Responsible for concepting, scripting, shoot and edit direction.
Royal’s Agency Evolution
Next week, I’ll be speaking at the Marketing Association of Credit Union’s mini-conference about Royal’s shift to an in-house agency model. It’s a topic that’s been of great interest to the industry, and one I’ve found has advantages.
We’ve generated some media attention due to our model, as well:
SPIRE partners up with Greater Minnesota Credit Union!
The membership of Greater Minnesota Credit Union recently approved a merger with SPIRE Credit Union. The resulting organization will have approximately 84,000 members – the third largest credit union membership in Minnesota – and about $800M in assets.
SPIRE’s marketing team, in partnership with GMCU’s marketing department, handled both internal and external communications efforts, which included mailers, a microsite, in-branch collateral, and public relations. Below is some of the work.
Responsible for concept, copy, design direction and overall project management for all merger-related communications.
Brand Loyalty Bygones?
On a recent shopping trip to Target, I peered in to my cart and noticed there were very few true “name brands” represented within. From Archer Farms salsa to Market Pantry oatmeal to Up & Up diapers (the latter of which are a full TEN DOLLARS cheaper than Pampers!), I have pretty well completely converted to the red retail giant’s house brand products.
A quickie survey of friends & colleagues revealed my behavior isn’t an anomaly among my contemporaries. Everyone I talked to uses a number of different store brand products, with few, if any, quality complaints (mac & cheese was one of a few products that caused noisy splits among the sample). Indeed, store brands have come a long way since the glaring black & white-packaged “generics” I vaguely remember from my youth.
If my mini-sample of higher-income professionals is any indication, it seems that the assumption that higher price means higher quality is fading.
The Great Recession brought with it new opportunities for retailers to appeal to consumers who grew increasingly eager to save on everyday purchases. During this time, the quality and the aesthetic appeal of store brands increased about a billionfold. Target’s Archer Farms package designs reflect a high-end product, and Cub’s Essential Everyday line is clean and attractive. More important, though, the products work well and/or taste comparable.
For the most part, consumers have been impressed by the no-name brands, with many of them rating highly in blind taste tests. Consumers have also learned that many “generic” store-brand foods are actually made by the same companies that produce the higher-priced name-brand stuff (just compare the ingredient label, as I did with baby formula last year. Identical.). Often, switching to a store brand is an easy way to save 30% or so, according to my own quickie calculations and the estimates of friends. And, because store-brands can be more profitable than national brands, Big Boxes have been granting them more shelf and ad flier space.
According to a new “Private Label” report from the Integer Group, there are a few key behavioral patterns when it comes to consumers and “generics”:
Women give more consideration to buying store brands. Most shoppers, about 77%, scope out both private-label and name-brand products before making purchases. But women are far more likely to compare — 90% look at both options before choosing.
When the cleanliess of their clothes are involved, people are picky. Beyond mac & cheese, of the eight product categories covered in the study, consumers think brand names are most important when it comes to laundry detergent: 69% prefer name brands.
(In my own study, respondents cited “toilet paper” as something not worth compromising on.)
Coupons and sales do help boost name brands. Of those who stick with name brands, 45% say they do so at least partly because they can find coupons to save money. Long live the Redplum Sunday coupon flier!
A minority of people assume a brand name means top quality. This is the biggest, and for Proctor & Gamble, perhaps the most foreboding news from the study. In 2010, 57% of consumers agreed with the statement “Brand names are not better quality.” More recently, the figure is 64%.
If the alarms aren’t sounding at the HQs of General Mills, P & G, J & J and others, they certainly should be.
Dubious Rewards: Trading Data for Discounts
Open up any American wallet (or logo-emblazoned purse) and you’ll doubtless find a colorful assortment of plastic cards and keyfobs. Like the invention of money itself, credit cards were first introduced as a tool to facilitate commerce. Since their inception, we have embraced those cards to the point of credit dependency and billions of dollars in debt. Credit cards, with their airline miles and “cash back” promotions, first introduced the consumer to the idea of a “membership”-based purchase rewards, and these days, traditional retailers have duplicated the model to suit their own purposes. Walgreens and CVS, long-standing rivals who all but openly mock each other by building stores on opposite sides of streets, are both using customer loyalty programs to solidify their proverbial bottom lines. These programs offer additional savings to the consumer, but there’s a catch – the retailers can then track every visit and every purchase.
Whenever we hand over our rewards program keychain fob or plastic card, we leave a trail of information behind. When we make a purchase, our cards are scanned, not only giving us “points” toward a gift certificate or a free tote bag, but also offering the merchant a detailed record of our purchase activity. It’s data ripe for the mining. All of this knowledge on behalf of the seller means we’re inundated with sales messages – via e-mail, direct mail, even an occasional old-fashioned phone call. “Junk” or “spam” e-mails alone account for 14.5 billion e-mails per day, or about 45% of all e-correspondence (Online Marketing Trends, 2011).
Is the privacy lost to behavior marketing worth the savings? In this weak economy, consumers don’t appear to be terribly concerned about the tradeoff.
The Drugstore Wars: Walgreens vs. CVS
Few retail battles are as overt as Walgreens vs. CVS . In fact, the two discount drug retailers often square off directly, building new outlets right across the street from each other. In September 2012, Walgreens has launched its own customer loyalty/rewards program, called Balance Rewards, in response to the popularity of CVS’s Extra Bucks program.
The inner workings at Walgreens.
Both Walgreens’ and CVS’s prices trend higher than the Target and Wal-Marts of the world, and most consumers use the drugstores as a means to “fill in” gaps between trips to major retailers, purchasing relatively few items per transaction at Walgreens. However, recently, one shopper, reluctant to face holiday crowds and yawning aisles at one of the mass merchants, spent about $70 at the checkout counter. (Yes, the aforementioned weary shopper was me. Sometimes, I just can’t deal with Target. Plus, there’s a $200 minimum just to get out the door. Seriously.) The clerk at Walgreens cheerily sold me on the benefits of a Balance Rewards membership. Signing up was simple: In my case, as in many others, Walgreens has consumer data saved from photo or pharmacy orders, so shoppers merely need to sign. There are no arduous forms to fill out or drivers’ licenses to scan.
The dollars ticked off … tick tick tick tick. My new total was just over $60. I had saved $8 just like that, and I was also handed a coupon for $10 my next $35 purchase, with the caveat that I made said purchase within the next two days. If all of that weren’t enough, she then proceeded to inform me I had earned 5,000 points by purchasing eligible items, and would get $5 off at my next visit. I left feeling almost giddy, brimming over with that euphoric winning shopping feeling.
(I used my additional $5 reward to purchase three bags of holiday-wrapped Hershey’s kisses for $5. Total. Three for $5. Unbelievable!)
With savings like this, who could blame consumers for gobbling up rewards programs like so many Thanksgiving turkeys?
The case of CVS.
In CVS’s case, here’s how the Extra Bucks program works. After signing up for the program, consumers will get additional coupons with every visit to CVS. Little red machines, scattered around the store, will print out savings when cardholders scan their rewards cards. The machines are linked to specific products, so consumers only print the offers that interest them.
The value of the coupons varies, and they are eligible to be combined with manufacturer coupons. In addition, these red machines will occasionally grant generic dollars-off coupons that aren’t product-specific, like $5 off a $30 purchase (Urbanski, 2012).
When consumers use an Extra Bucks card, they also earn 2% back on every in-store or online purchase. Quarterly, that 2% back, in the form of a savings coupon, will print out on the end of a register receipt. Customers can also generate $1 awards for filling prescriptions, and cosmetic-conscious members can sign up for Beauty Club, which awards additional points on purchases of cosmetics and accessories (krazycouponlady.com, 2012).
The Standings – How They’re Benefitting
Walgreens’ Balance Rewards program attempts to distinguish itself from CVS and other competitors with its wellness-promoting theme. For prescription, immunization and wellness product purchases, shoppers can earn an extra 500 points (krazycouponlady.com, 2012). Balance Rewards members can also earn 10 points for every mile they travel in the Walk with Walgreens program (Urbanski, 2012).
Walgreens has about two million members enrolled in the Balance Rewards program already, and it only launched in September 2012 (Urbanski, 2012). However, Walgreens has many miles to travel in order to catch up to CVS, which has an 11-year head-start. To date, CVS claims about 70 million active Extra Bucks cardholders, and the information it has collected over the past decade-plus is invaluable (Urbanski, 2012).
Data Privacy and the Futurecast
With all of the changes data mining technology has brought into our culture, government agencies and legislative bodies have been responding, both to consumer concerns as well as to business issues. Rewards programs, which rely upon collected consumer data to generate additional marketing opportunities, will need to be acutely aware of the ongoing actions involving the FTC and Congress and, of course, lawsuits pending and forthcoming. It’s very likely that as the economy begins to turn around – and as data breaches become more and more commonplace – consumers will begin to bristle at the data-for-discounts tradeoff, and may cut up their sheaf of plastic rewards cards.
How Technology is Reshaping Our Brains … & How We Need to Respond
That beautiful distraction. Our phones and tablets (laptops, so recently so cool, are now becoming passe’) are getting plenty of our attention, and younger consumers in particular love the functionality available to them. From finding a pizzeria in Bangkok to finding your way home from school to finding a date for Friday night, our mobile devices have, as television ads for the Apple Store state, “an app for that.”
All told, Apple’s App Store has more than 250,000 apps, and Google’s Android platform has about 80,000. Gaming apps are most popular, followed by news, weather, social networking and music. Nearly a quarter of mobile app users have downloaded an app in the shopping or retail category.
Information impatience. With teens and young adults leading the charge, the mobile phone and app utilization trend is extremely prevalent among consumers under 35, those that fall into the oh-so-attractive-to-marketers Gens X and Y. Parks Associates, a technology research and consulting agency, discovered that these younger consumers are passing completely on laptops and desktops, and that they quickly lose patience and interest in Web sites that do not translate well on a mobile phone. (For CUs who haven’t yet optimized their sites and home banking platforms for mobile, let’s get on it!) Native mobile apps, which access content without requiring the user to access a traditional Web site (e.g., no typing in a Web address or waiting for a page to load), are highly popular.
With our attention increasingly drifting away from traditional media like television, radio – and who even has a landline phone, anyway? – some psychologists believe that we are actually reshaping our personalities. Largely, the changes are not positive, as experts assert we are becoming more impatient and impulsive.
The near-instant speed at which we can send financial reports to Singapore or find out what movies are playing at the 32-plex has conditioned us to expect everything in our lives to move just as quickly and efficiently. To illustrate, consider how irritable we become standing in grocery line; or think about the advent of road rage in rush-hour traffic.
In addition, we no longer need to research a product or service before going to a retailer; we can now do it while we’re in the brick-and-mortar business itself. About 16% of consumers reported using their mobile to compare prices (Oracle, 2011). About 10% said they have looked for more information or product reviews, and 7% reported seeking coupons or discounts.
Scientists say juggling e-mail, phone calls and other incoming information has altered our ability to patiently focus on the task at hand. The constant stimulation of the beeps, buzzes and quick responses of our mobile devices causes our brains to release dopamine, a “feel-good” brain chemical (Richtel, 2010).
Without this instant gratification, we are lost. We are bored. We need the omnipresent distraction of our mobile phones. In short, we are addicted.
Credit unions – all businesses, really – can and should capitalize on consumers’ information impatience by, first and foremost, optimizing their home banking platforms and Web sites. Clunky access is a turnoff, and will drive away potential new members. Second, everyone needs a mobile app. Third, opt-ins like promotional e-mails and text alerts give us additional member access. Finally, CUs that want to remain competitive in this brave new world absolutely need to provide convenience products like mobile deposit capture, which appeal to our increasingly impatient natures.
Let’s find ways to provide that distraction we humans have come to know, love – and need.
The Sampling Strategy: Marketing We Actually Pay For
In 2010, Katia Beauchamp and Hayley Barna, college friends from Harvard, launched a business called Birchbox. For $10 a month, subscribers would receive a box of sample-sized, high-end cosmetics and toiletries delivered via U.S. Mail. At the time, the concept was puzzling to some of their peers. Why would women pay to get a mystery box full of tiny beauty items they didn’t specifically ask for?
Pay they have, however. As of April 2012, the company has over 100,000 paid subscribers, and employs approximately 60 at its New York office (Taylor, 2012). According to Beauchamp, Birchbox’smtremendous growth over the past two years can be credited to that modern-day word-of-mouth, social media. “We like to say we’re at the intersection of where glossy meets grassroots,” said Beauchamp.
Why It Works: Sampling and Sales
Beauchamp calls the concept “discovery commerce” (Taylor, 2012). By sending people products they haven’t exactly asked for, and likely have not tried before, they are relying on the quality of the product, as well as the “fun factor,” to inspire subscribers to continue their subscription.
“The beauty industry is so huge, it can be overwhelming,” said Beauchamp (Taylor, 2012). “We’re cutting through the clutter, choosing the very best options from the thousands out there for you to try. We’re helping people find what they didn’t know they wanted.”
With the sampling concept, Birchbox is cutting through the clutter of beauty marketing itself, too. L’Oreal, which holds about 10 percent of the market, spends $2.1 billion on marketing a year, largely through traditional channels such as print and television (Taylor, 2012). Estee Lauder, second to L’Oreal with about 4 percent of the market, spends $80 million. But instead of spending millions to promote specific products or shopping on their Web site, Birchbox is actually getting women to pay to be marketed to, which speaks to the strength of both the product samples and the Birchbox experience. It’s brilliant! Brilliant!
Beauchamp, Barna and the Birchbox marketing team haven’t been content to simply hope a consumer loves a product sample enough to visit their Web site and purchase a $30 bottle of shampoo. Birchbox relies upon additional reminders and enticements to close the loop and, ultimately, close the sale.
Before the box is shipped, subscribers receive an e-mail letting them know “Your Birchbox is on its way!” along with previews of the products inside. Each box is customized to the recipient’s hair and skin type, as well as coloring, so paying subscribers aren’t getting a box full of products that won’t work for them.
When the box arrives, samples are often grouped thematically, for example, “Winter Pampering” or “Pool Party.” Detailed descriptions and instructions for each product are included in the box, which is attractively wrapped and tied with a pink ribbon. Samplers are directed to the Web site to find out more ways to use each product, read blogs, or watch related videos featuring celebrities or how-to demonstrations (Bosker, 2012).
Finally, e-mails are also sent a few days after the box’s arrival, offering special discounts on products inside, as well as again reminding subscribers about the entertaining and informative editorial and videos on birchbox.com.
All of this is working. Half of Birchbox subscribers have converted into customers of its e-commerce site (Taylor, 2012). That’s 50,000 customers who are paying full-size prices after paying $10 per month just for the sample box.
Interestingly, Birchbox also offers more samples as incentives to buy. “Get two additional samples with any $25 purchase!” implores a sidebar ad on the Web site (birchbox.com, 2012). And the sample-buy, sample-buy cycle continues.
The Future of Discovery Marketing
The highly successful Birchbox concept of paying for mail-delivered samples has given rise to a number of copycats. Recently, popular fitness Web site muscleandfitness.com launched a similar endeavor, titled the “Supplement Sampling Program.” For $135 per year, fitness enthusiasts can subscribe and receive a shoebox-sized package of protein powders, vitamins, nutrition bars and other training aids (muscleandfitness.com, 2012). In addition, subscribers receive a discount at the muscleandfitness.com store, further incentivizing larger purchases. They also receive free shipping and free magazines, as well as other special “subscribers-only” discounts, which add perceived value.
Nearly everyone looking for a little surprise in the mail is likely to find a subscription sampling service that suits their tastes. Beyond Muscle & Fitness, which is aimed at a more male, hardcore athlete demographic, other sample box companies include HealthySurprise (healthy snacks), Citrus Lane (baby and toddler products), Foodzie (artisan foods). Prices vary, but most run from $10 per month to about $25 (healthysurprise.com, 2012; citruslane.com, 2012; foodzie.com, 2012).
One company, LoveWithFood, puts a twist on their offering by appealing to the human desire to do a good deed. For $10 per month, subscribers can enjoy gourmet snack samples, such as chipotle-smoked almonds, and also know that they have helped feed a hungry American through a donation to Feed America/Share Our Strength (lovewithfood.com, 2012).
Beauchamp and Barna’s startup has spurred an entirely new business model for e-commerce companies, and it doesn’t appear they will be going away anytime soon. Americans are, if the success of these “discovery marketing” companies is any indicator, very happy to pay to be marketed to, as long as that marketing includes fun surprises in the mail.