Will Retailers Deliver Holiday CX Cheer?

Earlier this year, we published the 2011 Temkin Experience Ratings (TER) that evaluates the customer experience (CX) of 143 large US organizations based on consumer ratings across three elements of experience: functional, accessible, and emotional.

Since many consumers are flocking to retailers at this time of year, I decided to share some details of the 27 retailers in the 2011 TER. The chart below shows the overall TER (across all 143 companies) as well as where the retailers rank compared to each other in the functional, accessible, and emotional elements of experience.

As you can see, Amazon.comKohl’s and Costco are on top while RadioShackGap, and Toys ‘R’ Us are at the bottom of the overall TER. It’s also interesting to look at the difference across components of the TER. Here are the retailers with the largest inconsistency across their rankings:

  • OfficeMax: functional (#15) and emotional (#24)
  • eBay: functional (#17) and accessible (#24)
  • Best Buy: accessible (#18) and functional (#25)
  • BJs Wholesale: emotional (#3) and accessible (#9)
  • WalMartfunctional (#8) and accessible, emotional (#14)
  • Macy’saccessible (#9) and emotional (#15)

The bottom line: Hopefully, ’tis the season to be CX jolly!

Gen Y Brands Gain, Financial Brands Lose

Interbrand just published its annual ranking of the 100 best global brands. Here are the top 10 brands on the list:

  1. Coca Cola
  2. IBM
  3. Microsoft
  4. GE
  5. Nokia
  6. Totota
  7. Intel
  8. McDonald’s
  9. Disney
  10. Google

Here’s some of the other interesting details from the rankings:

  • Google is the only new entry to the top 10; it was 20th last year. Which company dropped out? Mercedes-Benz was 10th last year and is 11th this year.
  • The listing also provides the change in value of the brands since last year. Here are the biggest changes in brand value:
    • Top gainers: Google (+43%), Apple (+24%), Amazon (+19%), ZARA (+15%), SAP (+13%), and Nintendo (+13%)
    • Top losers: Merrill Lynch (-21%), Gap (-20%), Morgan Stanley (-16%), Citi (-15%), Ford (-12%), and UBS (-11%).
    • The top gainers are what I call “Gen Y brands,” they came to age during the early adulthood of 20 year-olds, while the losers are dominated by large financial institutions.
  • There were 7 new brands on the top 100 list this year: H&M (#22), Blackberry (#73), Ferrari (#93), Giorgio Armani (#94), Marriott (#96), FedEx (#99), and Visa (#100).
  • The highest ranked company on last year’s list that did not make this year’s top 100 was Kodak (#82 in 2007).
  • For fun, I went back and looked at the top 10 brands from 2001. Here they are:
    1. Coca Cola
    2. Microsoft
    3. IBM
    4. GE
    5. Nokia
    6. Intel
    7. Disney
    8. Ford
    9. McDonald’s
    10. AT&T

The bottom line: Just about everyone recognizes this: 

Apple’s Newest Strategy: Influential Bundling

Last week I went with my family to an Apple store, mostly because my daughter needed a new computer for school. There was no question that we were going to buy a Mac; she wouldn’t consider anything else! (Even though we’ve been buying Dells in our house for about 15 years, I’ve become an Apple convert).

The experience was great. We got assigned an Apple Genius as we walked into the store and he very effectively walked us through all of our options. We ended up with a MacBook, an iPod Touch, a printer, Microsoft Office, and an extended warranty. He brought all of the products to us and we handled the transaction on his portable device. The entire process took about 15 minutes, we only needed to speak with one person, and we spent a bundle of money. Win for Apple, and win for us.

As I mentioned, we left with an iPod Touch. It turns out that Apple is running a program where you get a free iPod Touch if you buy a Mac. That was great for me. I’ve wanted an iPod Touch for watching movies while sitting in airports and planes. This promotion (along with Massachusetts’ tax free day) sealed the deal. My daughter got what she needed, and I ended up with something that I’ve wanted. Win for my daughter, and win for me.

As I reflected back on this experience, I realized the brilliance of Apple’s strategy. By bundling an iPod Touch into the deal, there was something in it for the Mac user (my daughter) and the decision maker/buyer (me). We all win.

This strategy isn’t new. The same general concept exists in the travel industry. Companies pay for flights and lodging, but business travelers get the loyalty points. I’m an American Airlines/JetBlue, Starwood/Marriott guy. There’s something for everyone.

Although people use this strategy, I’ve never seen it given a formal name. But I think it’s important enough to have one. So I’m calling the strategy Influential Bundling, and defining it as:

Packaging products and services that deliver value for key influencers

How about Zales giving free football tickets with the purchase of a diamond ring? Think about how many new engagements that would generate. Or maybe The Gap could run a deal where you get $50 and free shipping from Piperlime on any purchase of $250 from The Gap or Old Navy. Parents can get some stylish shoes after helping their kids pick out their back to school wardrobes.

The bottom line: What decisions makers can you reach with Influential Bundling?

Zara Bypasses The Gap; It’s All About Customers

The Spanish retail chain Zara has overtaken The Gap as the world’s largest clothing retailer. That’s amazing since many people outside of Europe probably don’t know much, if anything, about Zara. So what can we learn from Zara’s ascension to the top spot?

First of all, Zara is a division of Inditex, which is a vertically integrated apparel juggernaut. Unlike other large apparel corporations, the company owns all of its retailing, designing and manufacturing operations. This structural difference allows Zara to break some norms in the apparel industry.

Zara offers “instant fashions:” cheap, trendy clothing. In Zara shops, there are two new collections every week, and the company manages to design, produce, distribute and sell each of its collections in just four weeks. Here’s what Professor Isabel Díez Vial from the Complutense University of Madrid, who has studied Inditex, has said about the company:

The customer doesn’t go to the store at the beginning of summer or winter, and see what they want, and think about it and decide later what to buy. Instead, the customer has to go to the shop every 15 days because the collection is refreshed so frequently… This approach leads to a complete change in the production process. Instead of offering products that take a year to plan and sell, you now have a product that the customer demands.

In addition, Zara relies heavily on its front-line employees. Rather than squeezing costs out of its personnel costs, it sees them as a key to its advantage. By analyzing sales data, the retailer increases staff during the periods when there is heavy traffic in the store. Employees are also expected to provide feedback on any fashion trends they see or hear about — including what’s hot, what’s cold, or what’s missing from the current collection.

My take: Zara represents a great case study in how to change the paradigm by focusing on customers. Here are few lessons that others can learn from Zara’s approach:

  • Break supplier-driven paradigms. In many industries you’ll find approaches that are based on some limitation of the companies. These supplier-driven paradigms, like very discrete seasons in apparel, aren’t optimizing customer experience. So there are opportunities to expand your business by challenging the status-quo.
  • Disrupt with service amplification. Many firms view front-line employees as costs; which they try to minimize. That’s why there’s an opportunity for companies to differentiate themselves by investing in their people, like Zara. This approach, called service amplification, is one of the five disruptive customer experience strategies that I’ve mentioned before.
  • Shorten cycle times. If it takes six months to define, design, and manufacture something, then you need to make decisions six months too early. Zara’s ability to cut the cycle times for getting products to market provides it with the ability to respond more effectively to changes in the market. So firms should find ways to cut down the time it takes to make changes in their offerings. 
  • Look to customers for innovation. As I discussed in the post Customer Experience Innovation: As Simple As 1-2-3, companies need to focus their innovation efforts around the needs of customers. Zara’s growth shows that there’s a lot of opportunity to find new and better ways to meet their needs.

The bottom line: The path to the top is always fueled by customers.

The 10 Most Overrated Brands?

I just ran across a slide show on Boston.com called Lucas Conley’s 10 most overrated brands. Conley, who just wrote a book called OBD (Obsessive Brand Disorder), points to these 10 “tired” brands:

  • Southwest Airlines (The airline’s issue with safety inspections and its subsequent reaction has tarnished it’s fun-loving image).
  • The Gap (After trying a myriad of media tricks to get attention and 15 quarters of declining sales drops, the retailer has suspended TV ads).
  • The Los Angeles Lakers (Unlike the “Showtime” brand of the past, the Lakers couldn’t even keep the attention of their own fans)
  • Oprah (“Oprah’s Big Give” TV show was an instant flop and one of the many recent stumbles for the overexposed media queen). 
  • MTV (No more full-length videos, and the station’s programming now amounts to reductive reality crossovers and tasteless dating shows).
  • Dunkin’ Donuts (The new owners pushed DD coffee into stores and supermarkets while touting Rachel Ray and dismantling of the firm’s original neon sign).
  • Victoria’s Secret (Since 2004, when the company hired unsexy folk legend Bob Dylan to appear in ads, Victoria’s Secret has been groping in the dark)
  • Apple (In an age when no-name companies make phones of equal quality at a fraction of the price of an iPhone, how long can Apple keep sales and its cool factor up?)
  • Trump (Trump has become a trinket tycoon, feverishly trading in on his name to peddle a bazaar’s worth of crap… like Trump water and Trump cologne). 
  • The Everybrand (I didn’t quite get what he was saying about this one)

My take: I agree with many, but not all, of the brands on the list…

  • I agree with these being on the list:
    • Trump (enough of him already), Oprah (she’s overplayed, but give her snaps for doing some good things for society), Victoria’s Secret (it can’t quite get sexy right), Los Angelas Lakers (go Celtics!), The Gap (it’s down now, but I’m hopeful for a comeback), and MTV (I can’t take any more reality).
  • I disagree with these being on the list:
    • Apple (it’s coolness still has some staying power); Southwest Airlines (it can recover from the recent snafu) and Dunkin’ Donuts (okay, I just like Rachel Ray).

The bottom line: Your brand is a terrible thing to waste.

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