The Keyhole makes observations about consumers, brands, ads, & marketing, through a predictive customer loyalty lens. Most marketing is ineffective to today's bionic consumer, given undifferentiated products, loss of "brandness," & hard to come by profits. Marketers talk about "engagement" but nobody seems to be doing a very good job measuring or integrating it into what they do & it shows! The Keyhole opens a dialogue on this subject & suggests real-world solutions with the marketing community.
With the weather being some of the hottest in decades, one
might think that iced coffee sales would be going through the roof. But if
Howard Schultz, founder and CEO of Starbucks, seemed a bit jittery, it wasn’t from
too much caffeine. Analysts’ confidence were apparently on the decline when the
company posted what they felt were disappointing earning results. And the share
price fell nearly $5 at close of trading Friday.
Starbucks has not been climbing on our Customer Loyalty
Engagement Index either. Current overall rankings look like this, with
Starbucks moving down a little in terms of customer engagement, and McDonald’s
moving up a little:
Customer expectations almost never go down, and that’s even
truer in the out-of-home coffee category, where the increase in the number of
specialty providers attests to that. Oh, and an increase in the number of
varieties on offer, all appealing to coffee aficionados’ palates and a renewed
desire for novelty – including iced espressos, chocolate cappuccinos,
Japanese-style iced coffees – brewed hot and an alternative to cold-brewed iced
coffee – Stumptown’s famous “Bernice,” and New Orleans-style chicory flavored
café au laits. So it wasn’t surprising to find that the biggest expectation
jump – nearly 25% – was in the Innovation/Variety/Specialty category engagement
And if you look at the brands in terms of how they are seen
as innovators (whoever thought the day would come when brands like these would
have to innovate beyond serving up a decent cup of joe!?), the rankings stay
pretty much the same, but the innovation/variety/specialty numbers tell the
Dunkin’ Dounts 91%
Tim Hortons 79%
It’s been said that behind every successful man or woman is
a substantial amount of coffee (variety notwithstanding). But over the
24-hour-period from last Thursday afternoon to Friday afternoon Mr. Schultz’s
stake in the world’s largest coffee purveyor evaporated by $151 million
even at Starbucks' prices, that's an awful lot of coffee.
New Yorkers – not known for their reticence making their
opinions known – gathered at the NYC Board of Health yesterday for a public
hearing on the Mayor’s controversial proposal to ban large-sized sodas and
sugared drinks from restaurants, sports arenas, movie theatres, delis, and
outdoor food vendors.
Nutrition experts and beverage industry reps showed up to
face off about the proposed ban scheduled to take effect in September. OK, yes,
it’s only happening in New York City. Now. There are likely to be national
repercussions. Look what happened with calorie counts on menus and smoking
But back to soft drinks. Looking at our Customer Loyalty
Engagement Index for Regular, i.e., sugared sodas, here’s how they rank when it
comes to being “good for you,” the category attribute, benefit, or value we
have that comes closest to the health objections Mr. Bloomberg has raised with
7-Up, Mountain Dew
Dr. Pepper, Fanta
Nutritional experts and doctors, of course, favor the ban
prohibiting the sale of any sugar-sweetened beverage over 16 ounces, arguing
that large portions make it easy for people to over-consume and that
over-drinking is easier than overeating. Critics cite this as another example
of government over-reaching into people’s lives. And when it comes to putting
on weight, there are lots of products you could point to.
The spiritual teacher, Buddha, noted, “every human being is
the author of his own health,” a thought that might well be toasted by everyone.
But given the circumstances, perhaps it would be best done with a glass of New
York City’s world-renowned drinking water!
As anyone who’s ever bought or leased a car knows, beyond
basic transportation there’s always a list of optional extras--ABS,
surround-sound, tinted windows, cruise control, coffee maker. You know, the usual.
Wait, coffee maker? Have we mixed up categories? No, you read right, coffee
Fiat, once known for the acronym Fix-It-Again-Tony, more
recently known for Jennifer Lopez ads, has announced that its 500L model will
be the first car in the world to come standard with a Lavazza espresso machine,
making its debut in Italy before buzzing across Europe.
OK, cards on the table. Our Customer Loyalty Engagement
Index covers the automotive category and we have lots of attributes, benefits,
and values (including options), so usually we can accurately predict what
percent-contribution a change to a car can make to engagement, as we did years
ago with the 4th door on the minivan.
But in this case we don’t include anything about coffee
makers, so we’re not exactly sure into which category engagement driver we
might look to see how strategically leveragable caffeinating a car brand actually
is. We can, however, comment as regards innovation, a critical category driver
when it comes to engagement and loyalty. After all Italy is known for design
and innovation and coffee. Wasn’t it at an Italian cafe that Howard Schultz got
the idea for Starbucks?
Anyway, here’s the top-7 automotive brands when it comes to
“innovation.” After 7 they’re all viewed in pretty much the same way.
As you can see, Fiat came up #5. Maybe it’s that Italian
heritage they’ve got working for them. And maybe Fiat felt that today’s drivers
needed more distractions while operating a couple tons of metal, plastic,
rubber, and glass. Or maybe drivers needed something to keep them awake while
sending text messages and reading emails.
Before anyone turns into a tempest in a demitasse, you
should know that Fiat says that the machine will only work when the vehicle is
stopped. We’re not sure about how desirable an in-car coffee machine is going
to be for Italians who like their long leisurely lunches, usually on a
But Americans love innovation and eating and drinking on the
go. Keep in mind that while we didn’t invent the in-car coffee machine concept,
we did invent the drive-thru.
Someone once defined the word “forever” as the time to takes
to brew the first pot of coffee in the morning. Now, if you drive a Fiat, forever
just got a lot shorter.
U.S. retail sales have declined for three straight months in
a row, and, as anyone who took Econ 101 knows, weak employment numbers buttress
weak spending, Despite lower gas prices, unemployment doesn’t help. Even for
those with jobs, marketplace despair and ennui seems to be sapping consumer
This is the longest losing streak since 2008, when the
economy generally, and retail specifically, imploded. That experience did,
however, teach companies to introduce tighter inventory controls, so retailers
are likely to cut back on orders to keep inventory, consumer spending, and
their bottom lines in some sort of sync.
Smart brands continue to build engagement and loyalty
between their consumers. And while loyalty and real engagement are, in fact,
leading-indicators of profitability, they are not, unfortunately, a guarantee
of overall economic consumer confidence. But loyalty is better than no loyalty
and is almost always a guarantee that you won’t have to market your goods on price
and promotions alone. Even in a bad economy, the “Rule of Six,” kicks in, to
wit: loyal customers are six times more likely to rebuff competitive offers.
Especially price-based offers.
According to the consumers themselves via our Customer
Loyalty Engagement Index, here’s how Department Store brands currently rank
when it comes to loyalty and engagement, which matches up pretty well when it
comes to actual profits:
The Rule of Six does, however, comes with some reassuring
metrics when it comes to consumer confidence. Consumers are six times more
likely to think better of you, and six times more likely to recommend you to
And based on the current economic climate, retailers can use
all the friends they can get!
NBC is launching two free Olympic mobile apps. They’re
available only to pay-TV subscribers who have MSNBC and CNBC as part of their
service. Consumers can watch events and will also be able to look up athlete
profiles. They’ll be able to do that on iPads, iPhones, and some Android
devices. Oh, and there’ll be advertising too. OK, no surprise. You expected
that with a free app.
NBC says it’s the first time all 3,500 hours of Olympic
events will be available on smartphone and tablet computers. But given the
time-line of smartphone and tablet invention, introduction, and adoption,
that’s not quite the mindboggelingly astonishing statement it must have sounded
like when they wrote the press release, but, hey, it’s the Olympics and it’s
Production and adoption chronology notwithstanding, it turns
out that 50% of U.S. mobile subscribers now have a smartphone. Oh, and not
totally unconnected, accelerated smartphone adoption has been accompanied with
the acceleration of app downloading, with that acceleration the average number
of apps per smartphone has jumped 66%, from an average of 30 up to 49. Most,
not surprisingly, have ended up on iPhones, followed by Android devices, and a
much, much smaller number of Blackberry devices. Yeah, no surprise there
either. No surprise too, that there are more studies out there about the “top
apps,” all based on “time-spent.”
Time-spent is one of those interesting factoids that are
easy to read, but – when it comes to incorporating advertising on apps (or any
other digital platform) – doesn’t have a lot to do with real engagement. What
does is the fact that when it comes to real engagement, digital works very
differently category-to-category, so the most challenging issue currently
facing brands is connecting their brand strategy to digital technology.
We’re going to address that, tomorrow, July 18th, at noon ET
when we’ll present “We’re on Facebook. Now What?” It’s real data on three
categories and 14 digital platforms that demonstrate how the critical locating
the intersection point of emotional and rational category dynamics and use of
digital communication platforms in the category can be in marketing and
To register for this free presentation of findings from one
of the largest syndicated studies ever conducted on digital and brand
engagement, go to this link.
By the way, we managed to do this via a consumer
engagement-based Digital Platform GPS that is predictive of consumer behavior
in the marketplace.
The 35-year old pizza chain, Chuck E. Cheese, introduced a
new mouse logo – a mouse dressed in blue jeans, a tee shirt, carrying an
electric guitar – in the hope that it will re-boot its brand equity and get a
new generation of children engaged with the brand and into their locations.
The chain could certainly use something to spice up the
brand. Currently Chuck E. Cheese ranks next-to-last in our Customer Loyalty
Engagement Index, with the big chains looking like this:
Chuck E. Cheese
Logos, it turns out, 99% of the time, end up being a
component of the Corporate Reputation driver, which makes perfect sense.
But one logo doth not make an entire pie, keeping with our
theme. In the new animated advertising, the new mouse will be voiced by Jaret
Reddick, the punk-rock band front man. The theme – “Chuck E. Rocks.”
This is a process companies generally go though when they
have reached a point were traditional marketing options have ceased to
effectively address problems with flagging brand shares and increased levels of
Maybe the new logo will end up resonating with consumers.
How bad could it be? It’s pizza, after all.
For those of you out there who think brand and fashion have
broken up and don't even go to the same parties anymore, think again.
Brand continues to pull at the heartstrings of consumers
after the economic free-fall of 2008, when only 8% of consumers said they cared
all that much about brands. Well, according to 7,500 men and women, 21-65 years
of age, drawn from the 9 U.S. Regions, this couple is back on after their
break, with nearly a third of consumers saying brands are an important factor
in their purchase decision – more than tripling in importance in the last four
This fashion trend has been confirmed by recently reported
retail sales where high-end retailers, i.e., those selling brands, have done
significantly better than retailers selling predominantly on price. Ralph
Lauren, Armani, and Major League Sports brands led this year’s list.
So, what was it exactly that put the spark back in this
union? A little something called meaning, which is a big factor in how people
decide what something is worth to them. In fact, the change in the economy was
what drove up the importance of true brands – brands that actually stand for
something in the minds and hearts of consumers.
For the back-story on what brands made the all right moves
in this successful consumer romance, click here for more on our Fashion Brand
Index study and to see how real brands ranked.
By the way, it’s not only consumers who feel this way.
Professionals too. The legendary designer Giorgio Armani once noted, “The
difference between fashion and apparel is brand.”