How much is your loyalty worth?

Customer loyalty is quickly becoming one of those recession business buzz-words, as big companies realize that consumers are spending less and less, and that to remain profitable, they need to attract more and more of this dwindling pie. It's not surprising that we're seeing more and more companies pushing their brand rather than their product in their current commercial and ad offerings. There's also been a re-kindled interest (likely from streamlined marketing budgets) in customer loyalty programs. Here's a (albeit old) Air Miles commercial:

And another (this one a cheap laugh), albeit more recent, just before the credit crunch

and recession:

This next one isn't a real commercial, but accurately demonstrates the U.S. recession, as:

> The Aliens are creditors

> The Space Man is the average American

> And as usual, the U.S. will need to settle with the alien and tax the space man later, even

though he escaped in his pod.

Closer to home is the new Shoppers Drug Mart commercial that absolutely rocked:

They have their own in-house rewards program called "Shoppers Optimum". It's a program much better suited to the frequent shoppers customer; someone who can afford to go to there for all their daily staples. I guess it's working quite well, despite the economic slowdown, as it's posting higher than predicted sales numbers in the looming recession.

I just stumbled across a new brand loyalty program that is incredibly strong in the United States that I'd never heard of before. It's called Upromise; "where your everyday spending can pay you back with money for college".They have hundreds of online stores, thousands of restaurants and tens of thousands of grocery and food stores along for the ride. Participating companies include Apple, Expedia, Walmart, Dell, etc.These companies are leveraging Americans' emotional and economic mindset in order to get more brand loyalty (isn't marketing great?). 10 million users over an 8 year period can't be wrong.

The rewards program works so that whenever the American participant buys from one of the participating retailers using your special card (not unlike airmiles, but integrated into your credit card), a certain percentage (varies by participating entity) of your purchase is put into a savings account. It's like cash back, but reserved for higher education. This format is ingenious for two reasons (apart from playing on Americans' economic disparity):

1. Most Americans will never pursue higher education (about 48.8% of 18-24 Americans pursue college or some form of associates degree in 2005-2007 according to U.S. American Community census data)

2. The program gets payouts from retailers immediately, to be distributed at another time

THe first point is almost like defaulting on a mortgage. If a family has been using the program anad amasses a wealthy sum only for the student NOT to go to college or university; that money is pure profit (and there's a 50/50 chance they won't).

The fine print: "...It's too bad she'll grow up to work in that same supermarket."

The second point regards the time value of money. The Upromise company gets to earn interest on that money while it's waiting to perhaps be collected. That's potentially huge sums over a potential 19 years (birth -> usual college admission age) that a family could be saving money.

So, why is the program so popular (and bound to only get more attention)?

Now that there's so much turmoil in the economy, people's MPS (marginal propensity to save) is rising. Programs that play off this consumer attidue, while offering a no effort approach for consumers to act on their predispositions is an ideal choice for a rewards program. This isn't unlike the Canadian banking version. I think it was Scotiabank that had a similar program, where they would round up to an even dollar on debit purchases, and deposit that amount (<1$)>

So, how much is your brand loyalty worth? Maybe your tuition covered for shopping at WalMart rather than your mom-and-pop shop down the street?

Crackberries Unite!

It would seem that everyone knows what a blackberry is. For those of you who have never seen another homosapien before, I don't mean this:

I mean the epitome of the cell phone:

I can already hear the bellows of the cell phone geeks out there: "thas not da newest bberry n00bzor!". Yes, there is a "new" Blackberry 8900 "Curve" phone that has just released. They all then clutch on to their vintage blackberry (or if you're an apple fan; your Newton) and text all their friends on how un-educated I am. Just to prove how crazy the fandom over the device truly is, a search of "blackberry" in google images leads to 6,190,000 of images; most not fruit related.

Anyways...

What has created such a social revolution of the device? When the blackberry was still a business-focused device, the rest of us were still aw-ing at colour screens and camera phones. Does anyone else remember when camera phones with 0.3 megapixel or even worse VGA cameras were released? Now camera phones are hitting 8 mega-pixels and look more like cameras with a phone built in:



Is anyone else tired of the constant integration of these devices? I purposely went with a regular LG phone and an iPod Touch rather than converging the two. Why? I like to keep my eggs in different baskets. Plus, data plans are a pain in the arse.

There are three main contributors to the Blackberry's previous and continuing success:

1. A rock-solid platform

Providing technology for large businesses is challenging. They have strict security, quality and software requirements that make them easy to roll out to employees, easy to fix, and easy to manage. Building up the software behind these blackberries has provided the integrated system that was so easy to roll out to a mass populous. Many phones, such as the newly toted Google Android phone operating system and the Windows Mobile iteration had their fair share of headaches when it came to development; allowing the experienced blackberry platform to take over. Blackberry kept this same formula constant, while slowly rolling out the latest in technology into the previous rock-solid interface and ergonomic control. This was actually the first RIM (Research in Motion; the company behind the Blackberry product) device:

It looks similar to the current Blackberry models; no? Qwerty keyboard. Scrolling dial. Icon display, etc. All we have different know are bandwidths like 3G, Wi-Fi, Colour Screens, etc.



See what I mean?

RIM got a harsh lesson of its own medicine when it tried to leave its successful phone model. Its Blackberry Storm, or "Touch Screen" phone was deemed one of the provider's worst products ever released. The touch screen blackberry was supposed to be a competitor to the huge success of the iPhone from Apple; another giant who knows how to focus on what they do well and leverage it to produce competitive products. In comparison, it failed miserably. It tried to be too much of what the iPhone was, and was almost destined to fail against the integration expertise of Apple, with hundreds of touch screen patents, a successful music interface, and an understanding on the operating experience needed for a successful multimedia phone.

Even with big PR "suspense" dollars behind it; it still failed:



But if the iPhone is so great; what makes the Blackberry so desirable?

2. Endorsements

Apple has never really needed to bring on endorsements. Their fan community and Apple die-hards have been all they needed to get a product from launch to multi-million dollar success.

Blackberry has also taken a hands-off approach; but being the producer of business' most trusted device is bound to come attached with a few "crackberries" (people who are addicted, like the drug, to Blackberries) willing to swear by the device for promotional purposes.

This (albeit older) "research" "done in collaboration" for RIM; seems like a 7 minute long commercial for the device:



More recently in print ads, the likes of Premal Shah (President of Kiva.org, NFP organization), Rob Vandermark, and Nina Garcia (Fashion Magazine Editor, Elle, Marie Claire) divulge of how they can't live without their Blackberry:

And another:



And every good commercial/product needs a good spoof thanks to Rick Mercer. This clip is dedicated to Max for its NSFW (not-safe-for-work) content and periods of brief male nudity. (Anyone who attended the SEO session knows what I mean.) If you don't watch or read anything else; check this out:



Does anyone else get the impression that Blackberry is (rightly) pompous enough to claim that your business cannot flourish without their services? Awesome. More brand integrity than free swag at a showing of Oprah.

There are also un-paid endorsements from just the media in general, who go gadget crazy whenever someone uncovers their iPod or phone:

From Obama who would not dare give it up:



To Oprah who gives them away on her favorite lists:



To the Editor of Forbes Magazine who was brought to tears when removed from technology for 7 days (he lasted 40 hours before the water works<-- another must watch):

Off topic: all this on the syndrome called "Blackberry Addiction":



And lastly:

3. Savy Horizontal Customer Expansion

This is arguably the strongest, and smartest move RIM has made to gain market attention. Watch this commercial to get the jist of the concept. It is by far one of my favorite commercials ever made:



"Connect to everything you love in life, with Blackberry"

If that's not a powerful slogan; I don't know what is.

The device since its "pearl" iteration started to be marketed to a younger, more media and internet-centric crowd. The blackberry quickly transformed from your grandfather's antique:

To the modern-day social tool idolized by pre-teens all around the world:

All it needed was a slimmer size, Facebook integration, a camera, and the best texting interface ever seen and boom - pop culture sensation. What's truly incredible is that the device isn't very glamorous, an important factor in most pop culture icons (such as an iPod). The preference of function over fashion has truly cut out other suppliers of "cutesy" phones from the market. This is just another iteration of taking the bullet-proof blackberry model and tweaking it slightly to gain instant and continuous success; a model that would be coveted by ANY electronics manufacturer.

The key here is that the same mantra that applies for brands applies for devices. "Fresh" not "New". The most successful and well-known companies attain this status for exactly that: spending the time to create a rock-solid foundation; then tweaking offerings slightly to meet new customer needs. This applies for Google, RIM, Apple, HP, etc. If you don't believe me, here's a very similar commercial concept for HP that has added incredible brand equity:



As long as RIM learns from the Storm it just unleashed (haha, pun, get it?), I don't see it falling out of place anytime soon.

/Rant Mode On: Walking down the halls of Schulich, it's astonishing to see how many people are touting blackberries; some usefully, others just to check facebook and feel important. My favorite are those (primarily first and second year, but upper years too) students that whip out their blackberry every two seconds to see if their Japanese merger deal went through without a hitch at above market value. Or to see if they got tagged in the pictures of themselves at the "So You Think You Can Dance?" marathon session everyone was gathered around last night. But if it makes you feel so important; then go for it. At least it'll help the RIM stock go up. /Rant Mode Off.

Until then; be a crackberry, or don't. But then you risk facing the hordes of fans who will rub their device in your face with great pride and wide smiles drawn across their faces. Jerks.

Starbucks is ill

In looking for images, I searched "sad Starbucks" - this woman's picture came up, and she does look pretty sad.

Starbucks is posting a 69% loss in their last quarter, closing 300 stores, and cutting 6,700 jobs. Pretty bad times. I've even started drinking McDonald's coffee (which is pretty good) because as much as I love Starbucks, I can't justify the $2.50ish for a venti coffee.

Starbucks is reacting by swinging again toward value. Value based breakfasts and discount snacks (coffee and muffins), and a greater focus on drip coffee as opposed to espresso coffee beverages.

Wise choice, considering that consumers associate Starbucks with cappuccinnos, lattes, and other premium beverages, not with plain coffee. The decision to buy from Starbucks is based on the consumer weighing a decadent, premium latte drink to basic drip coffee. When wallets are fat, consumers treat themselves.

So when times are rough, it's no surprise that the appeal of a $4.50 latte begins to wane.

I think maybe it's time to leverage some the data from those Starbucks Cards now and begin to incentivize repeat visits and customer loyalty. With thin margins and a business based on premium quality products sold quickly with friendly service in a nice ambiance, Starbucks cannot risk not capitalizing valuable consumer insights. Growth into the CPG business and franchising the Seattle's Best brand to more locations are steps in the right direction to diversify the business and sustain Starbucks through economic ups and downs.

Cosmetics? What the hell are koz-meht-iks?

As a guy, it can be hard to understand why women torment themselves with what seems like hundreds of products each and every morning; only to wash it off that night.

It makes permanent make-up appear to be an almost obvious choice:

An unwilling trip down what seems like an endless aisle is maliciously meant to confuse, daze, and otherwise deter any male from entering (even the bravest of us).

I mean, who can even make out the ads in these crammed displays?

It's all just a dizzying array of products; each more confusing and with less marginal utility than the next. But it makes girls prettier; no?

Even as Canada plans to post an 85 Billion dollar deficit this year; I can't imagine that the cosmetic industry will feel much of the blow. If there's two things that sell extremely well; it's a cheap laugh and vanity. And it's not just about the products being sold, but the intangible experience and feeling that women feel when they're looking their best.

It reminds me of Starbucks; a company with one of the best understandings of what it means to sell more than just a household staple. They don't just sell 1,3,7-trimethylxanthine (caffeine for those non-chemistry geeks); but a friendly smile, a homely environment and a portable brand to be shown off by consumers.

But what's the difference between a make-up artist and a barista?

Not much. Danielle Sacks, a writer with Fast Company magazine claims it's the difference between a consumer claiming that they "...love the way my friend's lipstick looks," and "I love how I feel when I wear that color." But that feeling doesn't come without a steep price tag that consumers are undoubtedly willing to pay. It's unsurprising that the multi-billion dollar industry keeps growing larger and larger with widespread marketing fluffing and 90$ jars of coloured powder that refused to stay shelved. MAC has recently become a mainstay giant of the industry; its success a combination of a high-quality project that's well marketed, and well represented by their employees.

And the numbers don't lie:

[Of MAC Cosmetics' company report]

Numbers Game

• 2.6 | Average number of products customers actually buy when they come to buy one item
  
• $45 | Average amount each customer spends per visit >
  
• 83% | Percentage of new customers who are referrals
  
• 250,000 | Number of brides-to-be each year who come to MAC for their wedding makeup

Serge Rogasik, the Global Marketing Director of Beauty-Care Solutions describes the industry's fluff best (although indescriminently):

"...for an extreme example of what's possible, you start with algae that costs 5 cents a kilo and from that create algae extract that costs $50 a kilo. Then you can create an encapsulated algae-extract complex that you sell for $100 to $1,000 a kilo so that a customer can retail a beauty product at up to $50,000 a kilo. This is what we do: supply a very trendy market with high-tech solutions."

The article's main focus is on the emerging ingestible beatuy industry that will really jive with your inner vain.

All of this translated onto the shelf in a really intersting way:

Hmm...the products look well-packaged, but something seems to be missing...

Oh yeah...the prices. It would seem that consumers don't quite like thinking about how expensive coloured powder truly is.

I suppose that packaging and a quick first impression really is sufficient in order to sell perfumes. It's gone so far, that even the new iPod packaging is being leveraged:

The iPod iteration:

And on the shelf:

The cosmetics industry truly is a confusing three aisles.

Fun-dergrads!

Welcome back, BBAs! I'm glad that you're back in school. It was nice for the MBAs to have the school to ourselves, but I missed the energy and fun that you all brought.

I've often thought that Schulich BBAs exemplify the best and worst of Gen Y culture:

• Paradoxical individualism and self-expression but intense needs for social affiliation
  
• Creative and critical thinking but irrationality when emotions become involved in the decision making process
• Curiosity and a thirst for knowledge but a crass arrogance that their worldview is unflappable

As one of the younger MBAs (and a Gen Y myself), I unquestionably exhibit a lot of these qualities. Self-confidence (arrogance) and poor attention span spring to mind!

But the BBAs are complicated creatures. Let's begin to understand them with some archetypes. The lovely Robyn, B!G's VP, has graciously offered to let me use some of her Facebook pictures for illustrative purposes:

THE SOCIALISTA AND SOCIALISMO


Team building and group facilitation exercises are huge parts of the undergraduate experience at Schulich. They tried to do a lot of this kind of stuff for the MBAs in first year, but it didn't exactly catch on. Socialistas and Socialismos are identifiable by their energetic approach to life, the constant need to be surrounded by close and distant friends, and their voices, often approaching an amp'ed up level of heightened emotion and enthusiasm. Barf.

THE LECTURE-PHOBE


The fact that B!G is so popular among BBAs leads me to believe that there's a hunger among Schulich's lowerclassmen for learning outside the classroom. By their nature, Gen Ys do not learn well in a single platform environment - by textbooks or lectures alone. On-the-job skills training and real-world experiences are vital to give context to the theory being learned in class. That, or they just cannot stand to spend one minute in dull classrooms being lectured AT by an apathetic professor.

THE KIDULT


Robyn describes these students are doing kid things at night. Pillow fights, tobogganing, and games of capture the flag played at 3am suggest that growing up might never happen. I agree. Growing up won't happen - but that's ok. Kidults are recognized for their use of abbreviations and verbal slang, need for adventure and constant stimulation, love for challenges and physical/mental stimulation, and no sense of when bedtime occurs.

THE KNOWLEDGE SPONGE


Related to the Lecture-Phobe, the Knowledge Sponge participates in every possible school event, signs up to multiple clubs, and is super-engaged in class. They actually read every word of the textbook and take copious notes. I was this archetype in my undergrad until I found ways of getting high grades and doing limited reading! I really do feel bad for this undergrad because professors tacitly promote their destructive OCD behavior. Rote memorization of the textbook facts is a really dumb way of testing learning. Also, holding a textbook in a picture and smiling is really lame, sorry Robyn!

THE IBBA/EXCHANGE STUDENT


I'm really not sure what goes on when the BBAs go on exchange. Olga is in Norway right now and it fills me with great fear. Fear for the Norweigians. The exchange student is filled with amazing memories of their semester away and fantastic stories that you could believe actually happened. It's hilarious that none of the stories involve school.

So these are just a few of the students who you'll meet in the BBA program. Each is a pretty good facsimille for any previous generation's archetypes, but they are powered the Gen Y fuel of optimism.

Thanks Robyn for being a sport and letting me do this!

The weekend links, on a Monday

Lots of work, eh?

This weekend was exhausting, full of obsessive group meetings and lots of circular discussion. B!G is going really well though and all our projects are now in full swing. Everything has started and we're in a good frame of mind after having outlined the scope for each project.

The Schulich BBAs come back today and it'll likely be hell crossing the picket lines with the extra number of cars. I'm really glad they're back and I don't underestimate the insane workload they're now facing.

From the rousing feedback I got from last week's links categorized into big themes, I'm trying it again. So, how're you feeling?

SENTIMENTAL:


Terrific pictures from Washington and the world last Tuesday for the Obama inauguration.



I'm a Bowie fan - he sang this version of 'Heroes' at the Concert for New York back in 2001 (2002?) as a celebration of NYPD and NYFD. You'll see a lot of them in the audience singing along. This gets me kinda emotional, listen to the lyrics.


Bobby Adams photographs couples, in a unique way

HAPPY

Krispy Kreme donuts enrages pro-lifers with 'freedom of choice' donuts

I really don't use enough crayons on my monitor...see BBDO's creative idea to marks Bring your Kids to Work Day.


I'm only guilty of one of these nine looks no guy whould ever try to pull off.

The freaky other side of online dating - it's not all that great! This woman has a collection of some really funny responses to her classified ads.

ANALYTICAL

REQUIRED READING FOR B!G: CPGs are desperately trying to understand the value of social media and online consumer engagement. And they're finding that social media is not so well understood. Perhaps a little more action and responsiveness rather than just passive listening...

Coke is debuting the following ad in this Sunday's Superbowl:



Ad Age thinks the Coke ad is almost great, but somehow is a little short of dazzling. I just don't really understand it. I never liked Coke's ads.

Street drugs are really stupid, especially ecstacy - in many cases you have no clue what active drugs are in the tablets. This site shows the chemical results for any pill they receive for testing. MDMA is ecstacy, but check out how many pills contain meth, ketamine, barbituates, or even aspirin. Scary, scary stuff.


Wow, Chrysler spend money - money they received from Congress - on the media space for a thank you ad. Colossally poor judgment.

Journey's Don't Stop Believing is an awesome song...unfortunately so are 36 copies of it.



The song got me thinking about another weird question I have - what happened at the end of the Sopranos???!!!



CURIOUS


Gorgeous cars, all together, in the sun! Great photos of a multimillion dollar car collection.

The 10 Best Cars of 2009 is a pretty interesting list and I think the Honda Accord actually looks quite nice.

Godwin's law states that as a thread in a newsgroup or forum discussion gets longer, the probability of references involving Nazis or Hitler approaches one. I love these social observations.


Cool graffiti with lights and time-lapse.

Ok all, have a terrific week!

Hitting it home: Pepsi's Refresh campaign

I'm in class right now, time to blog!

Someone just made a comment in class about how Obama's election isn't anything new, it's just the representation of American political sentiment at this moment. I'd seriously care to disagree, and Justin emphasized that 2M people in Washington is hardly evidence of the fact that Obama is no different than other presidents.

This all speaks to a larger cultural movement that's churning and frothing but still largely intangible.

Pepsi has relaunched its brand in an effort to ride this new cultural zeitgeist. It's now a fresher, edgier, more movement-focused brand. And it's coincided with the inauguration!

Here's their old look:

Here's their new look:



Familiar, but different. It's fun.

The centrepiece of the brand relaunch is the Refresh Campaign.

Check out the microsite: RefreshEverything.com. It's a social media site to aggregate the opinions and voices of normal citizens and Eva Longoria (among other celebrities).


It's been created to allow anyone to upload their own user-generated content that expresses their feelings of hope and optimism with the new President.


Even my current fascination, Lady GaGa, has gotten in on the action!



The Refresh campaign doesn't prominently feature any Pepsi products. I like this campaign because it's not about driving sales, it's about driving engagement (again, how does one actually value this?...is it even fair to value engagement by the classical measures of consumer value??)

The microsite is simply meant as an online interactive destination for their offline commercials. It's tied to a YouTube channel with Pepsi's new commercials and other related videos. The microsite doesn't have any search or folksonomy tagging capabilities so it's not too important for site visitors to find exact information on what people are saying, rather, it's meant to act as a speaker's corner for average voices to be heard.

So what's the point?

Two things:

Think of the optics: Pepsi is showing that they are a brand associated with change and youth (again). The TV commercial, courtesy of TBWA Chiat Day, was shown during key primetime spots (I saw it on AC 360 at 10:15pm, January 20) and captured the momentousness of the day. Check out the commercial. It's fresh and friendly.

Think of the non-quantifiable brand development: Tacitly, Pepsi's Refresh campaign is effectively sponsoring the Obama administration! It's piggybacking on a wave of interest in society in individualism, plurality, and self-expression. Pepsi is demonstrating that it understands the strong needs by consumers/voters for these things.

Pepsi is allowing consumers to be heard at a time when the urge to speak up has never been stronger.

To be fair, Coke is launching a big wave of new ads too. Analysts think the Colas Wars are going to begin again!


Great work by Pepsi and their agencies on this one, this is definitely a campaign i'd have loved to be involved in.

Excellent example of getting it done, creating a transparent and highly understanding brand personality, and emphasizing that Pepsi is a brand that unites and empowers people.

Way. To. Go.