Thursday, February 26, 2009
That these are bad times for banks isn’t new news. But what may be is the fact that banks are not only cutting back on bonuses, private aircraft, and off-sites; they’re cutting back on their credit card reward programs too.
For example, JPMorgan Chase recently rolled out a less generous program for their Freedom card, which used to provide a 3% cash-back bonus and now only offers 1% (unless it’s for specially promoted items). Discover requires a forfeit of cash for inactive accounts or late-payers. Amex cut their free domestic companion airline ticket program for Platinum and Centurion cardholders.
Moves like this clearly migrate rewards from “delight” to “expectation” to “surrender” on the part of the consumer and moves may turn out to be penny-wise and customer loyalty foolish. According to our 2009 Customer Loyalty Engagement Index, when it comes to Credit Cards, “Rewards and Services” has gained greater import to customers. Currently, as it applies to this valuable loyalty driver, cards rank as follows:
As “Rewards” are both an important loyalty driver for consumers and a prize, they’d be wise to pay attention to the changes being instituted by banks because if they don’t’ use their rewards they could just lose them. They’d also be wise to remember the words of Chief Justice Earl Warren who noted about banks, “They're first in with their fees and first out when there's trouble.”
Tuesday, February 24, 2009
Throughout modern baseball, core statistics have traditionally been referenced — win:/loss ratios, batting average, RBIs, and home runs. Comprehensive, historical baseball statistics were difficult for the average fan to access until 1951 when The Complete Encyclopedia of Baseball was published. Eighteen years later, using a computer to compile statistics for the first time, the Baseball Encyclopedia was published. Known as "Big Mac", the encyclopedia was the standard baseball reference until 1988, when Total Baseball was released. But here are some baseball statistics that don’t appear in any of these references:
Number of men who still have a baseball glove from their youth: 65%
Number of guys who recall which player’s name was on the first baseball glove they owned: 50%
Percentage of men who break in a brand new glove by placing a ball inside and putting it under their pillow: 25%
Number of men who actually own pair of baseball cleats: 66%
Number of non-professionals who wear eye-black during a game: 7%
Number of women who like a man’s baseball cap to be worn slight off center: 9%
Time it takes to construct a typical baseball glove: 10 days
Time it takes if a pro needs one right away: 1 hour
Of course, when it comes to statistics, it’s interesting to remember that baseball is the only field of endeavor where one can succeed three times out of ten and be considered a good performer!
Thursday, February 19, 2009
Yesterday, in the viability plan submitted to the government, G.M. indicated it plans to cut its car lines in half, to only four: Chevrolet, Cadillac, Buick and GMC. Most of its big competitors – Toyota and Honda - build their businesses around three brands or fewer. Ford is moving to focus primarily on three - Ford, Lincoln and Mercury, so this seems a smooth move for G.M. It’s just the rationale that’s rusty.
Experts have suggested that cutting the number of brands is a good thing because it frees up marketing dollars since – the logic goes – if there are too many brands, no particular brand or brands can achieve the share of voice that they need. But that kind of thinking is what got the industry into its current trouble. It isn’t “voice” or “awareness” that was absent, it was “meaning.” The flagging car marks have become just placeholders in the automotive category that stand for nothing in particular.
According to our 2009 Customer Loyalty Engagement Index, the top-5 automotive brands imbued with the most “meaning” are:
Anyone notice a pattern here? G.M. (and Ford and Chrysler) cars do not suffer from a lack of voice or awareness they suffer from a lack of meaning in the mind of the consumer.
Generally speaking, most of G.M.’s current roster of cars stands for nothing. Well, to be more accurate, most of them just stand for “cars,” which makes them a commodity, not a brand. Their more successful competitors? Honda stands for “reliability.” Toyota stands for “efficiency” and today, “hybrid.” BMW stands for “engineering,” and Mercedes and Lexus, for “luxury.” What does Buick stand for, and, more importantly, why should you actually want to buy one, beyond a general mechanical dependability, the “employee discount,” and government tax credit?
To succeed today a brand needs something beyond awareness - you need to stand for something beyond “zippy,” or “red,” or the car “Tiger Woods used to stand next to.” As G.M. and Ford and Chrysler crunch their bailout numbers and plan their next marketing campaigns, they would be wise to remember the words of a famous mathematician, Pythagoras, who noted, “silence is better than unmeaning words."
Tuesday, February 17, 2009
The Academy Awards are called “The Super Bowl for Women,” but female ratings have been on the decline. And while it’s the second-most viewed TV event after the Super Bowl, these days if you’re looking for winners, it’s better to bet on engagement than it is on eyeballs.
Viewership this year is likely to be up as consumers – disheartened by the economy – seek some glamorous escapist entertainment that doesn’t cost anything. Even though ABC lowered the price for ads from $1.7 million to $1.4 million some major advertisers, like GM and Revlon, have exited due to the economy. So those who do advertise will just have to wait to see if their investments paid off. But while we wait for the numbers to come in, we’d like to point out that the investment of millions of dollars doesn’t have to be done in a vacuum. Engagement metrics can advise advertisers whether they’re making a good (or bad) investment. It can be done for any brand, for any media touch point before you spend your money.
So here are the results of our annual Academy Awards Engagement survey, conducted among 1,000 men and women, 18 – 59 years of age. The process quantifies the level of engagement created by the combination of the media environment and the advertised brand – the increase (or decrease) to a brand’s equity resulting from an advertising effort on a particular show like the Academy Awards. It reports the “return” or “loss” gained from the advertising effort. The results have been indexed to allow for cross-category brand comparisons, and are benchmarked to 100—like so much in this world, higher is better (+ 5 result in a significant ROI at the 95% confidence level.) Results for 9 specific brands reported to be advertising this year were as follows:
Apple : 107
Cingular Wireless: 103
An increase in brand equity always results in an increased engagement. That means viewers will pay more attention to the advertising, think better of the product, and actually go out and buy the advertised product.
Anyway, last year we offered up some odds on who would win the Academy Awards based on the same loyalty and engagement assessments we use to measure ad success. They managed to predict – with 90% accuracy – the recipients of the various Oscars. So here are the odds we came up with for the “big” categories this year. We provide these for entertainment value only. If you’re making real bets on the outcomes, you’re on your own! (Advertisers without engagement metrics are always on their own!)
Slumdog Millionaire: 3:1
Benjamin Button: 4:1
The Reader: 8:1
Sean Penn: 3:1
Mickey Rourke: 4:1
Frank Langella: 5:1
Richard Jenkins: 10:1
Brad Pitt: 20:1
Kate Winslet: 3:1
Meryl Streep: 4:1
Anne Hathaway: 5:1
Melissa Leo: 6:1
Angelina Jolie: 10:1
BEST SUPPORTING ACTOR
Heath Ledger: 2:1
Josh Brolin: 4:1
Philip Seymour Hoffman: 4:1
Michael Shannon: 20:1
Robert Downey Jr.: 25:1
BEST SUPPORTING ACTRESS
Penelope Cruz: 3:1
Viola Davis: 3:1
Marisa Tomei: 5:1
Taraji P. Henson: 10:1
Amy Adams: 15:1
Danny Boyle: 2:1
David Fincher: 4:1
Stephen Daldry: 5:1
Gus Van Sant: 7:1
Ron Howard: 20:1
We wish all the nominees and advertisers “good luck.” Actor/Director Clint Eastwood once 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.
Thursday, February 12, 2009
Legend says it started with a letter from Valentine to his beloved, and now, every February 14th cards and gifts are exchanged between nearest and dearest. But this Valentine’s Day will be the first major holiday of 2009 to feel the economic pinch. Based on our annual survey, the average price placed on love is $108.00. That’s down 15% from last year.
Men, women, and friends still intend to celebrate – just spending slightly less. Gift-giving has skewed away from the purchase of big-ticket, expensive presents and gift cards. And the traditional tokens of love – flowers, candy, jewelry, and lingerie – are all down 10 – 15%. And this is the first year that gift card purchases has flattened, a behavioral harbinger that in this economy people intend to give fewer tangible gifts.
Consumers will, however, use spending time with their Valentines as a surrogate for the more material gifts. Four times the number of celebrants intend upon celebrating at home, and smaller, less expensive, and more intimate tokens of love and devotion, like dinners and drinks have picked up nearly 16% over last year.
The bottom line: Love may conquer all. It’s just going to be a little bit more difficult in this economy.
Tuesday, February 10, 2009
Starbucks is working to convince customers that they are not “expensive” and just an average cuppa joe! It’s the beginning of a campaign to persuade consumers that not all their offerings cost four bucks a cup. They’re going so far as to train barristas to tell customers that they are misinformed, and the average price of a beverage is only $3, and that most items cost under $4. Just what the average Joe wants to hear first thing in the morning!
This is yet another move by Starbucks to reposition for the current economic landscape, the thing they blame most for their customer defections and attendant sales declines. Last year they introduced a loyalty card and began offering a dollar-off coupon for a cold beverage after 2 PM with proof of purchase from that morning. But Starbucks sales have been in decline for a while now, and these declines preceded the economic downturn, and therein lies the problem with their class-to-mass strategy.
While the economy is crumby, and there are always people who are price sensitive, and while people are indeed counting their pennies, Starbucks’ problems run deeper than just price perceptions. Most of what they face has to do with the fact that the category has changed. There isn’t a major city anywhere where you can’t currently get a more-than-acceptable, economical, non-Starbucks recreational beverage. What was once “delight” is now “expectation” and that change was accompanied by a shift in price-value perceptions, which is A) why $4 – even $3.50 – seems a lot to pay for 16 ounces of coffee, and B) why a generation of consumers don’t think twice about getting a latte at Dunkin’, McDonald’s, or their local coffee shop
According to our 2009 Brand Keys Customer Loyalty Engagement Index, Starbucks own customers rate the brand #3 behind Dunkin’ and McDonalds, and price is actually the 3rd most-important loyalty driver. So being price conscious is fine, and being seen as a value-brand even better, but Starbucks needs to wake up and smell the coffee and acknowledge that there are far more leverageable values than price.
Play that card long enough and you end up a commodity.
Thursday, February 05, 2009
In our new book, The Certainty Principle, co-author Amy Shea, Brand Keys EVP of Global Brand Development (currently presenting at the 2009 WARC Advertising Conference in London), wrote, “as the recent Jerry Seinfeld/Microsoft pairing proved, having money to spend is no guarantee that it will be spent wisely.”
For confirmation of that statement, we invite you to read Brad Stone’s New York Times Advertising column, “In Campaign Wars, Apple Still Has Microsoft’s Number.”
To further quote from our book, “it’s tempting to think of advertising as requiring a trade-off, that it is impossible to both bring attention to a message and sell something. But it’s not impossible. It’s just hard.”
Happily, real brand engagement numbers let you know ahead of time what consumers really want, really expect, and what they are willing to believe about a brand, and that makes the task a bit easier.
As to the numbers that matter most, Macintosh gained more than 2 percentage points of market share in the last year and now controls nearly 10 percent of the overall market for personal computers.
Now, that’s ROI.
Tuesday, February 03, 2009
In 2006, Citigroup signed a 20-year $400 million contract for the naming rights to the Mets’ new stadium - the replacement for Shea. Since then Citigroup, who has had net losses of $28.5 billion since 2007, received $45 billion in taxpayer bailout money, and government coverage on a $301 billion pool of Citigroup’s bad loans. There have been rumors that Citigroup would like to back out of the deal, especially as it has been attacked as a prime example of misplaced spending by financial institutions.
According to our 2009 Customer Loyalty Engagement Index, the two most important loyalty/engagement values in the banking category are “trust” and “financial acumen.” We think it’s fair to say that Citigroup has exhibited neither of those traits, and given the cost to taxpayers, one really has to suggest that keeping the name on the stadium will only provide fans with a 20-year reminder of corporate hubris at its very worst.
Re-selling stadium naming rights isn’t new. In Baltimore, ISP PSINet acquired the naming rights in 1999 to the original stadium, Ravens Stadium at Camden Yards. When PSINet filed for bankruptcy in 2002, M&T Bank acquired naming rights to the stadium. But PSINet went quietly into the night. Such is not the case here although some Citigroup executives have been urging the company to scale back advertising and marketing to avoid public condemnation and government oversight. After all everyone knows the “Citi” name, and plastering it on a stadium isn’t going to help its current image and reputation, particularly as up to now this would be the most expensive naming rights deal ever.
Along with Citigroup there’s Reliant ($300 million for Houston Texans), FedEx (($207 million for Washington Redskins), American Airlines ($195 million for the Dallas Mavericks/Stars), and Phillips ($182 million for Atlanta Hawks/Thrashers) who make up the top-5 naming rights deals. Of course the difference is that none of the others did it with taxpayer money.
There are advocates and opponents for naming rights deals, and to be honest, most consumers don’t concern themselves with the ROI (return-on-investment) sports marketing deals like this create for the sponsoring brand. Most marketers don’t either. No, for Citigroup it’s more basic than that. There’s a lot of consumer anger over signs that the massive taxpayer capital infusion has done nothing to ease up consumer loans. And without that, how will fans be able to afford the tickets?