Tuesday, March 30, 2010
Starbucks is once again in the news, and this time for something other than its closing of stores, fair trade practices or outrageous pricing. This time the brand has been goaded into taking a position on allowing guns to be openly displayed in its stores located in states with open-carry weapon laws.
The brand has issued a statement, posted on their website March 3, 2010, reading, “We have examined this issue through the lens of partner (employee) and customer safety. Were we to adopt a policy different from local laws allowing open carry, we would be forced to require our partners to ask law abiding customers to leave our stores, putting our partners in an unfair and potentially unsafe position.”
Unfair? Got it. An argument can be made for following the law, certainly. But that “unsafe position” is exactly what many blogging customers of Starbucks seem to be worried about themselves. Some indicate that firearms, while being legal to openly carry, are only carried obviously by provocateurs, at best, or the dangerous, at worst. And they don’t want to hang with those folks, frankly—no matter how good the coffee and free wi-fi. If Starbucks is scared to have its employees ask a customer with a gun to leave, it should not come as a surprise to them that many of its customers are scared to stay.
In our annual Customer Loyalty Engagement Index, Starbucks was able to stop its free-fall from grace and edge back into second place this year, addressing some of the issues that have plagued the brand in recent years. But this stance on what it allows on its premises may not help the brand in a category where “surroundings” is a huge driver of loyalty and engagement. Just as any store can bar customers with no shirts and shoes—a perfectly “legal” right outside its doors—Starbucks can set its own rules for the house. Instead of whining about “being put in the middle of this divisive issue” it might want to stand for something—something that customers really care about.
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Thursday, March 25, 2010
On Tuesday President Obama signed the new health care legislation, which has been both blessed and damned, depending upon which side of the issues you come out on. And while the legislators and lobbyists battle over the details of the law’s form, function, and time frame, we’d like to call attention to one of the less controversial sections of the law:
Every restaurant chain with 20 or more outlets will now be required to put calorie counts on their menus, salad and buffet bars, and drive-thru signs (but not for daily specials or limited-time offers), thus supplying consumers with information on how many calories a healthy person should consume each day. The law also requires labels on vending machine goodies (or not-so-goodies, one supposes, depending upon the actual nutritional content). The measure was designed to create a national policy modeled on the one that Mike Bloomberg pushed through in New York City (which applies to restaurants with 15+ outlets), and virtually guarantees exposure of calorie information in a uniform nature in more than 200,000 restaurants across the United States.
Consumers will see all this information over the next year, but as “perception is reality” is a marketing reality, and while we don’t specifically assess calorie counts, we thought we’d take a look at our Customer Loyalty Engagement Index to see how consumers rate restaurant chains on providing healthy food. Specific categories notwithstanding, here’s how they ranked:
4. Domino’s/Burger King
7. Red Lobster
11. Papa John’s/Olive Garden
12. TGI Friday’s/Ruby Tuesday’s
15. Godfather’s/Taco Bell
17. Little Caesar’s
19. Chuck E. Cheese
According to experts when people eat away from home, they eat worse sometimes because they really don’t know what’s in the food or how many calories it contains, so the theory is that the law would affect the decisions of enough consumers to actually create a public health benefit.
But however it goes, while consumers are still blessed with the freedom to choose when, what, and how much they eat when they dine out, health-care professionals recommend that you not only count your blessings but you count your calories too.
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Tuesday, March 23, 2010
Have you heard the joke going around about Toyota? They’re changing their tagline to “Moving Forward. . . Whether You Want to or Not!”
But now the Japanese carmaker's real slogan can be applied to multiple shareholder lawsuits which are moving forward into class-action cases that could cost the company billions. A law firm in California just filed a class-action complaint in the US District Court.
Shareholders are claiming that Toyota made false and misleading statements in press releases, analyst calls and in SEC filings. Until, of course, last month, when Secretary of Transportation, Ray LaHood, urged Toyota owners to stop driving them and take them to dealerships to be repaired, and the Japanese government ordered Toyota to investigate a possible defect in the brake system.
While we cannot comment about the legal issues we can comment about the loyalty issues. Clearly these problems – both PR and mechanical – are hurting the brand. The Toyota brand, a perennial list-leader in our Customer Loyalty Engagement Index, started 2010 in the 2nd position. Not a big move? It was when you consider that the brand assessments were collected prior to the brake problem hitting the fan and folks started asking, “You know what ‘Toyota’ stands for? This One You Oughta Tow Away!”
But loyalty is no joke. These assessments are leading-indicators of positive, in-market behavior, and it doesn’t take much today – let alone class-action lawsuits – to start to show up in terms of actual sales figures and profits. But loyalty comes with it’s own set of “extras.” They’re called ‘The Rule of Six,’ which states, among others, that not only are loyal customers six times more likely to buy you again, but they’re six times more likely to give the brand the benefit of the doubt, a reality that could come in handy for the automaker.
How is that showing up in the marketplace? Well the current top-5 ranking (excluding high-end, luxury brands) looks like this:
or a 0.72 correlation with sales last month.
And numbers like that are nothing to laugh at!
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Thursday, March 18, 2010
An “early adopter” is a customer in the forefront of company, brand, product, or technology engagement. In politics, fashion, art, they would today be referred to as “trendsetters,” but the term originates from Everett M. Rogers’ 1962 book Diffusion of Innovations. In it he put forward a theory of how, why, and at what rate new ideas and technology spread through cultures.
It’s nearly a half-century later and early adopters – both digital and otherwise – are still as critical to marketers and brands as they were when Rogers first identified them. Technology and the Internet make it easier to locate them, but identifying how they can best be integrated into your marketing process at the opportune time is a more difficult task.
For some current Brand Keys insights into how to predictively measure and more timely engage today’s digital (and non-digital) adopters, we invite you to read an excerpt from an Ad Age Insights White Paper, “Shiny New Things.”
By the way, Rogers proposed that the continuum for new innovation adoption could be categorized as “innovators,” “early adopters,” “early majority,” “late majority,” and ‘laggards.” And marketers particularly want to avoid falling into that last classification.
Because in today’s digital (and non-digital) marketplace there’s an immeasurable distance between late and too late.
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Tuesday, March 16, 2010
There’s a proverb that goes, “between the wish and the thing life lies waiting.” But what with continually increasing consumer expectations and the immediate gratification offered by the Internet, people aren’t keen to wait for very long for very much these days.
But in New York City on West 41st Street people stand on line 24/7 at the counter of 99¢ Fresh Pizza. One block over is 2 Bros. Pizza. They charge $1.00 a slice (tax included), and both restauranteurs offer the same daily special: 2 slices and a can of soda for $2.75, which is what you’d pay for a single slice at most other places.
OK, so consumers – even those with high expectations – will stand on line for a real deal, but if you watch the national pizza chains promotions carefully, you can sometimes find even better offers, and they’ll deliver directly to your home. The 3-for-$5-each offers, even for three smallish pies, equates to about 83¢ a slice.
While not all chains offer the deals all the time, here’s how customers of the national chains rated their pizza for value in the 2010 Customer Loyalty Engagement Index:
2. Pizza Hut
3. Papa John’s
5. Little Caesar’s
6. Round Table
7. Chuck E. Cheese
But deal or no-deal, people love their pizza. In fact, it’s fair to say that pizza is a lot like sex. When it's good, it's really good, and when it's bad, it's still pretty good.
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Thursday, March 11, 2010
Debit cards allow consumers to access funds in their checking accounts, but consumer advocates describe the overdraft fees attached to them as a form of high-interest lending. In fact, according to the FDIC, customers can be charged an overdraft fee as high as $38 on a $5 purchase. Banks automatically recoup that fee the next time the customer makes a deposit, and with modern computers, that’s really high interest really fast!
Overdraft fees on debit cards account for about half of all overdraft fees, totaling nearly $24 billion a year. That’s a lot of credit and a lot of money, and there have been a lot of complaints about debit card fee gouging by banks.
When it comes to Cost of Services and Fees, according to our 2010 Customer Loyalty Engagement Index customers rank their banks as follows:
1. Wells Fargo
2. Bank of New York
3. JP Morgan Chase/PNC
4. Bank of America
Cost of Services and Fees is one of the banking category’s loyalty drivers that makes a big contribution to brand loyalty, almost as much as debit fees contribute to a bank’s bottom line, so this has been a sore spot for both customers and banks.
And while loyalty and engagement metrics are leading indicators of future customer behavior, when you rank toward the bottom of the list in your category, you don't have to look too far into the future to absolutely know what's gong to happen: customers are going to hit you with significant penalties, generally coming in the form of significant withdrawals to other financial institutions.
Bank of America and other big banks have said they were doing consumers a favor signing them up for automatic overdrafts. But B of A changed its tune (and policy) and issued a statement that starting this summer it would just deny debit card transactions for customers that didn't have enough funds in their account to cover charges.
But never fear, customers would, of course, have the option of linking their checking account to another account at the bank and that could provide overdraft protection for any debit card transactions.
For a fee.
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Tuesday, March 09, 2010
Here’s some new research that won’t leave you shaken, but perhaps will stir you to action. According to new research in the Journal Archives of Internal Medicine, if you want to lose weight, consider adding light to moderate alcohol consumption to your daily nutritional supplements.
The study showed that women who initially had normal body weight and consumed light to moderate alcohol could maintain their drinking habits without gaining more weight, as compared to those teetotalers who didn’t drink at all.
The type of alcohol one should consume on a light to moderate basis wasn’t specified, but we can tell you which vodkas consumers rated higher (and lower) on this year’s Customer Loyalty Engagement Index:
1. Grey Goose
3. 3 Olives
4. Ketel One
8. Jewel of Russia
The results of the study bring new meaning to the phrase “balanced diet.” For those hoping to stay slim it can now mean a vodka in one hand and an orange juice in the other!
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Thursday, March 04, 2010
No, no nudity or inappropriate content. This is Hollywood we’re talking about after all. No, it turns out that Jeff Bridges did Hyundai’s voice-overs, but as a nominee for Best Actor, the sponsor has to make sure that ads featuring celebrities (or celebrity voice-overs) don’t run near a segment of the program that might feature that celebrity. Apparently, trying to schedule where seven ads could run without violating Oscar rules was too complicated so seven other celebrities got hired to read the ad copy. This last-minute casting raises some questions.
Is this just a tempest in a teapot? How would hearing the voice of a nominee affect the outcome of the already-completed Oscar voting? Do the voices of celebrities really increase brand engagement, or is that just what the agency tells the client? Do celebrities tell a better “story” than unknown yet skilled actors?
OK, it is pretty cool to sit in the studio and get your picture taken with some star you’d otherwise never meet. But the truth is that most celebrities view this kind of work as an easily earned new income stream. Some celebrities, like Sean Connery or Julia Roberts, will only do voice-overs, not deigning to appear too commercial by actually showing up in an ad.
But that said, it’s equally true that most “celebrity” voices really aren’t as recognizable as, say, Garrison Keillor or Orson Wells or James Earl Jones or Winston Churchill (or an unknown yet skilled actor imitating Winston Churchill). And if you hire a celebrity to read copy, what do you get besides bragging rights, an autograph, and the chance to shake hands at the recording studio? Did you increase loyalty or engagement, make more sales, or larger profits? Will you settle for recognition?
Let’s see how resonant that recognition is. Below is a list of actors who earned $1million + paychecks for lending their voices to commercial ventures. Can you match up the voice to the product or service? Answers appear at the very end of this blog.
1. Jeff Bridges
2. George Clooney
3. Sean Connery
4. Richard Dreyfuss
5. Gene Hackman
6. James Earl Jones
7. Queen Latifah
8. Julia Roberts
9. Christian Slater
A. Oppenheimer Funds
D. Pizza Hut
H. Level 3 Communications
Thinking about those products and services, did the big name (or the big name’s voice) mean anything to you? Did the celebrity voice engage you better? Did you even remember the voice at all? Or did you check this all out using loyalty and engagement assessments to insure that your brand’s values were reinforced and you actually got a real return on your marketing investment?
There’s a Native American proverb that says it takes a thousand voices to tell a single story. But today it can take only one to bust the budget.
Answers: 1I, 2G, 3H, 4B, 5A/F, 6J, 7D, 8E, 9C
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Tuesday, March 02, 2010
Benjamin Franklin noted, “An investment in knowledge always pays the best interest,” a maxim Palm, maker of ‘handheld devices,’ might well have attended to before having to reduce its revenue goals last week. Had they a better understanding of how to compete against rivals like Samsung and Apple, they also wouldn’t have found such a weak demand for their phones.
The cut in Palm’s forecast came in the face of an expanded distribution system – new sales partner, Verizon. And while it’s true that the speed of communication can often help to multiply the distribution of loyalty values, it’s an error to mistake expanded product distribution as an assurance of brand loyalty. More places to buy a product do not guarantee a brand connection with consumers. Only understanding and managing what people really expect can do that. And to do that you need to know what their Ideal for a smart phone really is, not only the places where they might buy one.
The category has shifted so dramatically over the past two years that if a brand doesn’t know – with tremendous certainty – where consumer values are going to be, they can be certain that consumers will disconnect with the brand. According to the 2010 Brand Keys Customer Loyalty Engagement Index, a predictive indicator of consumer behavior toward brands, Palm, once the darling of both consumers and Wall Street, ranked 6th out of seven brands tracked, the current standings looking like this:
Jon Rubinstein, Palm’s chief executive, said the company was working closely with carrier partners to increase awareness of its products. But that’s a problem too. Awareness – even with expanded distribution – is never enough. Being known, but not known for anything in particular, quickly transforms Brands into Category Placeholders.
These days that’s not a place you want to call home.
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