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Archive for January, 2010

Toyota Recall & Domino’s Pizza Mea Culpa Destroy Brand Image

Did you catch today’s news that Toyota, the brand many American’s have run to from GM and Ford because they were “better built” than the Big 3, has halted production and withdrawn eight models?  Not just came up with a recall to fix but HALTED PRODUCTION of 60% of their products due to an accelerator glitch they don’t seem able to get a handle on.   The full story can be read at the WSJ but with such a mea culpa, have they raised our consciousness to such a level that we now question all those years of quality reports?  I know I do.

[Updated 2/2: The New York Times reports, "At almost every step that led to its current predicament, Toyota underestimated the severity of the sudden-acceleration problem affecting its most popular cars. It went from discounting early reports of problems to overconfidently announcing diagnoses and insufficient fixes. You can read it all here.]

But they’re not the only ones.  Have you checked out the new Dominoes pizza ads that basically say their pizza crust sucked for the past 50 years and they had to do something to acknowledge customers’ honest comments? They’ve even created their own website reinforcing again how they had to change. You can watch Patrick Doyle’s message here.

But wait, it’s not just the Domino’s Pizza company CMO and President saying they’re sorry. How about Jr. and Ramon (the District Manager?)’s video apology to a Twitterer’s tweets about a bad experience. Just amazing to watch a DM in Chicago apologize about Dominoes 223 Lincoln.  Domino’s may have still been smarting from their disgusting employees in Conover last year and how their response was anything but mea culpa. If you missed that post, its here.

What’s fascninating is they are major companies taking the lead in saying, “Yep, we got problems.”  Maybe its due to the influence of social media they want to get ahead of things, I’m not sure but the acknowledgements are almost reveling in their rottenness.

With Valentine’s Day coming up, imagine saying to your sweetheart, I can’t see you anymore because I’ve been unfaithful, not sure when I can stop so stay tuned.” Or, “I know I’ve been unfaithful, here’s the room we stayed at, the bedsheets and notes I wrote – I get it, I’m bad but give me another chance because hey, I’ve got a video.”

Is this where watchdog reporters have led us?  Think back to Lee Iacocca’s commercials for Chrysler in the 80′s – he never said, “We sucked and hope you’ll give us a chance.”  His message was “We’re doing amazing things.”  Of course, the difference is he had high safety ratings, when you have cars that accelerate uncontrolably, you kinda ‘cede that.

Now consumers who have purchased Toyotas and those who will undoubtedly buy them in the future will scrutinize the brand like never before.

Lesson to businesses large and small, if you want to become a larger brand, you better pay attention to the most basic brand promises:

  • eating our product won’t taste bad or
  • our products won’t kill you.

It really is the little things that allow you to say those things. Take your eyes off the ball and you’ll be whipping yourself like the judge in Stephen Sondheim’s musical Sweeney Todd – hopefully not on the global stage like Toyota and Dominoes. Which could tarnish the reputations of others in their categories and, Toyota’s case, a whole country.

PS – This isn’t like the Tylenol scare which killed 7 people because of a saboteur tampering with the bottles in stores.  Toyota has almost 100 deaths due to sudden acceleration – they knew about this as far back as 2006. This won’t blow over.

Business Management Strategy Fail: The Fallacy of More With Less

My mom is from Virginia.  She tells stories of growing up with her seven brothers and sisters baking two or three loaves of bread, two or three pies, rolls and cakes for Sunday dinner. Even as a single mom, she often made bread or rolls for us on weekends.  I’d watch her as I got older; she never used a recipe.  ”Why not?”I once asked.

making-yeast-bread

“Don’t need it, its basic science what has to go in and what proportions.”  She was after all a science teacher.

I thought about her baking recently as I heard more predictions of businesses needing to do “more with less” in 2010.  In fact a Google search resulted in over six million results. More with less.

If you add more flour to bread dough, it won’t rise. Why? Because the yeast can’t lift the added weight.  If you cut the yeast in half and use the same amount of flour, the dough won’t work either. In either case, less is still less – something suffers.

So how can you get more with less?  Entrepreneurs are still wearing too many hats; are they supposed to put on another one?  Instead of adding staff, are retailers supposed to give existing staff even more responsibilities?  Is a store department manager supposed to manage an additional department’s employees?

In all of these cases, something has to give because the reality is, less is still less.

This reminds me of another old saying I heard a lot at NRF recently, “perception is reality.” No, only reality is reality. If I perceive I’m Tom Cruise – sorry – it doesn’t make me Tom Cruise. I think that makes me delusional.  Only reality is reality.

Doing less with more, cutting past the fluff and the fat into the marrow, has led to:

  • Deterioration of basic merchandising and display techniques
  • Deterioration of hiring standards
  • Less people on the sales floor
  • Less training by the few who run the sales floor
  • An emphasis on looking backwards at data rather than selling in the moment

So what should you do? Make a list every morning of what you want to accomplish.  Next prioritize it.  Work through your list.  What is left each day may be insignificant or major.  After awhile, you’ll probably see that many major things were left undone.

I think we’ve seen plenty of “profitable” companies crowing how they are doing more with less.  Really or are they just doing less?

For many retail businesses, the bread’s in the pain – waiting to rise to the occasion or sit. What’s your choice going to be?

Why You Should Abandon Having An Online Retail Store

With the struggling economy, I hear a lot of independent bricks and mortar stores saying they need to build an online store.   The image is millions of people perusing your products, shipping to exotic locales like Pacoima, Paris or Peru.  A website delivering the amount of customers you lost in the last two years with low overhead.

Here’s the reality: major brands are segmenting visitors to their websites by person, they are tracking where you the customer went to customize their banner ads and even which page you will see when you return.   They have a valuation for each consumer relative to each SKU, they know how the consumer will react, to which offerings and when, how fast they’ll shop and what % they’ll have to eat in returns.AA chart

They can connect the dots of a customers’ age, past purchases with other online sites, household income and spending patterns. They know what the consumer zoomed in on, what they reviewed, with whom they have social media influence, what they researched on a page but purchased on another.  They can track back their online wardrobe purchases from the past six years and build a virtual closet of what the customer owns.

They know who the bargain hunters are – like a parched woman in the desert dying for a drink, the die-hard bargain hunters will wait until the price drops to what they will pay – they know they are in the distinct minority and make up those losses elsewhere.

They know who the high priced affinity shoppers are  - the 5% of people making 20% of purchases.  Because of that, they can micro-target whoever they want with a customized list of products suited to that one consumer.

How do I know this? At the National Retail Federation’s Big Show, Nielsen said they track 5.55 million transactions a day worldwide, that they slice, dice and resell that information to major online sites.

HEMAIn addition, an online website cannot just be for order fulfillment but a place that engages customers.  Here’s a great one in Europe. http://producten.hema.nl/ It’s fun, it engages you, you stick around to watch it unveil itself and, if you’re like me, you’ll tell others how “cool” it is.

Here’s the point, if you can’t be as committed as Amazon, Best Buy, Toys R Us, and the big boxes to deliver a seamless experience, then don’t tip-toe around it.  Heck, even Sears which is dying as a retail bricks and mortar store, is committed to capturing online biz with their new iPhone apps as well as their marketplace site , then put your money elsewhere.

Oh and one more thing: many of these big guys are selling merch online at a LOSS to build fans.  amazon palinTake a look at January’s price for Sarah Palin’s Going Rogue.  List price was $28, Amazon had it for $9.98. That’s probably $5 below what the average small bookstore would pay for it exclusive of shipping.

Just how much profit would you have to make to recover the loss you would incur if you matched Amazon’s price?  Since a great independent business only keeps about 3 cents out of every dollar, one book at that price could take $150 in profitable sales to make up for that one discount.

Its those kind of decisions you have to be able to make in your bricks and mortar and online store.  I cover more of the financials in my new book.

The easy money online has passed.  If you want to have an online store presence, you need to invest the money to be at least as good as the big boys.  Just like an independent coffeehouse has to be at least as clean as the local Starbucks with a speed of service no slower, with a product at least as fresh, you have to meet the competition’s standards just to be in the game.

Don’t pay attention to these harsh web realities of 2010 and you’ll continue to discount your goods online, upsetting your in-store customers, robbing your store of cash flow and losing focus to what really can move profits – your interactions with customers on your sales floor.

If you can commit to making your site vibrant, not just a discount place but also offering unedited reviews of your products, number of items in stock and online chat – have at it! A better use of your money is to make your website a draw to customers, then give them a reason to come into your store so you can standout, sell more and develop a relationship built on something other than low price.

What say you?

Hot Retail Trends

I was in the Big Apple last week for the National Retail Federation’s Big Show at the Javits center.  Nearly 20,000 people with something to do with retail from the C level (CEO, CIO, CMO) executives, to service providers, to the media – everyone was focused on retail and grateful the holidays weren’t worse than the previous year.  I’ve done my predictions previously so here are some of the current trends in retail I picked up on.

intel

Intel & Windows New Digital Signage

Big Box Retailers Have Given Up On The Browsers; Consumers Are Now Seen As Mission Shoppers. They have to be able to “get in quick and get out.”  It’s like the Internet has been overlaid on the sales floor.  Nowhere could this be more evident than the new touch screen interface from Intel.

Their Intelligent Digital Signage Concept Proof of Concept, presents HD video streams on two separate displays.  This signage recognizes a customers’ gender and height using video analytics and then immerses customers into a rich multi-touch environment.  They claim this gives retailers “attractive tools that can help create targeted, personal and effective customer connections.” Makes me wonder if they came up with the idea from the Tom Cruise movie,  Minority Report.

What I got from it was a giant store directory that, seeing you were a man let’s say, would automatically pop up with the men’s sections of a store and show off sale items.  What they’ll do with transgendered folks or men with long hair or a women with a Rachel Maddow haircut is besides the point. Information is a good thing – right?

Rachel Maddow

Rachel Maddow

The trouble with mission shoppers is there is no magic to the experience – you’re just filling a pre-existing need.  Great merchandising is getting people to stop and discover your merch, not see your store as Tron or look at the palm of their hand.  Great retail is about looking around your store, finding your way, being interrupted by a great display that shows how several products can mix together.

Best Buy ads

Best Buy ads

Big Brother Is Indeed Watching You. Best Buy touted how they use cookies on people’s computers to monitor where a customer goes after they land on their site.  For example, if you were looking at plasma TVs, clicked off to ESPN or YES network then came back to the Best Buy site, you would be shown a banner ad tailored to sports.  If it were HGTV it might show you an ad for a vacuum. When one woman asked the marketing representative of Best Buy if there were privacy issues they faced she said, “No.” When the questioner followed up with, “How could that be if you are tracking sites visited?” She said they used service providers who kept everything legal.  Hmmm.

Blog Readers Rock! At the opening reception, longtime blog-reader Mike Murray, Director from Caliber Interactions found me and thanked me for my blog,” You stated the value proposition of mystery shopping better than I’ve seen anyone do.”  I also had owners, Directors and managers waiting for me after sessions to chat about their business who recognized me from this blog.  If you have something to say – blogs are a great vehicle to connect with people in your industry!

Online Learning is Only Good For Product Knowledge.  In various button-hole meetings it seemed many had tried online learning but found that experiential training, the kind I present to retailers, is the only way to move sales.  Otherwise, the learning just doesn’t seem to “stick.”  They can read the text but that is hard to pickup, monitor or duplicate so retailers need to create safe educational learning where they can role-play and get immediate feedback.

Merchandising and Sales Skills Have Deteriorated. On Tuesday, I was having lunch with Gordon Segal, Founder of Crate & Barrel and his team.  I thought the only way retailers will succeed with so many identical competitors in an overcrowded marketplace was to invest in sales training of the crew.  ”You’re right,” he said.  ”We had to sell back in the 60′s and 70′s, that has been lost.” Winston Weber had said earlier that day that, “Merchandising skills have dropped over the past 25 years.  We need to reteach the basics.” Amen to that!

images-11

Original Jake Drawing

Accidental Businesses Can Prosper. Life is Good started as an antidote to negativity.  The Jacobs brothers sold t-shirts for five years with no success.  When they came up with the design of Jake and the words, “Life is good,” they sold 48 of the new designs in 45 minutes back in 1994.  That may not seem like much but it was enough validation to them to go with it.  Thereafter, anything that celebrated life Jake could do.  They expanded their company by celebrating the simple things in life – hiking, fishing, ice cream.  They found a niche by accident and grew sales from $87,000 to over a billion dollars in sales.  John Jacobs is an Amiable personality that built on his natural inclination to be with people and created a company focused on people and helping people. His story was worth the cost of the convention registration alone.

Online Retailers Are Looking To Get Into the Bricks and Mortar. With so many stores looking to bring their business online (which I’ll tell you about next time,) I was fascinated by the online retail CEOs sharing their plans to expand out from virtual reality to storefronts.  One told me, “We can give a better experience for our brand through people.”  No names given but this could be interesting to watch.

Social Media Continues To Get Rave Reviews For the Isolated Stories.  There are a certain segment of Feeler personalities that are happy to volunteer their time as “brand ambassadors.”  They are the golden ring for many retail marketers who have scads of fans on Facebook and followers on Twitter.  Are these consumers who get off bragging about connecting to large brands  (did you know Tide laundry detergent has 300,000 Facebook fans) really driving sales or just an experiment?  Everyone is looking for their ROI (return on investment) when it comes to social media.  James Bickers, Sr. Editor of Retail Customer Experience highlighted a woman upset her wedding dress hadn’t arrived, Tweeting about it, Bloomingdale’s hyper-responsive responses, day saved and customer happy.  But is that really great customer service? Which leads me to my final point.

Great Customer Service These Days Is About Fixing Things Gone Wrong Or Getting Your Way.  It’s like a spoiled child being listened to.  Is that great customer service? I don’t think so but from the NRF awards, that’s what was rewarded.  Great customer service is an experience so tangible, so connected to another human being from the start that the shopping experience with another human being stands head and shoulders above any experience the customer had that day at work, at home or in the mall.  So exceptional that the shopper felt compelled to tell others how remarkable it was to friends, family and co-workers and then yes, posted it on Facebook or Twitter. That’s the mark of customer service from a customer standpoint.

From a merchant stand point it is to sell the merch so convincingly that the customer doesn’t even know the interaction follows a process (like my Sales RX: Five Parts to a Successful Sale) that builds the transaction, basket or average check while building a dynamic relationship with the salesperson and then the brand or store.  That’s the trend we need to see more of or we’ll see more people grasping at the straws of technology because its easy; not the foundations of great retail which is to sell the merch which takes training.

Learn more about how to build your business by pre-ordering my new book, The Retail Doctor’s Guide to Growing Your Sales

2010 Dr. Martin Luther King Jr. Day

[Note: This post is not about business today and while it is posted on Martin Luther King Jr. Day, it is not a story about civil rights as much as it is the people who were affected by the civil rights movement.]

us-3-brothers-at-lake-8-62

me and my two brothers 1962

My dad would always sign his letters and talk about how he was proud pop of his “three boys,” but I couldn’t take that in most of my life, because I wasn’t proud of him. He was out at meetings, on the phone or if he was home, too tired and asleep in his chair.You see, my dad led the march for equal housing and race relations as the Executive Director of the Council of Churches in Toledo, Ohio during the 60’s.

Civil rights were the favored son in our tribe.  The sexier one, the one with all the trophies, the one who was all over the papers. To him, civil rights for all were the driving force to his life. My brothers and I were invisible to him.

His cause was front and center to all the neighbors’ kids in our all-white neighborhood (ironic, I know.) We were routinely pelted with rotten apples in the fall or ice balls in the winter while walking to or from school or beaten up on the playground.  All to the taunts that we were, “N-lovers.” I was the first one home so I saw the death threat postcards in red marker and several times I picked up the phone to hear, “You’ll never see your dad alive again.” While you could try to make a joke of it, the fact was he gave our all for his cause.  At eight years old, that wasn’t fair. I held onto that pain like a dirty blanket of comfort most of my life.

I had to find a way out and went with him to the Phibbs Family reunion one summer. He shared how it was 40 years ago to the day, when the March on Washington took place.  He knew it would be historic and he organized a busload to go from Toledo. As the day approached news reports quoted the FBI’s J. Edgar Hoover saying, ‘Violence is expected: some of you will be shot and killed.”

He rewrote his will and made sure his life insurance was paid up. Then he drove my mom and us three boys to stay with my mom’s grandparents in the Shenandoah Valley, understanding he may not see any of us again. I was five.

He met the bus from Toledo in Hagerstown, Maryland for the ride to Washington.  When he got there, there were hundreds of buses lined up. “I never saw so many angry people out on sidewalks. They didn’t want us there. They were holding brooms, baseball bats; whatever kind of stick they could get their hands on. Later I stood 20 feet from the stage and when King walked to the podium “you could hear a pin drop -even with 250,000 people.  As he reached his “I have a dream” crescendo, the stirring in the crowd was like a giant thunderstorm rolling from the back to the stage. It took several seconds for the noise to reach us in front. When King let loose, that crowd went wild.”

He said it was the best day of his life.  Not when I or my other brothers were born, or his marriage or when he was the first Phibbs to graduate college – it was being in attendance at an event away from his family.

How could a man leave his wife and 3 small sons and know he may not come back?

I can’t imagine doing that.

The next day my dad confided in me, “Your brother once asked me if my devotion to social justice had been worth it. I told him at the time: `If you’re asking whether any progress was made for blacks, 10 years ago I’d have said yes, yes, the progress was worth the sacrifice. Now if you’re asking me, was it worth losing my family, home and profession? No, it wasn’t.”

I didn’t expect to hear that. My pain was worse because I was a little boy. Now I saw we both shared the same pain, mine wasn’t better or worse.  I withheld my love most of his life making him pay for what he did to me by his involvement in civil rights. Now I got it, we were equally hurt.

When I got home and opened the binder he gave us, “What did you DO in the Wars daddy?” The Cover of the Boston Globe, “Preacher takes on Air Force.” Page after page of accolades from people in Toledo.  “You kept us going.” Headline, “Rev. Phibbs run out of town by bigots.” Tears start to run down my face.  Pictures of a thin, hopeful man in his prime.  I read a letter “If you hadn’t been here, I don’t know what we would have done.”  More letters and recommendations.  Ohio ACLU man of the year. This is his chest of medals. He was a great man.  He never passed.  Never wanted to pass. I always cared what people thought.

I went to my computer and began to write, “Dear Dad, I am a continuation of your parents dream of getting out of the Appalachian coal fields to a better life. I can only imagine how it would feel to be my age and realize your marriage was falling apart, your kids were growing up without you, the era of non-violent protests were ending as “black power” emerged, the cities erupted, the war raged and everything seemed in flux.

We didn’t make it out of that dad without our lives being inextricably altered. None of us. I know I can be curt with you and have a real problem talking with you because I haven’t really felt listened to – haven’t felt it most of my life. I stand today on some very big shoulders, including yours to enjoy the life I do today. I can only hope that I can live up to your conviction, passion and purpose driven life.  I’m proud to be your son.”

I know I could easily have talked myself out of sending it.  I didn’t like being vulnerable with him. I printed it and without reading it over, mailed it- not willing to let this feeling of reconciliation pass. I called him a few days later at the nursing home he lived in in Charlotte, NC.

“Hey dad, it’s Bob” I could hear CNN in the background, “this is Anderson Cooper reporting from Washington.”

dad-dream-keeper

my dad in the 90's

Dad said, “Well howdy, let me get this TV off.” I heard him fumble with the control, he snorted, and gave up.  Normally he’d start off with something about how the Republicans are ruining America, the FunDAMENTALISTS or some story about gays.  Today is different,

(Dad) “That’s a letter I wanted all my life.  My son doesn’t hate me or is embarrassed by what I did.”

“No dad,” I was able to give for probably the first time in my life without anger to him. I waited my whole life for this.

My dad passed away last fall, a true warrior out to help the world be a better place.  While he did not have the visibility of Dr. King he and thousands of others paid a price to make the world a better place.  People often think of the cost of civil rights was Dr. King’s death but many families, both black and white, paid a heavy price.

While the stories will deservedly honor Dr. King today, this post is in honor of the families of the cultural warriors who knew that the struggle for civil rights wasn’t black and white but a lot of grey.

[This post is based on a memoir I'm writing entitled, "I Have A Scream."]

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