Using Mobile Apps to Build Customer Loyalty

When my kids were little, we knew where every public restroom was in town. At any moment, one of them might have to "go." Not only did we know which stores had public restrooms, we knew exactly where the restroom was located inside the store. Whether it was grocery store, the drugstore, book shop, video store - or somewhere in between - wherever we were, we could get a kid on the pot in less than 3 minutes.

So, I smiled when I saw that Huggies was doing a mobile campaign. Potty training is a big deal in kids' lives, and having the Disney characters "call" to talk to a 2 or 3-year old is her or his dream come true. The potty-training kit tie-in is clearly designed to generate measurable sales from the promotion. But will it get moms to buy Huggies training pants? Thankfully, potty training is a relatively short-lived stage for most kids. The real play here may be to build a relationship with the mom so she chooses Huggies diapers for her next child.

What would be truly useful to parents with kids who are potty training? While we knew the restroom map by heart for our small town, once we ventured outside Mill Valley, we were in trouble. We would have loved a mobile app that used GPS to show all of the public restrooms within a block or some self-selected distance of our location.

Come to think of it, that could be useful for another set of Kimberly Clark customers, too. Obviously, different positioning, imagery and langauge would be key, but the same basic data would be helpful for Depends users, who are getting younger all the time.

Big Retail Can Get Local - A 5-Step Approach

While conspicuous consumption is out, people are still buying stuff, entertaining (mostly at home), and traveling (more, shorter trips closer to home). The newly cost-conscious are still in search of interesting social environments and diverse shopping, consuming and learning experiences. What’s changing is our perceptions of who provides them.

In the '90s, Starbucks tapped into a collective search for the third place - there was home and work, and then there was Starbucks. The chain grew like topsy, and now has over 11,000 stores in the U.S. alone. It’s not surprising that the CEO of Starbucks, Howard Schultz, is trying to recreate the local coffee house experience. He is tuned into the trends of our times, and has publicly lamented the "commoditization" of the retail coffee experience. What’s surprising is the clumsy approach he has taken with 15th Ave. Coffee & Tea. Launching another brand in the same category, and trying to distance it from the Starbucks mother ship follows solid brand management theory. But it misses badly on the reality front. It seems “everyone” knows that Starbucks is behind the veil, and the effort is reflecting badly on the brand that’s badly in need of a pick-me-up. See the July 28th Harvard Business article by Peter Merholz for one of many on this topic.

What’s a national brand to do to try to get local? One approach is to give local store management greater authority to support local causes. By becoming a visible and active member of the community, big brands demonstrate commitment to the issues that matter to their customers. This puts the spotlight back on employees as an important part of the brand’s personality again.

Whether it’s sponsoring a “float” in the annual Memorial Day parade, or getting store employees to walk in the parade and hand out goodies along the route, or supporting flower planting or fund raising or other community initiatives, neighborhoods afford ample opportunity for store personnel to get involved. And let’s face it, it’s the people that are hardest for another brand to copy. Peet’s people are different from Starbucks people. Not better or worse, but different. For Starbucks to get local, it’s going to be the people who work in the stores in a particular town that make it so.

Here then are 5 steps to help national brands get local:

1. Create loose guidelines for store managers to follow
2. Give them a budget to do something meaningful
3. Let them find the local causes or events they and their teams want to support
4. Show them how to measure their impact
5. Get out of the way
   

I wonder what they’d come up with. Whatever it is, it would be more relevant, Starbucks brand-enhancing and customer loyalty-building than 15th Ave. Coffee & Tea.

Social & Fun - A Winning Combination

More retailers are getting their toes wet with social media. And that's turning out to be fun and save money.

The recession has not been easy on most retailers, and marketing budgets have been slashed. Not to fear - social media is inexpensive and contests that emphasize fun over the value of the prize are winning customer hearts and minds these days.

Whole Foods is the latest to get with the program. The upscale grocery held a contest to hit the 1 million Twitter followers mark. But unlike the Lottery, where higher cash prizes fuel a Lotto frenzy, in Twitterdom, small gestures have a big impact. So, Whole Foods offered a million grains of quinoa and $50 gift card to the millionth follower.

According to Mike Duff's story on BNET Retail, they offered up 10 more $50 gift cards — and 50 more pounds of quinoa – as rewards for Twitter pals who could came up with clever five-word summaries of their food philosophies. The additional awards will be parceled out through the end of the contest period, which is Friday, but the first of the “micro-philosophies” winning a gift cards was: “Can you pronounce those ingredients?” Others entries that the company highlighted include “Peanut butter goes with everything.” And, my personal favorite: “Just say yes to chocolate.”

No doubt, many of these followers are not and will not become die-hard loyal customers. But a good number are or will, and their care and feeding is worth far more than a few hundred dollars. Oh, and since the retailer gave away Whole Foods gift cards, the money they spent comes back to the cash register, hopefully as partial payment on a much larger grocery tab.

Making Mobile Work for Marketers

While pundits debate mobile’s uses as an marketing medium, examples are all around us of brands experimenting with this new medium. New to the fray is General Growth Properties, a mall developer and owner of Water Tower Place in Chicago, Fashion Show at Tyson's Galleria outside Washington and South Street Seaport in New York. According to a recent story in Mobile Marketer Daily, the mall operator partnered with Mobisix to extend its email-based The Club program to include The Club Mobile, an alerts service that relies on SMS.

These are clearly early days for what’s being billed as the nation’s first national mall-based mobile advertising network. And it’s understandable that General Growth would follow its retail customers’ embrace of offer-driven loyalty. Here’s how the program currently works:

Consumers who sign up online with mobile number and other preference data at http://www.theclubmobile.com will receive discounts and offers via regularly scheduled text messages. Those who sign up stand a chance to win a $1,000 shopping spree.

The loyalty business is waking up to the fact that earning loyalty requires more than offering customers deals. At Loyalty EXPO earlier this month, there was lots of discussion about the shortcomings of across-the-board discount oriented programs and the need for a more nuanced approach.

Here are a three ideas for General Growth and others like them to harness the unique opportunity that mobile affords them to drive profitable business to their tenants and provide real value to end users:

1. School’s out, and moms are looking for low cost things to do with the kids. Mobile alerts about local mall activities like face painting, story telling, and other goings-on would be welcome news and smart uses of SMS for moms on the go.
   
   
2. People are looking for value, and stores are offering all kinds of discounts and deals on services like gift wrapping, not just merchandise. Marketing these service type deals in advance of a shopping trip may fall on deaf ears as they really become relevant once the shopper is at the mall. Mobile alerts about tenants offering free gift wrapping, or other services would be useful and again, don’t require any additional spend or discounts beyond what the retailer is already offering.
   
   
3. Shoppers at high-end properties like General Growth’s are tuned into good-works and brands with a social conscience. Malls are a great venue for supporting those good works. Whether it’s hosting a local area clean up that gets the locals involved or a pancake breakfast honoring the local fire department, the mall is a gathering place and natural community venue. General Growth could use other media to promote these events in advance and mobile to promote them the day they’re occurring to drive participation.

General Growth is in deep trouble. So are malls in general. As CB Whittemore suggests in her recent blogpost “Rethinking the Mall & Uncovering Retail Creativity” the next stage for retail is socializing the retail environment – and I would argue, that extends to the mall experience.

Increasingly, community is where we make it…and that includes the mall.

Coupons and Customer Loyalty? It’s not what you think!

We're talking about customer loyalty with clients and prospects a lot these days. Everyone wants it – some are working strategically to achieve it. Many more seem to be focused on short-term demand generation tactics, which can have surprising results from a loyalty standpoint.

Coupons are a great example of how a tactic aimed at generating demand for one participant in the value chain may build loyalty for another. Coupons are generally top-of-the-funnel tactics that convert consumers from considering to trying a product. Loyalty comes later – and brands work hard earn it. In general, the product usage experience is most important in building repeat purchase and loyalty.

According to research by IRI and Platform A that was conducted in late 2008 and reported on last month, “More than 90 million US consumers (78% of retail shoppers) currently use newspaper coupons, and 40 million (40% of shoppers) say they are likely to use coupons accessed online.”

No wonder newspapers are stuffed with all those inserts and circulars. In addition to being one of the only remaining revenue sources for newspaper publishers, most shoppers report that they actually use them. Who are these shoppers? The same IRI study found that nearly one out of every four newspaper-coupon clippers is likely to be age 65+. That means three of every four are under 65!

For a whole variety of reasons, coupons are shifting online. Q Interactive found that as the recession has worn on and as more people are more comfortable online, online coupon usage has increased significantly:

“From July to October 2008, consumers printed an average of 477,000 coupons per month at Q Interactive's online coupon site Cool­Savings.com, a 33% increase over the first six months of 2008, and a 124% increase compared to the monthly average for the full year of 2007.”

According to Q Interactive, Google has an application that lets the user scan a barcode in a store into their phone, press a button and search for comparison prices at nearby stores. This app would seem to work best for categories that people are willing to shop around for - more expensive goods or where the risk of getting it wrong is high. In other words, not groceries, where we know people tend to go to the same store(s) for the vast majority of their purchases. Rarely is a coupon worth an extra trip to another, less familiar grocery store.

Cellfire is a new digital coupon service that works on consumers' Smartphones and computers and is relevant to grocery and specialty retail. Kroger frequent shoppers can link their grocery savings card to their Cellfire account, and the coupons they select are immediately loaded to their grocery savings card. The coupons are applied automatically on qualifying items and reflected on the receipt at checkout when the card is presented. Once a coupon is used or expires, it's automatically removed from the Cellfire account. Sounds a lot more complicated than Safeway's program - all a shopper needs is to sign up, have a phone number, and purchase anything the retailer has on special for its loyalty program members.

For groceries, some time soon, we’ll be able to retrieve coupons on our Smartphones and have scanners read them at checkout just like they read paper coupons today. In this scenario, where does the equity flow – to the brand whose coupon I just redeemed so easily? To the retailer who accepted the digital coupon? Or to the app or the device that brought me the coupon and allowed me to avoid having to cut it out or remember to bring it with me to the store?

Each player in this story has its own customer purchase funnel at work. Online and newspaper based coupons are effective at driving trial for food and CPG brands (including store brands). New services related to digital coupons may build loyalty for the device and application developers, not the product or store.

IRI speculates that "we’ll be seeing CPG manufacturers using online coupons to court a new generation of consumers and build loyalty during these cost-conscious times.” I suspect online coupons will build awareness and trial among a new generation of consumers, and increase their loyalty to their Smartphones!

4 Things Retailers Need to Know About Millennials

From the impact they are having on politics to their effect on the ways we communicate to how they are influencing every category of consumption to their spending and savings habits - Millennials are a force to be reckoned with. They are social. They want to be engaged. They seek authenticity and sophistication. Experiences that deliver will earn their loyalty.

The Economist Intelligence Unit conducted a study of Millennials last year and found that business executives believe them to care little about price, and most about convenience, style, taste, and peer recommendations. Are they right? Even when it comes to wine, recent research by Mintel/Simmons and the Wine Council shows that Millennials are different.

Here are key takeaways on what retailers need to know about millennials:

• They want to be in the know: Millennials who drink wine are twice as likely to belong to a wine club (20%) and to drink at wine bars in the past three months (38%) than older groups, (Wine Council).
  
  
• They want sophistication: Forty-one percent of Millennials who drink wine say they drink imported wine most often vs. only 24% of Boomers and 31% of Gen X'ers. For example 31% of Millennials have drunk a wine from NZ, compared to only 15% of Gen X'ers (Wine Council). And 40% percent of 25-34 year olds agree that more expensive wine tastes better compared to 31% of adults on average. (Mintel)
  
  
• They are willing to spend more to make an impression: Millennials say they spend about $10 more per bottle than average across a wide variety of wine buying occasions. For example, Millennials say they would spend $40 on a bottle of wine for a special occasion compared to just $24 for all adults. (Mintel)
  
  
• They value authentic experiences when they shop: Millennials are much more likely to purchase wine at a winery (33%), specialty liquor store (40%) or gourmet food store (20%). (Mintel)
  

Wine is a favorite discussion topic on Yelp, a vibrant millennial community. A quick review of the listings for San Francisco reveals a beehive of millennial (and other) enthusiasts advising one another on the pros and cons of different wineries, wine stores, wine clubs, and restaurant wine lists. Here's an entry by sascha "just let me" b. from March 20, 2009:

Berna, I do one of the K&L clubs (champagne) as well as the monthly club with Plumpjack. I enjoy them both for the fun of having new and interesting wines selected for me that I wouldn't necessarily seek out (or find) on my own. I think that K&L has some good buyers --- which is the key to a good club --- and PJs has a great buyer as well. Do I always like every wine? No. Am I always satisfied? Pretty much. The value is there, and if you can budget the guaranteed $40-$50 a month, it's a lot of fun, and will expand your wine horizons no matter what club you go with.

I also do some winery clubs, but that is a different value proposition: you're only getting one winery's output, and you better make fer dam sure that you know and like the winemaker's style and vision.

The headline for retailers trying to engage Millennials – make it real and create opportunities for Millennials to study up on your category, and to share their knowledge. Help them show they're in the know!

For food and drink marketers wanting a more intimate understanding of millennials, check out Brand Amplitude's upcoming proprietary study of millennial trendsetters, food and wine.

Too Cheap to be Good? It Can Happen in Food

The recession grinds on and people continue looking for ways to save. Meanwhile, brands are trying to entice new customers to give them a try and to get past customers to buy again. Discounting is rampant in cars, shoes, hamburgers, cruise vacations, the high end, the low end – pretty much all around us.

The LA Times reported last week on the Fast Food Wars. Both KFC and Pollo Loco were giving away free food -- to introduce new products in KFC’s case and to increase trial in the case of Pollo Loco.

As the article points out, it’s not clear how attractive the customers are that find heavily discounted or free offers appealing. Here’s a flash – they tend not to be brand loyal. This may seem obvious, but the path to retail bankruptcy is littered with brands that were going to make it up on volume.

It's not only likely that KFC and Pollo Loco are attracting unprofitable customers. In addition, they may be turning off their loyal customers by devaluing their offering. And the potential lost revenues from these loyal customers are far greater than the potential gains from switchers gained through low price promotions.

Recent research with consumers, we found that there is a price below which people become suspicious of product quality. For brand-loyal canned goods customers, the magic number is $1.00. Below a dollar/can, these shoppers suspect the product can’t be any good. They buy the brands they buy and pay what they cost because they think they’re better. That’s one of the main advantages of having brands.

How does that jive with recent reports from Procter and Gamble that volume is off for major brands like Tide and Swiffer? To state the obvious: Food is not a cleaning product. Consumers may be willing to cut back on the latter before they cut back on the former. Second, there is something potentially nostalgic about canned goods. It’s possible consumers are stocking up on them as a way to reconnect with simpler times. Another possibility: smart home chefs are using canned goods to bulk up their home cooking, for example adding canned olives or canned chopped tomatoes to soups or chili or pasta sauce.

Whatever the strategy, it’s worth it for retailers, including fast food chains, to pay attention. Pricing too low can lead to greater lost sales than pricing too high.