The late Peter Drucker told us “the purpose of business is to create and keep a customer.” When businesses forget this fundamental fact they soon fall into decline.
When Lou Gerstner took over IBM in the early 1990’s, Big Blue was in deep strife, about to report its biggest loss ever, $8.1 billion. Here is how Gerstner saw his future:
“In the spring of 1993, a big part of what I had to do was get the company refocused on the marketplace as the only valid measure of success. I started telling virtually every audience…that there was a customer running IBM and that we are going to rebuild the company from the customer back.”
Gerstner went on to pull off one of the greatest turnaround stories of modern-day business, turning an $8 billion-plus loss into a $5 billion gain in 5 years by focusing on the needs of critical crown-jewel customers.
Liz Bigham SUP/Director of marketing for Brand Marketing for Jack Morton Worldwide tells us just 9% of the 91 million viewers who watched the 2006 Superbowl ads could remember the ads a week later.
Combine that figure with the massive increase in consumers who distrust advertising (the number or complaints about deceptive advertising doubled between 1997 and 2001) and you have a serious disconnect.
If consumers can’t remember what you’ve said and don’t trust the medium you’re using to talk to them its time to change. Its time to reallocate your brand dollars to experiential activities that will generate advocacy for your brand.
If there is a car brand that is synonymous with trust it has to be Toyota.
Corolla, Camry, Hilux, and Landcruiser are all icons of reliability. When a brand oozes trust like Toyota you have a potent asset. The challenge for an advertising agency is to get the message across with flair and creativity. Here is one of my favorite Toyota adverts. It comes from Spain. We laugh because the underlying message that you can trust a Toyota resonates and rings true.
When you discover a compelling difference that sets you apart from your competitors leverage it for all you are worth.
Commerce Bank, from New Jersey, offers its customers extended opening hours - which typically run from 7:30am to 8pm, 7 days a week. These operating hours mean Commerce Bank is open for more hours than any other bank.
To drive its difference home, the branches follow the ten-minute rule. Branches open 10 minutes early in the morning and stat open ten minutes later than the official closing time. Can you remember the times when you ran towards your bank to see the staff close the doors at 4:59pm?
The 10 minutes dramatizes Commerce Bank’s key differentiator by adding an additional burst of creative magic.
One of the things that I admire about Disney World is the way it transforms its low paid workforce into a cast of brand evangelists.
Walt Disney understood that the words we use frame the way we think and often behavior. Disney created his own language to support the Disney mission of delivering happiness through entertainment.
In Disney Speak:
Rides or shows are always called ATTRACTIONS
Employees are always CAST MEMBERS
Customers are always called GUESTS
Jobs are always called ROLES
On the surface, language can seem superficial or trite. But words create images that reinforce assumptions. Take the word GUEST. A disgruntled customer evoked a different image to an unhappy guest. Guests always deserve special treatment, while customers often evoke images of indifference.
If you want to create a service culture where staff stay in role or on-brand, start by changing the vocabulary you use to label staff, roles and customers. The right words really can mobilize your culture.
Hot fashion retailer Zara has one plaudits for the way it taps into fashion trends and converts them into hot clothes that are affordable - amazingly fast.
A Zara design can go from concept to store within 30 days. Zara employs over 200 staff in its Spanish design and development team. The team churns out an amazing 1000 styles a month.
The mantra in Zara is react rather than predict. Zara’s designers don’t attempt to predict or share the market like most of their competitors. Zara reacts to what they in the night clubs, on the streets and on the catwalks and tests them in their shops. What sells is replaced quickly. The sale dogs are cut.
Its a magic formula. Customers love it. They get the latest fashions, fast and cheap.
Zara’s short lead times means it continues to deliver more fashionable clothes. Thats why customers return to the store - on average an amazing 17 times a year (most competitors average 3). The lower quantities mean the fashion items are often in short supply. Low surplus stock means Zara doesn’t have to regularly purge its stock with massive end of season sales - so margins remain high.
The huge range of styles gives the customer more choice and improves the odds of Zara getting it right. Because Zara customers know Zara is always updating its stock, Zara spends very little on advertising. Zara’s hot fashion creates massive word-of-mouth among it’s target customer base.
When Ortago Gaona, the founder of Inditex, the owners of Zara, is asked what Zara does, he replies “Zara provides freshly baked clothes.” For the staff this translates into:react rather than predict.
The Zara formula also suggests that before long we will find that a lot more fashion brands will have to own and run their own retail outlets. Zara’s “fast fashion” is built on getting daily feedback from its own stores and using it’s sales associates and store managers as “trendspotters.”
In the 1900’s all train passengers traveling from East Germany to West Berlin had to pass through Checkpoint Charlie.
At the border, an East German officer would check all passports and travel documents. As the officer checked each passengers papers he asked the same 3 questions:
Who are you?
Why are you here?
Where are you going?
These 3 fundamental questions were all the officer needed to ask to test the validity of the family’s travel plans.
When you are selling to customers you need to be able to answer three questions that your customers will ask of you:
What makes you different?
What makes your company different to other vendors?
What makes your company’s product or solution different to your competitors?
Before you ever sell to a customer you need to be able to answer these 3 questions with clarity and conviction.
I have worked with Toyota and Lexus for over 20 years.
Undoubtedly, I’m biased. My wife and I both drive a Lexus. Plus, I’ve been part of numerous Toyota and Lexus product launches, branding and sales plays.
Over the years, I’ve thought deeply about what separates Toyota from its competitors.
Building cars that are relentlessly reliable and offer exceptional value explains much of Toyota’s success. But you can only do that consistently if you have a culture or mindset, that welcomes customer feedback - especially when it’s a negative.
No other company I have ever worked for embraces and faces problems or challenges like Toyota.
When Toyota discovered the average age of a Toyota buyer is about forty-five, compared with about thirty-seven for Honda and thirty-two for Mitsubishi, they set about building a brand that would win the hearts of the next generation of consumers by launching a new brand called Scion in the U.S.A.
The median age for Scion buyers is thirty-five. More importantly, 76% of Scion buyers have never bought a Toyota before.
Compare this to GM who spent years trying to rescusitate Oldsmobile with slogans such as “This is not your father’s automobile” and “A New Generation of Olds.” The campaigns didn’t work. So in 2000, GM killed off Oldsmobile.
Back in 1999, Joseph Pine and James Gilmore wrote a paradigm-busting book called The Experience Economy: Work is Theatre and Every Business a Stage.
Pine and Gilmore argued that the future of marketing would belong to companies who moved from pushing goods and services to delivering “sensational” value-adding experiences.
Since then, a barrage of books have appeared on customer experiences. But the best book I’ve found is Experience the Message, How Experiential Marketing is Changing the Branded World.
Max Lenderman is creative director of GMR Marketing, one of America’s top event marketing companies. Lenderman has written a must read book. My copy is marked heavily with annotations.
Pine and Gilmore remain the heavy-weight thinkers in this field. I call their book The Experience Economy, the “old testament.” Lenderman’s book deserves the title “new testament.”
I’ve had lots of fun recently visiting ZARA fashion stores in Barcelona and Paris.
Customers flock to their stores, literally grabbing the latest fashions which seemingly come into their stores in a never-ending stream.
Zara is not just cool for its modestly priced, affordable clothes. What makes Zara really cool is its ultra-competitive business model which allows it to design and deliver product to its stores within 15 days.
Competitors typically take 9 months.
Zara’s designers start by attending the fashion shows looking for cool designs. They then produce small batches of imitation cool product which is shipped to stores to test for demand.
Product runs for popular lines then are scaled up. Zara avoids the big mistakes its competitors regularly make. Plus it doesn’t have to spend much on advertising because its customers are always coming back looking for the latest cool wear.
Compare that to competitors, where you wait around for the end of season sales.
No wonder Zara is so cool. Or should I say hot?
If you haven’t already, make sure you check out my other blog, The Naked Negotiator - The Secrets of Big Deals, Big Sales and Big Pitches - laid bare.
