business news in context, analysis with attitude

Last week, in a discussion of loyalty marketing keyed to the series of e-interviews on the subject that we’ve been doing here on MNB, Dan Raftery of Prime Consulting referred to the successful programs run at Dick’s Markets in Wisconsin…and suggested that former Dick’s executive Ken Robb could add some valuable intelligence to the debate.

This morning, Ken Robb does exactly that:

“It's true that simply having a card does not mean you have a card program. I think that most would agree that using a card as a vehicle to deliver price reductions is not Loyalty Marketing. Neither is the obligatory Thanksgiving Turkey Offer. Neither are the overused frequency promotions like Buy 10 Subs Get One Free. Likewise, the unimaginative and overly expensive rebates or points on all purchases. Also, at least as most are structured, neither are Baby Clubs, Pet Clubs, and similar affinity programs.

“John Groman, co-founder Epsilon, once stated, "Loyalty Marketing implies we can market to people and make them loyal to us...the truth is that loyalty is the result, not the object, of a successful relationship.

“Loyalty Marketing, let's call it Customer Relationship Marketing or CRM, should be about building relationships with customers. The role of the card in CRM is to build a database. The database provides the information needed to understand what the customer wants. Our job is to give it to them. That frightening perspective often raises the ire of the CFO, but in practice, giving the customer what they want doesn't always involve markdowns. Our company's most profitable (and highest volume) years were those that followed the introduction of our card program. In addition to doing other things better, we learned to execute our marketing programs more efficiently. There were many elements of our card program that affected the shopping experience of our best customers which had little to do with discounts and rewards, yet would not have been feasible without the database.

“Yes, we did work closely with a few manufacturers and well as startups on pilot programs, and we were certainly grateful for the significant contributions they made to our program. But don't get the impression that the answer to unlocking the data lies with manufacturers and suppliers. The few we worked with were the exception. Most didn't have a clue. On more than one occasion, national manufacturers would bring their senior sales and marketing executives to our offices to learn about what we were doing. As we explained the marketing strategies for our card program, how we used our database to target consumers one-to-one, I could see their eyes begin to glaze over.

“I personally know many U.S. supermarket retailers who are very adept at CRM. They're certainly not the majority, but a significant number nevertheless. A respected database software provider recently estimated retailer use of the data as follows, "One-third uses the data, one-third doesn't use the data very well, and one-third doesn't use the data at all." I believe this to be an accurate estimate, although it would be difficult to confirm.

“The primary responsibility for CRM lies with the retailer. As it should. Retailers should determine if they have the required skill sets in house to run their card program, and if not, look outside the company and hire them. This is not easy. There is a steep learning curve to the implementation of CRM, as with other initiatives, including ECR and others. Each demands a high level of analytical expertise and consumer insight that the food industry...any industry...retailer, distributor or manufacturer, is ill-equipped to provide. You don't need to be a rocket scientist to do CRM, but it sure would help.

“I do think the significant one-third is doing a pretty good job, thank you. The rest are trying to catch up. Those who do will enjoy a competitive advantage with their best customers that the price-impact retailers and low cost operators will find difficult to match.”

And because so many companies seem frustrated in their attempts to do battle with the price-impact and low-cost operators, it seems obvious that loyalty marketing isn’t just a possible strategy. It isn’t a “can do.” It is a “must do.”

And, it seems to us, that it needs to be combined and integrated with other aggressive strategies, such as e-commerce, to make sure that the consumer isn’t just attracted to a specific store, but compelled to go there because of that unit’s loyalty to him or her.

In response to yesterday’s piece about Amazon deciding to make permanent its free shipping policy, MNB user W. Frank Dell wrote:

“I have said for a long time unless INTERNET shopping offered free shipping it would not be in direct competition with retail stores, but would be electronic catalogue shopping. Free shipping from Amazon and Staples puts them in direct competition with brick & mortar. Free shipping is a cost of e-commerce. Run right e-commerce can be more profitable than stores, because the store occupancy and labor cost greatly exceeds the shipping cost.”

MNB user Jeannine D'Addario agreed:

“Great move...allows them to compete directly with the brick and mortar retailers...not just the other internet e-commerce sites.

More comments have come in regarding the need and/or wisdom of fast food chains providing better tasting, more nutritious, less fatty food. MNB user Jane Larson wrote:

“We already have unlimited access to better-tasting, less fatty, more nutritious food. It's called YOUR KITCHEN. You can eat whatever you want whenever you want, as long as it's in the fridge/pantry/freezer. You have to get the food there, manage your time, and make the best choices possible for your family's needs. Everyone has to pitch in. There's nothing wrong with a sandwich, fruit, and some milk for dinner if you're running to tuba lessons or a hockey game; it's portable, you have control over the content, and it'll cost you less than mystery-meat nuggets and carbonated corn syrup. If you and the kids are so overloaded that you can't make time to eat something healthy prepared at home, then maybe your waistline isn't the only thing that's overextended.

“I write this as a single mom who is about to send Little Tuba Boy off to college. We often ran so fast that we forgot where we were going. We did a lot with a meager budget in the beginning, but found that we liked a nice thick sandwich with cheese and veggies more than the local Burger-rama. And once you sit in line at the drive-thru (or, God forbid!, actually get out of your car and walk up to a counter), you've wasted enough time to make sandwiches for the whole band.”

Aside from the fact that we’d be mortified if our mother called us “Little Tuba Boy” in public, we absolutely agree with Jane.

Just one thing, though. How many retailers communicate the advantages of making your own meal as succinctly and persuasively as Jane did in her email?

We’ve gotten several emails from MNB users who are Kmart vendors and who clearly are disillusioned with the whole bankruptcy process. We want to share excerpts from their letters, not because they reflect every case, but because the suggest a certain discontent that could permeate the company’s future relationships.

One MNB user wrote:

”They go bankrupt and now they call their vendors with an attitude, treating small suppliers the worst. The ones that supported them get the shaft…Where is management? Checking to make sure their bonuses are being paid…”

And another wrote:

“I read the basics of the new plan and it appears that there is NO provision for payment of any sort to VENDORS who were owed money on the day of the filing.

“In the hope that there are at least a few vendors on the creditors committee who are small enough to be critically hurt by this arrangement, I would appeal to them to vote against this plan. It appears that once again, Kmart is fulfilling the needs of those who stand to gain the most from keeping them in business and just totally ignoring everyone else.

“Please let your readers know that every vendor Kmart owes money to is entitled to get an equal share of the funds available and anything less is not acceptable. I for one, would vote them "out of business" before allowing them to get away with this. From my point of view, any proceeds we would receive from liquidation would be better than what their plan is offering.”

On the same subject, another member of the MNB community wrote:

“The Kmart horror stories continue....This is a very basic basic apparently that the people responsible for the store operations at Kmart cannot "see the forest for the trees," or they are not being heard.

“In the process of handing out money I assume they have brought their most competent store operations people together via a working committee to get their laundry list of what is needed to solve the problems that are staring them and their customers in the face on a daily basis. (not enough store employees, out of stock, lack of cleanliness, etc.)

“If they are utilizing an operations strategy of matching up with the industry in terms of store expense control they should of course, remember that their offering is coming from behind, so that will require a substantial investment in their plan just to get even with those (Wal-Mart) that they hope to switch shoppers away from.

“To be the ‘Store of the Neighborhood,’ which one can only assume entails one to one i.e.: one customer, one employee, at a time will cost more ‘people working in the store’ dollars than they currently are investing.

“I hope they will make the commitment.”

More on the Miller Lite “mud wrestling” beer commercial…as MNB user Dennis Barthuly wrote:

“First of all, I thought the Miller commercial was an accurate depiction of the male thought process, at least as perceived by women. We are constantly told that “men” think about sex every 5 seconds (or some such figure) and women usually go “yep, that’s right”, but when this particular ad physically shows some of that thought pattern, they are suddenly shocked and disturbed.

“Well, apparently ABC thought enough of the commercial to hype the new time slot for “The Practice”. In case you didn’t see it, it aired after the Super Bowl and the premise and location was the same as in the Miller commercial, only this time there were 2 gentlemen discussing the new time slot for the show. The same argument ensued with the toss into the pond et al. The breakaway shows the ladies of The Practice leering and agreeing what a great commercial that would be… impersonation being the greatest complement, I guess this would tip the scales as to how the networks see the ad.”

One of our users wrote yesterday that “what I object to is when an advertiser a) takes an ad, which might have been good the first ten times you saw it, and runs it a thousand times.”

And another user wrote:

“I agree wholeheartedly with the reader above and offer a “Kudo” to Visa for changing its Tiki & Ronde Barber ad (“But it looks like him”) to reflect Ronde’s role in the Super Bowl last night. Best part: we THOUGHT it was going to be the same old ad, but we like it so much we kept watching anyway – and then a nice surprise came with the twist of words. Good move by their agency! (and way to go, Bucs, too!)”

Yesterday, one of our MNB users suggested that just like bartenders in many states are required to be trained so they can recognize when to serve and not to serve alcohol to patrons, fast food restaurant employees may be required to not serve burgers to people who clearly have eaten too many Big Macs.

Another member of the MNB community responded:

“One very important point was left out of the response and that is this: over-eating Big Macs does not impair one's ability to drive.

“Alcohol consumption impairs thinking skills and driving skills. The dispenser of that does bear responsibility. Hopefully, the bar tender is not impaired in thinking as the patron is.

On the subject of obesity lawsuits in general, one MNB user wrote:
“These people really need a life. How could you NOT KNOW that fried foods are bad for you. Heck, I should sue because I didn't know that coffee makes you jittery and wired. Or should someone sue the GUN manufacturers that I didn't know that guns kill. If any of these lawsuits go through there will be no stopping the stupidity. These people need to get a life, and get off their DUFF and exercise.
Speaking of stupid lawsuits, what about people who break in to someone’s house, and get hurt, turn around and sue the owner, and win. In Nebraska you catch a burglar in you house, you can legally shoot them as long as they are inside the doorway, and fall inside, and if they fall out side, drag them back in. Self-defense.

Maybe we’ll skip Nebraska next time we’re in the mood for a little B&E…


In response to our essay yesterday about Super Bowl marketing ideas, and the general need for supermarkets to appeal to consumers’ imaginations, one MNB user wrote:

“Great ideas, Kevin. Retailers need to look at the calendar and begin to think creatively and plan events. Let their employees help with their imaginations as well. Spend some money to create excitement. (Now there is a novel idea for most retailers!) Stop letting the natural barriers like cold weather, employee overtime, keep from creating a fun atmosphere.

“Unfortunately, my local Giant Food Store had overwhelming crowds on Super Bowl Sunday, staff was inadequate to meet the task, so an event would have really been unappreciated.. Long check out lines, crowded aisles, surly employees do not put you in a tailgating mood!!! I hate that store.”

Another MNB user wrote:

“I think you’ve hit the nail squarely on the head with “what’s wrong at retail”. Not only do they normally show a lack of imagination during events like the Super Bowl, but their weekly ads also lack any type of “out of the box” thinking. The party platters, chip and dip displays, endless soft drink and beer ends…year after year after year…ho hum.

Face it, the consumer that wants to buy soft drinks, beer and chips, is going to do so whether or not you have it promoted heavily or at all. Retailers only promote what is presented to them by the manufacturing community and allow that to shape their entire promotional visibility (And that is regulated to be equally offered to all competitors.) If it weren’t for their logos at the top of the ad, you wouldn’t be able to tell the players apart, because the content is as duplicitous as it is uninspired.”

Couldn’t have said it better.

And MNB user Sue Galati wrote:

“You and I are thinking along the same path re: more imaginative selling opportunities around events. I think grocers should start about a month before say – Super Bowl promoting Menus (instead of advertising "Come to us for all your party needs", tell the customer WHAT they need for "the Party")...Give customers some package deals with platters/sodas/chips & dip sort of things and give them an 800# to call in their order.

“Have it ready for the customer at a specific time (or offer up delivery to
the home) and thus you have made it easy for someone to throw a party.

“I went to a Super Bowl Party that was catered....the hostess couldn't "deal with it" so she hired a caterer to make chili (????)...and that is the missed opportunity for Retailers!”

We’d be embarrassed to hire a caterer to make chili…

And by the way, thanks to all of you who wrote in with varying beer and wine suggestions meant to go with the red beans and rice we made for the Super Bowl.

We went with a terrific Abita Turbodog beer Yummm…..
KC's View: