We carry professional-grade gear from brands like Fender, Marshall, Roland, Yamaha, and Drum Workshop. We are working on building awareness of our musical instruments department, but more importantly, building credibility and authenticity. We hope to inspire people.

Digital allows us to connect with our customers in new and exciting ways, and our digital experience is meant to tap into that potential. Later this summer, we want our customers to create “dream rigs” from our inventory and share them with their friends on the social platforms they use.  We will be using the power of digital to let our employees, musicians from communities around the country, and our customers share their passion for music and their insights. Instead of just telling people that we have these great instruments, we want to show them, and help them experience them in the digital space in unique ways that go beyond catalogs of products.”

Kokich described how his team is inspired by the call to “become a partner in helping people rediscover their love for music.”  One example is a unique advertising effort with Pandora. Again, instead of just skinning Pandora with big ads for Best Buy, the company created a unique ad (above) that actually shows what instruments are being played in each song. (On a side note, I can’t find that tool anywhere at Pandora–what a lost opportunity!) He shared some glimpses of work in progress including Facebook tools to help people form a band and ways for people to build an interactive wish list. This should be an exciting space to watch in the months ahead.

Results/Conclusion

It is too early to call this a success, as Best Buy has only just begun supporting this effort in earnest. Of course, I welcome any comments from Barry Judge (@bestbuycmo). But the real lesson here is that a new marketing strategy is a great opportunity to rethink your approach to marketing–and make it meaningful from day 1.

BONUS: Kokich on Client Organizations

One of the biggest challenge of shifting to a meaningful marketing model is the existing organizational behavior of clients. As our boss, Sir Martin Sorrell said at the P&G Global Alumni Reunion back in June, “The amount of time we see our clients wasting on bureaucracy and infighting is appalling.” Kokich also drew attention to this key issue in his presentation. He made the point that “digital” can be sales, CRM, advertising, research, and customer service.  But clients have kept each of these functions in separate silos (”and they all hate each other”) for so long that it is difficult to take advantage of the opportunities.

Kroger and Clorox Deliver a Dose of Prevention

Thursday, June 25th, 2009

A few weeks ago, Jonathan Richman from my team at Bridge Worldwide sent me this photo of complimentary disinfecting wipes that are available at our local Kroger stores near the shopping carts at the store entrance. I’m not sure if he specifically noticed this due to Swine Flu concerns, his growing traffic at his blog, Dose of Digital, or the fact that he is reading an advance copy of my book. Whatever the reason, it’s a nice reminder that little details can make a powerful impression on customers.

Kroger (full disclosure: a client of ours) and Clorox have actually been providing free disinfecting wipes for years. It is a very smart way to show the quality of service and amount of concern for shoppers at a “moment of truth,” that first step into the store. Interestingly, I could see an argument that providing these wipes could actually be a negative: They could send a signal that the store is dirty. But Kroger took the risk because it is the right thing to do for its customers. The recent concern over Swine Flu makes it even more critical.

Is this marketing? Is this a service? I’m not sure and it doesn’t really matter. What counts is that Kroger was thinking about the details and caring for the people who come through its doors each week. And the moment this blog post went up, it became word-of-mouth marketing… with meaning.

Value Tips from Food Retailing Forum

Monday, May 4th, 2009

I received a lot of attention from my recent posts about how to improve the value equation through meaningful marketing, so I assume that this is a very relevant topic for readers and Googlers. A few weeks ago, our friends at MVI hosted a Future of Food Retailing Forum here in Cincinnati. I was unable to attend the event, but one of our star Client Service Managers, Andrea Bollin, provided our agency with a nice summary of the event, which hit again and again on consumers’ value needs.

The main purpose of the conference was to hit many topics that are useful for vendors and suppliers of all types that serve retailers—and we attended to get more perspective for Bridge Worldwide’s major food retail client, Kroger. There were two main takeaways from the two-day conference that hit on both value and meaningful marketing:

1. “The New Premium”—The concept of what consumers expect in a “premium” brand is shifting dramatically due to the economic downturn, a concern for environmental sustainability, and an overall desire by people to make a more positive impact in their purchases. According to MVI, the new premium brands are transparent and have a focused purpose. New premium brands also never mention price, but instead show added value through their social, sustainability, and health/wellness contributions. In a world where premium brands are less and less better performing than low-cost store brands, they must differentiate along other lines that people care about. I’m very excited to see the future of marketing when leading brands innovate and create marketing along these lines.

2. Teach People New Skills—One of the conference sessions shared some emerging themes in consumer messaging. One specific example is the opportunity for brands to help consumers learn or rediscover new skills. A few things are driving this: (1) People are increasingly interested in “doing it yourself” to save money and enjoy an experience, but they need to learn how; and (2) young adults today spent less time in the kitchens, yards, and garages with their parents learning how to bake a cake, landscape, or change the oil, respectively, so there is a skill gap waiting to be filled. Teaching a skill is one of the big opportunities for brands that I explore in the upcoming book, using examples such as Home Depot’s in-store classes. The idea is that brands can close a sale and earn long-term loyalty by helping people better themselves.

Overall, it’s great to see more and more industry minds triangulating on the importance of marketing that itself adds to the value equation by improving people’s lives.

As a special offer to readers of this post, you can read Andrea’s brief summary of the event by downloading it here.

Making Mobile Meaningful

Thursday, May 15th, 2008

For the first “official” blog post here, I want to dive into mobile marketing and share some breakthrough work we just launched for one of our clients, Pringles. Yep, Pringles + Mobile = Meaning.

Mobile rapidly is shaping up as the next big target for marketers’ efforts to reach their customers at a time when traditional media is losing its effectiveness. Nearly every consumer has a mobile phone or device, the technology is advancing to allow for better experiences (see Treo, iPhone), and geo-targeting offers the chance to, say, ping a pedestrian with a pizza ad just as she is walking by the pizza restaurant. Marketers are also intrigued by the chance to make a deal with phone networks who “own” their customers in a way similar to broadcast TV networks of old.

Despite the hype, mobile has been very slow to show a viable marketing model, mostly because people will not tolerate unwanted interruption on this most personal of devices. We already know that people are sensitive about having their phone numbers used for marketing. At least 76 percent of Americans have placed their numbers on the National Do-Not-Call Registry. Studies by Nielsen in 2007 show that only 18 percent of people trust mobile advertising, and 67 percent of mobile-phone customers who use data services said that mobile ads are unacceptable.

The solution? Make the marketing meaningful.

A few companies have found that people actually will choose to engage with mobile marketing that helps them out. A recent Adweek story provided some great examples. Vicks is providing weather alerts via SMS. CoverGirl created a “ColorMatch” application that recommends makeup while women are shopping. And Visa launched a wine-and-cheese-pairing recommendation tool.

I’m proud to say my company, Bridge Worldwide, launched another great mobile tool just a few weeks ago. We are testing a mobile shopping list for the Pringles brand. We came up with the idea because we know we can significantly increase sales to Mom if we can just remind her of Pringles at the point of purchase. Meanwhile, we know Mom is increasingly planning grocery trips on her laptop. So it was natural to create an online shopping list tool that could be sent via SMS to her mobile phone.

We set up a way to read household panel data among our test group, which will tell us whether or not this process moves cases, the tool is limited to folks in a small test group, so I cannot share broadly; but we might be able to share results in the future. At least one other marketing blogger likes the idea.

Interestingly, just as developing nations are skipping telephone poles and “land lines” and going straight to mobile for their first phones, mobile might be the first medium that skips interruptive marketing entirely and goes straight to marketing with meaning.

Please send me any examples of mobile marketing tools you have created for your brand or clients. I just might feature them here.