Learn All You Can From The Mistakes Of Others. You Won't Have Time To Make Them All Yourself.

With the economy turning from recession towards growth, retail marketers appear to be more confident about a pickup in consumer activity. But consumers are wily creatures and it's never too early to plan for sales success and avoid mistakes.

On August 1st through the 3rd, the 2010 Retail Customer Experience Executive Summit will be held in Chicago, IL, for an exchange of ideas and innovations, addressing the industry's top strategic issues.

Brand Keys will be presenting predictive data fresh from our national Customer Loyalty Engagement Index as to what's really driving loyalty and engagement in the retail sector today. We'll be conducting an interactive session that will show how understanding the category's loyalty drivers can help retailers strategically drive long-term profits.

Attendance is free for qualified executives, so please take a look at the agenda, see if you qualify, and join us for some frank and open discussion about issues facing the retail industry, some really innovative work group sessions.

This kind of planning brings the future to the present, so you can do something about it now. You won’t be making a mistake!

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Browsing for Shortcuts

A web browser is arguably the most important piece of software you use and you spend a lot of time online using it; when you do searches, send emails, read, chat, watch videos, buy stuff – most of the time you end up using your browser.

Microsoft ‘s Internet Explorer owns the lion’s share of the browser market, about 60%. Other favorites include:

Firefox: 24%
Google’s Chrome: 8%
Safari: 5%
Most of others (including Mozilla, Netscape, & Opera): 3%

Google, in 3rd place, has a goal to release a new stable version of their Chrome browser, designed to be fast, its browser window streamlined, every 6 weeks. Chrome also includes features designed for shortcuts, like searching and navigating from the same box.

Google’s always been pretty clever about shortcuts. If you type a song title and artist into the search box, a playable file shows up. Or if you put a mathematical calculation by entering an equation in the box the answer shows up at the top of the results page. Like movies? Type in “movies” and your zip code and the show times appear. You can also enter an airline and flight number to see if everything is on time, another pretty nice shortcut.

There are, of course, no shortcuts in life. But there are plenty in our imagination. And you know what they say about imagination -- possibilities become limitless. Kind of like technology!

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Five Kinds of Lies

It’s been said that there are five kinds of lies: lies, damned lies, statistics, benchmarks, and delivery dates. That last one is a “lie” that virtually every consumer has had to deal with at one time or another. Who among us hasn’t fumed as the 2:11 to 6:23 PM “promised delivery” period has come and gone – without a sign of the ordered product?

Given the ubiquity of products, pricing, and range of merchandise, service has become a critical differentiator when it comes to engagement and loyalty. In today’s marketplace saying it, doing it, and actually delivering on it has become a more and more important contributor to retail brand loyalty.

So how do retailers do when it comes to delivering on their deliveries? It’s an attribute/benefit/value in our Customer Loyalty Engagement Index, and we looked at just that one quality to see how customers rated various retailers. Here’s what we found:

1. Home Depot
2. Ace
3. Lowe’s / Target
4. Walmart
5. Staples / Radio Shack
6. P.C. Richard
7. Kmart
8. Office Depot / Office Max
9. Best Buy

These assessments are generalizable at the 95% confidence level and, fortunately or unfortunately, play out in the marketplace. In fact, sad to tell, Brand Keys had a bad experience with Best Buy only recently when their crack delivery team couldn’t tell the difference between West 29th Street and East 29th Street, didn’t make the promised delivery – and then insisted that we didn’t know where our offices were actually located! To be fair, their Customer Service team did all they could to clarify the situation and they were really, really sorry, although they couldn’t manage to arrange for a more timely delivery, “all the trucks being out already for the day.”

When it comes to both life and loyalty there’s an inherent problem with thinking that being sorry is almost as good actually doing what you promised. Edmund Burke, statesman and philosopher, noted that “Hypocrisy can afford to be magnificent in its promises; for never intending to go beyond promises; it costs nothing.”

But in this instance Mr. Burke was wrong. These days if you “lie” about a promised delivery time it can cost you dearly – your customers.

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What’s Yours is Mine, and What’s Mine is Mine and What’s Ours is Theirs.

It been reported that Facebook will reach 500 million users this week. That’s a 5 with eight zeros. Or in people terms it’s the combined population of the United States, Japan, and Germany—or half the population of India.

However you think about it, it’s a lot of people looking to connect. In the last year the number of Facebook users has doubled in size. In just 6 years it’s become the biggest information network on the Internet— or anyplace else, for that matter. And Facebook effects go well beyond just sharing photos or saying ‘hi.’ For many it has become the site of first resort: 70% of users outside the U.S. and 25% of all users check in and update their pages via cell phones. And all this has begun to test the limits of personal privacy.

When you’ve got a half-billion users distributing personal news, views, and information of both real and sentimental value, you have to also be able to manage the masses of enlightened – and humdrum – personal information shared by the masses with the masses. Last year the company’s change in privacy policy sparked complaints by users on comment boards and privacy groups to regulators. This year there’s also been a lot of uproar online about Facebook's alleged lack of concern for the privacy of its users' personal information, and complaints that the 45,000-word privacy policy is far too complicated for an ordinary user to decode.

This growth and privacy uproar has attracted the attention of Federal regulators and lawmakers who are looking to protect the privacy of consumers, because the number of users isn’t the only thing growing. Third-parties such as advertising networks, with access to all this information, make it important that consumers understand what they “own,” what is actually being shared, and which privacy rules apply.

Nearly 4 decades ago, Earl Warren noted that the advances in electronic communications constituted a real danger to individual privacy. That said, according to our Customer Loyalty Engagement Index (and varying, of course, depending upon the category you’re talking about), aspects related to privacy have only increased only very slightly over the past 5 years. Times have changed and Americans are apparently willing to trade a degree of privacy in exchange for on-going social networking. But for vacation photos?

As frustrated execs and users throw up their hands and ask, “what do people expect?” Facebook's growth will have more to do with how well it listens and changes according to users expectations as to what’s private and what isn’t. As big as Facebook is, it might want to tread carefully and not only help users “friend” someone, but be one.

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Gross-Out Food Wars

It started with KFC’s bunless “Double-Down,” two pieces of fried chicken with a burger in the middle. Next came Friendly’s “Ultimate Grilled Cheese Burger Melt” – a hamburger between two grilled-cheese sandwiches. But in the interest in of staying competitive – while offering something other than gourmet hamburgers – and generating some much-needed buzz, Carl’s Jr.’s is introducing a foot-long burger, made from lining up three burgers on a hoagie bun and weighing in at 1,400+ calories.

Whether these offerings are appetizing to the consumers, a market opportunity does not a brand success make. The truth is that any quick-serve chain can come up with a truly gross offering. But getting attention and getting sales are two entirely different courses. Consumers may try something for the novelty (and for the occasional cholesterol jolt), but you need more than one-time buyers to make a success of newly fabricated grub.

What you need is to be able to do it believably. While gross as any recent offer, the foot-long, triple burger from Carl’s Jr.’s would seem at least within their prevue, and thus a more feasible offering coming from a burger joint. And as a brand, Carl’s Jr.’s could sure use some inspiration. According to our Customer Loyalty Engagement Index, they’re rated toward the bottom of the current national offerings—a category that increasingly sees “health” showing up in the decision process:

1. McDonald's
2. Subway
3. Burger King
4. Quiznos
5. KFC
6. Wendy's
7. Carl’s Jr.’s
8. Hardee's
9. Jack in the Box
10. Taco Bell

As the summer unfolds and the gross-out comestible wars continue, we are curious to see what other culinary chimeras get offered to the public. But as anyone with a test kitchen can create a gross-out pièce de résistance, here’s a research question that rings loudest: is the weird combination of disparate foods – and attendant and unfamiliar mouth-feel and unusual taste sensations – the reason that consumers feast on such fare? Our metrics tell a different story of what consumers in the category are looking for, which may not be as simple as shaping a bigger burger. Especially when the shape many of today’s consumers are most interested in is their children’s and their own.

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“I Do. But What’s The Return Policy?”

It’s been said that marrying someone is like buying something you've admired in a store for a long time. You may love it, but when you get it home, it doesn't always go with everything. If that sounds like part of a wedding toast joke, it isn’t. It turns out that retail stores like Home Depot and Wal-Mart are now hosting weddings.

Some couples are attracted by the low cost of retail store weddings. Some by the novelty of them. Others use them to reflect their brand or employee loyalty. And although retail weddings are unique, they are becoming more and more mainstream.

Two Home Depot employees got married in the garden section of one store, under a rotunda built with store lumber. Guests sat on benches made from boards laid on top of orange buckets. Wal-Mart is living up to its reputation as a one-stop destination – for weddings too. A couple purchased rings from the Wal-Mart jewelry department, listed desired gifts on the Wal-Mart wedding register, and held their ceremony at the store.

We have to admit that this demonstration of store loyalty has us flabbergasted. Not so much because consumers could be that loyal to a store, but it never occurred to us to include attributes, benefits, and values related to getting married in the store in any of our retail category loyalty assessments. So while we can usually isolate loyalty rankings for virtually any customer behavior, we had to make some corrections to account for customers getting married. For Discount Retailers, for example, we looked at the ‘Shopping Experience’ loyalty driver and found the following rankings:

1. Target

2. Wal-Mart

3. Kmart

For Home Improvement retailers, we looked at the ‘Location and Value’ loyalty driver, with the following rankings, although we do point out that the current configuration does account for “convenient parking,” it wasn’t designed to take into account the size of a guest list:

1. Ace / True Value

2. Home Depot

3. Lowe's

Not to be outdone by Discount and Home Improvement retailers, Quick-Serve Restaurants have expanded their carte du jour to include weddings. One couple tied the knot, exchanged vows, and held a reception in booths at a Taco Bell. All for $200.

That being the case, it might be balanced to observe that getting married is also very much like going to a restaurant. You order what you want but when you see what the other fellow has, you may wish you had ordered that instead!

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Decision Day

LeBron James will end an unprecedented free-agent frenzy tonight by revealing whether he will remain with the Cleveland Cavaliers or sign elsewhere. James will announce his future NBA plans during a one-hour special on ESPN at 9PM, Thursday. Proceeds for sponsorship for the special will be going to the Boys and Girls Clubs of America.

If you’re a gambler, the Vegas odds-makers recommend laying off your bets in the following order:

1. Cavaliers
2. Knicks
3. Bulls
4. Heat
5. Nets
6. Clippers

New York City is really the place for someone who once claimed that they wanted “to be an active billion-dollar athlete.” The Bulls boast a top-5 point guard and a top-3 rebounder to help LeBron score all those points. The Heat is probably a wild card, but there is the lure of having Pat Riley come out of retirement just to coach you. The Clippers are a long shot too but they have Vinny Del Negro, who took Chicago to consecutive playoff appearances. The Nets are low on the list and the Cavaliers high, but no matter how they’re ranked, both teams have the “Loyalty Factor” working for them.

LeBron James is as loyal as they come and as one of his closest friends, rapper Jay-Z, is one of the owners of the Nets, there are long term ties at work there. Cleveland is, of course, LeBron’s hometown and moving away from that – and the opportunity to take his team to its 1st championship – tests the bonds of loyalty. Staying could come with a 6-year, $125 million deal sweetener.

Then there are the fans. Fans think their players are supermen. But beyond adoration, as loyal fans fill the stadium, buy more licensed merchandise, and watch the team more often on TV, we turned to our Sports Fan Loyalty Index to see how local fans rank their own teams. Here’s how they line up:

1. Heat
2. Cavaliers
3. Nets
4. Bulls
5. Knicks / Clippers

Mr. James’ decision of which team to play for is a complex matter. But so is fan loyalty. It’s mostly emotional with a dollop of rational statistics thrown in. But the statistics are just for the present. Fan loyalty can be for a lifetime.

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Let’s Make A Deal

Retailers were encouraged by shopping increases this spring, but recent retail sales are down 1.4%. While that’s up from last year, consumer unemployment and small business credit concerns have cooled consumer spending. And while consumer confidence is weak, personal income and savings have increased suggesting to retailers that consumers need a little motivation, a raison d’être if you will, to open their wallets and spend more liberally.

So retailers are doing what they know best: promoting their own retail brands by offering promotions which they hope will get shoppers into the stores and reaching for their wallets. Some of the promotions are variations on long-established tactics. One is brand new.

On the everything-old-is-new-again side of the fence is Target, for example, is offering its credit card holders 5% discounts. Staples and Office Depot are reviving an adaptation of the “BOGO” –buy one, get one free (or in this case, gets something for a penny or a nickel) – by giving away items for a token payment or by rebating product costs via gift cards equal to consumer spend. Toys “R” Us is instituting a variation of the old “Christmas Club,” a holiday fund program where it will add 3% to shoppers’ October saving balances. Sam’s Club, looking to help their members get access to the money they need is introducing a brand new program: it will facilitate loans for shoppers of up to $25,000.00, backed by the Small Business Administration, hoping that a heap of that money will get spent at Sam’s or Wal-Mart.

There’s certainly no lack of creative “shells” with which to wrap tried-and-true promotional tactics, but retailers should keep in mind that consumers have morphed over the past couple of decades to become “smart shoppers,” and that situation is accompanied by a few realities retailers have to face.

First, just because you offer up promotions doesn’t mean that consumers won’t take what works for them and leave your revenues flat. Second, consumers have heard all this before. (OK, not the SBA loan, but pretty much all the rest which are just paraphrases of popular promotions.) To really engage them, to really engender positive behavior you need to be sure that they believe the retail brand can deliver on their expectations, even more so when it comes to saving money. So when smart shoppers want to make a deal, how do they rate the retailers on providing more than everyday values? For answers we turned to the Retail Section of our Customer Loyalty Engagement Index:

Discount Retailers:
1. Wal-Mart
2. Target
3. Kmart

Price Clubs:
1. Sam’s Club
2. Costco
3. BJ’s

Office Supplies:
1. Staples
2. Office Depot
3. Office Max

And, as Department Stores and Apparel Retailers are soon to follow, here’s how smart shoppers rate them when it come to offering up real and engaging values:

Department Stores:
1. Kohl’s / TJ Maxx
2. Marshall’s
3. Macy’s
4. Sears
5. Dillard’s / JC Penney

Apparel Retailers:
1. GAP
2. Victoria’s Secret
3. H&M
4. Old Navy
5. A&F

Over the next few months we’ll see which deals work best – for retailers and consumers. But there is one final reality which comes into play today: shoppers have been taught by the retailers themselves that often the greatest rate of return they can earn is on their own personal spending. And that being a smart shopper is the first step to really saving money.

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Putting Your Faith in Brands

The market may be down, but investors are reved up about electric carmaker, Tesla Motors.

In the first initial public offering of a U.S. automaker in half a century since Ford Motors debuted in 1956, the Tesla Motors stock advanced more than 40%, from $6.89 to close at $23.89, raising $226 million. The money is aimed at retooling both factory and brand.

Nikola Tesla was a scientist and inventor who, in the 1880s, figured out how to make alternating current work, creating the first major hydroelectric dam at Niagara Falls. His inventions helped Marconi develop radio. His electric rivalry with Thomas Edison – AC versus DC – was, well, electric. Tesla won out and his AC equipment powered the electric lights at the 1893 World’s Fair in Chicago. But when he died in 1943, he was all but forgotten.

But Tesla was ahead of his time in lots of ways, and is just now getting his due. And with that leading-edge, sci fi, outside-the-box, ‘nothing’s impossible’ thinking aspect to the man, anything branded “Tesla” comes with its own mythology and cachet.

The current product, the electric Tesla Roadster Sport, has a top speed of 125 mph and a range of 244 miles on a single charge. So nobody is shocked to find the car –with a $100,000.00 price tag – is viewed as a luxury brand. The company is looking to create and position a new car for mass-market commuters.

The stock offering comes at a time when – according to our Customer Loyalty Engagement Index – the most important auto (category) driver in is currently “Fuel Efficiency and Environmentally Friendly,” which supplanted “Right brand and Design,” and explains heightened consumer interest in hybrids, plug-in hybrids, and battery powered, electric cars.

All the major automakers are looking to introduce some sort of battery powered car, but, as we’ve pointed out before, saying it, doing it, and doing it in a way that consumer have faith in, are three entirely different things. How willing a car buyer is to believe and put his faith in a brand that it will actually deliver against expectations is critical to success. So how do the usual auto suspects rank on this particular driver? Here’s this year’s current top-10 (n.b., there are not enough Teslas currently on the road to show up in our survey):

1. Toyota
2. Ford
3. Nissin
4. Volkswagen
5. Chevrolet
6. Saab
7. GM
8. BMW/Mercedes (tied)
9. Honda

It doesn’t matter to consumers if auto manufacturers currently have an electric car or not. What matters is whether they have faith in the brand and believe the brand can produce one that meets – or even exceeds – their expectations. Brand matters, of course, but even with the name “Tesla” attached you need to prove yourself to the customer. The Tesla Roadster, for example, actually uses an AC motor descended directly from Tesla's original 1882 design.

And as new vehicles are introduced, faith in the brand will play a large part in the success or failure of the endeavor. Because faith is a lot like electricity. You can’t see it but you can see the light.

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