Thursday, February 26, 2015

Is Target Off-Target With Cuts To Minimums For Free Shipping?



Target, the discount retailer, well-known for its low-lower-lowest pricing strategies and low-lower-lowest same-store sales, has instituted a 50% cut to its minimum online purchases for customers to qualify for free shipping. Now all consumers have to do is spend $25 to qualify for Target’s free shipping, although handling fees may still apply.

And no, it’s not out of the goodness of their hearts. It’s a short-term shot at Amazon and Walmart, which currently have higher minimums. Why “short-term”? Well, it won’t take long for Walmart and Amazon to institute the same free-shipping pricing. In fact, by the time you read this both retailers will have likely changed their policies, which is a really good example of “retail poker.” You play for table stakes, or you don’t play at all. Someone “raises” and then the other players in the category have to raise or blink, and nobody every blinks! They just keep raising. It’s also an attempt to meet consumers’ increasingly higher expectations about, well, everything. So all in all, what we call an “easy fix.”

According to our new 2015 Customer Loyalty Engagement Index, in the online retail category “free shipping” accounts for a 15% contribution to brand engagement, up a third from last year, and something that has become a high- expectation item in the retail category. Zappos, who instituted the free delivery, free return policy set the bar pretty high for the rest of the online retailers. And anyway, “free” has always been a great engagement mechanism. Way before the Internet.

According to our 2015 Customer Loyalty Engagement Index, here’s how online and discount retailers rate when it comes to meeting expectations for added value à la shipping costs for their Ideal retailer (100%):
  1. Zappos (100%)
  2. Amazon (95%)
  3. Walmart (87%)
  4. Overstock (85%)
  5. Target (79%)
  6. Kmart (75%)
Based on current customer views about this particular category value, Target really does need to do something, but a 50% cut probably isn’t going to do it. Not for long anyhow. Necessity may be the mother of invention, but so is desperation!

Consumers aren’t stupid. They have very high expectations. If retailers like Target can offer free holiday shipping, consumers figure they can do that all the time. Why should they pay more? It’s their right, after all. Don’t they deserve it? And if a retailer doesn’t recognize that, there are lots of other retailers.

Anyway, consumers are on to all the tricks, especially membership programs. Join Amazon Prime and you get free shipping. Overstock.com has a membership program too. For Target, all you have to do is join their RED card program. You can get free shipping on bigger orders from Walmart, but you have to wait a week or so to get your stuff. Don’t think that going to go too far meeting customer expectations.

Target’s been having a tough time of it. The 2013 data breach didn’t exactly instill confidence in consumers, although it did inspire lawsuits. And last month Target closed all of their stores in Canada, which in fairness didn’t have anything to do with shipping costs. Lack of sales had to do with the fact that they got the product-mix all wrong, which was a really expensive lesson for them! So for the moment it’s only a cut in shipping minimums.

It was Sam Walton that said, “High expectations are the key to everything.” The tough part is you have to accurately identify what those expectations really look like and then meet them.

And today, that’s the hard part.


Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Wednesday, February 18, 2015

And The Academy Award For Advertising Engagement Goes To. . .


They call the Academy Awards the “Super Bowl for Women.” Unlike the Super Bowl, ad space was sold out four months before the event. Just like the Super Bowl, ad rates were up to $1.9 million for a 30-second spot with first-time host, Neil Patrick Harris.

Last year the Academy Awards captured nearly 46 million viewers, an 8% increase YOY, making it the most-watched entertainment telecast in the past ten years, with the biggest viewership in 14, and a seven-year high among the much-coveted 18-34 demo.

Pepsi was the exclusive soft drink advertiser last year, but gave it back to Coca-Cola, which had held that spot for the five prior years. The switch may have been due to the inadvertent promotion Coke got when last year’s host, Ellen DeGeneres, “ordered” pizza for the stars sitting in the audience and the boxes had the Coke logo on them. You really had to look for them, but these days a plug’s a plug, and ABC gave Pepsi a number of make-good spots to make amends. Now Coke is back.

Last year must have been the year where promotion trumped ads. Samsung is back following the celebrated three million-tweeted selfie that featured their Galaxy Note 3. As we have said in the past, counting tweets, particularly one of a crowd of celebrities, may not be the most accurate way for brands to calculate ROI, but it certainly did give the phone more on-air face time, what with social media hype the current proxy for actual emotional engagement. We’ll see what Mr. Harris does this year.

J.C. Penney will be sponsoring the Oscars. This will be their 14th consecutive year. Their ads usually feature high fashion for all the obvious reasons but advertising, and advertising believably, are two entirely different things and it hasn’t seemed to have done the brand much good. Who shops for high fashion at JCP? But, one supposes a girl and a brand can dream, can’t they?

In other ad-biz news, GM will be back this year, replacing Hyundai. Anheuser-Busch InBev is expected to run ads for Stella Artois, but given the brand and the venue, you probably shouldn’t expect any puppies. King’s Hawaiian, the #1 branded dinner roll in the United States, is running an ad looking to gain national awareness. They’ve positioned themselves as the “Official Snack of the Awards Season” (having already run ads on the People’s Choice Awards) and, as the “Super Bowl for Women,” the Academy Awards is certainly the spot to catch the attention of moms, although awareness in-and-of-itself – no matter how much you entertain an audience – isn’t usually a good ROI metric and doesn’t necessarily guarantee business, i.e. sales. And bread and buns as “snacks?”

We approach the business of advertising on big events like the Super Bowl and the Academy Awards, from two perspectives, “entertainment” and “engagement,” which are really two, very different things. Just like movies and advertising are two different things, although more and more advertisers seem to forget that fact. One is there just to entertain. The other is there to convince viewers to engage with the brand and behave more positively toward the brand in the ad. You know, buy something. At the very least think better of the brand. Not just sit there and laugh or be amazed at green-screen special effects, blasting funny/exciting/sexy commercials at them.

We measure real emotional ad engagement using a validated process to fuse emotional and rational values of category and brand, and then quantify how exposure to the advertising emotionally engages the viewer, hopefully getting the viewer to “see” the brand as better meeting the expectations they hold for the category Ideal. And yes, before the movie/research critics start carping, entertainment and engagement are not necessarily mutually exclusive. But advertisers often confuse the two, and if you’re a marketer and are given your choice between one or the other, you should always vote for “engagement.” Attaining both means not only was your creative top-notch, but your brand strategy was, as well.

Anyway, last year – also based upon our predictive engagement assessments – we offered up some odds on who would win the Academy Awards in the “big” categories, and did pretty well. Please note we provide these for entertainment value only. If you’re looking to engage in some moneymaking outcomes, you’re on your own. Just like advertisers without engagement metrics.

Best Picture
Birdman                                             8/13
Boyhood                                              5/4
The Imitation Game                           50/1
The Grand Budapest Hotel                50/1
American Sniper                                50/1
Whiplash                                          125/1
The Theory of Everything                 125/1
Selma                                               150/1


Best Director
Alejandro Gonzalez Inarritu (Birdman)            8/15
Richard Linklater (Boyhood)                            11/8
Wes Anderson (Grand Budapest Hotel)        100/1
Morten Tyldum (Imitation Game)                   100/1
Bennett Miller (Foxcatcher)                            150/1

Best Actor
Eddie Redmayne (Theory of Everything)          4/1
Michael Keaton (Birdman)                                 3/1
Bradley Cooper (American Sniper)                  18/1
Benedict Cumberbatch (Imitation Game)         66/1
Steve Carrell (Foxcatcher)                             125/1

Best Actress
Julianne Moore (Still Alice)                        1/100
Reese Witherspoon (Wild)                           25/1
Rosamund Pike (Gone Girl)                         40/1
Felicity Jones (Theory of Everything)           66/1
Marion Cotillard (Two Days, One Night)       80/1

Best Supporting Actor
J.K. Simmons (Whiplash)                              1/80
Edward Norton (Birdman)                              18/1
Mark Ruffalo (Foxcatcher)                             28/1
Ethan Hawk (Boyhood)                                  80/1
Robert Duvall (The Judge)                           100/1

Best Supporting Actress
Patricia Arquette (Boyhood)                           1/80
Emma Stone (Birdman)                                  30/1
Keira Knightly (Imitation Game)                      66/1
Meryl Streep (Into the Woods)                        66/1
Laura Dern (Wild)                                            66/1


We wish all the nominees and advertisers “good luck.” Actor/Director Clint Eastwood, a 10-time nominee himself has noted, “There's a lot of great movies that have won the Academy Award, and a lot of great movies that haven't. You just do the best you can.”

With engagement assessments, advertisers can do better than that.



Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Monday, February 16, 2015

Brand Keys 2015 Customer Loyalty Index: Gap Growing Between What Customers Want & What Brands Deliver


Consumer expectations have increased nearly 28% YOY. That’s according to our 2015 Customer Loyalty Engagement Index® (CLEI). That’s an important number because in a marketplace where brands struggle to create meaningful differentiation and engagement, those better able to identify customers’ expectations and then address them via authentic emotional values always see tangible bottom-line results.

While some marketers and consultants have only recently come to acknowledge the importance of consumer expectations, something Brand Keys has tracked for 20 years. Empowered and socially- networked consumers have come to expect everything from brands, particularly as regards emotional gratification and engagement. Meanwhile brands have only managed to improve their ability to satisfy consumers’ expectations by 7%, which is a pretty big gap. Brands able to meet consumers’ emotional expectations always have higher engagement power, more loyal customers and, axiomatically, greater sales and profits. The difficult part is accurately measuring this gap and determining what emotional values can help a brand successfully fill it.

Thirty-six (36) new brands appear in the 2015 CLEI, a number that’s a real indicator of volatility for brands that can’t emotionally engage consumers. The CLEI brand list isn’t pre-determined. Consumers tell us which brands they actually use and brands must be mentioned by enough consumers to provide a statistically generalizable sample. A significant number of new brand mentions tells us consumers are looking around for other brands that will better meet their expectations on the emotional side of the purchase equation. Oh, and they’re talking to each other before they talk to you. If you’d like to see the brands with highest levels of consumer engagement vis à vis their ability to meet expectations in their respective categories, a complete listing of the 64 categories, and the rankings of the 540 brands in their categories can be found here.

Assessments from this year’s Customer Loyalty Engagement Index found the gap between what consumers expect and what brands deliver, driven almost entirely by emotional values. More emotionally driven categories have higher expectations that escalate faster. The more rational categories have lower expectations and are more stable. Marketers and consulting firms acknowledge consumer expectations are a new area they need to better address to guarantee engagement and profitability – shifting from a “try to do it better” approach to one of “engage the consumer differently.” Unfortunately, without predictive emotional engagement metrics, many brands try to “shoehorn” values that they’ve seen work in categories entirely different from their own. If you do that, you shouldn’t be surprised when they don’t work. Consumers don’t buy cars the same way they buy cola or computers.

For the 2015 survey, 36,605 consumers, 18 to 65 years of age from the nine US Census Regions, self-selected the categories in which they are consumers, and the brands for which they are customers, although this year certain categories included Canadian consumer assessments as well.

Brand Keys uses an independently validated approach that fuses emotional and rational aspects of the categories, identifies the four behavioral drivers for the category-specific ‘Ideal,’ and identifies the values that form the components of each of the four drivers. The Ideal describes the precise path-to-purchase drivers, describing how the consumer will view the category, compare brands and how they will engage with the brand, buy, and remain loyal. The four drivers, for example, for the Smartphone category have been identified as 1) Brand Reputation & Design, 2) A Platform For All My Needs, 3) Features & Personal Connectivity, and 4) Brand Value & Customer Support. Again, drivers are category-specific since Consumers don’t buy smartphones in the same way they buy cosmetics or pizza so that one-size-fits-all list of “values” is not the optimum way to look at your brand!

The assessments measure how well brands meet expectations that consumers hold for each driver that makes up the Ideal for a specific category, and is a combination of psychological inquiry and statistical analyses, has a test/re-test reliability of 0.93, with results generalizable at the 95% confidence level. It has been successfully used in B2B and B2C categories in 35 countries.

Consumer expectations always grow so being attentive to the engagement expectation gap in one’s category presents a brand a real opportunity. If a marketer does something that increases a brand’s engagement level they always see more positive consumer behavior in the marketplace. Always,” And brands that are assessed as better meeting expectations held for the Ideal have greater market share and are more profitable than the competition. Always. But to do all that you need real insight.

In this instance “insight” can be defined as an accurate answer to two questions: “What do my customers expect?” and “Which values will best fulfill those expectations?’”

And you know what they say. Insight is identifying and caring immensely about a couple of right things, and not caring a bit about the rest. And based on this year’s CLEI survey, they’re right!



Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Monday, January 26, 2015

When It Comes to Super Bowl Advertising, Emotional Engagement Beats Entertainment. Always.



Fewer than half of Super Bowl XLIX’s advertisers will score big on their considerable investments, according to the 13th annual Super Bowl Ad Engagement Survey conducted by Brand Keys.

When it comes to Super Bowl ad playbooks, brands hope ads will score big in five ways: 1) big audiences, 2) big creative, 3) big buzz, and 4) big social networking, and 5) big levels of emotional brand engagement. That last one is most important! It’s a leading-indicator of consumers’ positive behavior toward the brand in the only arena that counts – the real-world marketplace.

The Super Bowl, one of the most-watched events in broadcasting, has long been a showcase for innovative advertising creativity, but in an attempt to level the ad playing field, marketers have increasingly moved to create up-front buzz for their ads, a tacit recognition that it’s a given their ads will get noticed – along with everyone else’s.

Sure, brands need to entertain if they want buzz, but today, if brands want a real return, it isn’t enough just to entertain, they need to emotionally engage consumers with their ads.  Do that, and consumers come away feeling the brand better meets their expectations for their Ideal in the category where the brand competes. That’s what real brand engagement is all about, and way different than entertainment or methods of engagement. 

Assessments collected via mobile software from 2,705 men and women measured social networking activities for 26 brands reported in the media to be Super Bowl advertisers calculating consumers’ emotional engagement for the brand itself, the levels of anticipated advertising entertainment (according to social interactions and buzz), and the brand within the context of the Super Bowl broadcast. Results were perceptually mapped to identify where consumers saw the brand falling, identifying whether consumers felt the brand will engage and entertain, entertain only, engage but not entertain or neither engage nor entertain. Each combination results in a different in-market outcome for the brand and for this year’s results, just click here.

It turns out that only 46% of the brands were assessed by consumers as both engaging and entertaining (only 12 of the 26 brands), slightly lower than the 12-year historical average of 50%. Those included Pepsi, WeatherTech, Doritos, GoDaddy, and Dove Men+Care. According to social networking inputs, brands assessed to be highly entertaining but with low engagement levels included Budweiser, Coke, and McDonald’s.

Agencies and marketers all pretty much assume their ads will be entertaining, but advertising really shouldn’t be judged only by entertainment value or related social network activities, but how it ultimately performs in the marketplace. Does the ad emotionally engage and build brand equity?  Does it engage enough to drive sales? If so, you’ll see positive bottom line impact - even if the advertising wasn’t as entertaining as envisioned. A brand that can both engage and entertain is a real Super Bowl winner.

With 30-second spots selling for a reported $4.5 million plus, marketers need a new game plan when it comes to ad effectiveness and ROI. Monday-morning creative quarterbacking is always fun. Ad entertainment and social networking reviews generate lots of chatter, traditional and digital. But these days that’s not enough.

On this particular Sunday, when a brand gets into people’s living rooms and on their computer or mobile device screens, it doesn’t matter how many consumers tweet, like, or share if, ultimately, it doesn’t increase emotional brand engagement levels, positive consumer behavior, and sales. Otherwise what brands have produced are very short, very expensive movies!

And sticking with this Sunday’s theme, it’s worth remembering that there may not be an “I” in “team,” but there is one in “ROI.”



Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: brandkeys.com. Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.