Archive for September, 2011
How to fire a banking customer
Bank of America’s exciting announcement this week certainly has consumers buzzing with indignation. Adding a $5 a month fee for debit card purchases certainly is bold. But is it risky? From a business standpoint, it may be savvy. When your bottom line is sinking, you can no longer afford to let your least profitable customers be subsidized by your most profitable. But a bank can’t just say “I’m sorry, but we don’t want you as a customer anymore.”
Perhaps for BofA, the best way to encourage those free checking customers with low balances to find a new bank is to make them really, really mad. The inertia of the typical US bank customer is legendary. Only about 7% of consumers switch banks in a typical year. And with the planned cut of 30,000 employees, BofA may be thinking they need far fewer unprofitable customers to service.
So, maybe this $5 fee is strategically ingenious. What do you think?
How the Bad Economy Raised the Bar and Is Making Value Propositions More Important than Ever
In the past few weeks, I’ve worked with two B2B clients who are looking to create new positioning and value propositions to showcase the ways that they add value to two different kinds of commodity sales. Both companies – one in the food industry, the other in steel – had become marketplace leaders by taking a customer-centric approach to their service: delivering exactly what the customer asked for when they needed it and without quality issues. While that may sound like a low bar to clear in order to become successful, it had been enough for both clients for years.
But I get the sense that in the past few years, due to the economy, there’s been a shakeout in a lot of industries. As the economy and sales declined, many companies likely felt the need to up their game to win or keep clients. Giving customers what they wanted, when they wanted it and without issues has become the norm. Companies that haven’t been able to do those basic customer-centric things are probably not in business any more.
As the bar gets raised and companies are finding what used to work is no longer as effective for winning business, keeping customers or differentiating themselves, there’s a great need to understand how to go beyond the basics of customer-centric marketing. For many companies, finding the meaningful differentiation means moving higher up the value chain – or creating a new level of customer value in their industry.
Two Years into The Sustainability Consortium
A couple of years ago at Virgo’s Focus on the Future, a gentleman from Arizona State University – representing the Sustainability Consortium – spoke about Wal-Mart’s then-new mandates to their suppliers regarding sourcing, supply chain management and post-consumer waste. As I recall, he was quite optimistic even in the face of some pretty tall orders that the company was asking of the companies whose products line the shelves of the retailer. The Sustainability Consortium was largely funded by Wal-Mart, with the intent to have many companies sign on in order to share best practices and vet products. While other retailers haven’t climbed on board (go figure) TSC has been joined by many companies who sell products through Wal-Mart.
Wal-Mart’s initiatives were indeed transformative as they spurred major brands to find more innovative ways to reduce their carbon footprint and to begin having a more transparent dialogue with consumers and investors. Once Wal-Mart threw down the gauntlet, it seems that an entire industry cropped up. That is, the Sustainability Industry. Just Google “Sustainability Conferences” if you want to make your head spin. Continue reading
Fads, Trends, Niches and “Things” – Where’s Your Product Ceiling?
A couple of months back, a colleague of mine and I were attending the International Food Technology (IFT) Annual Meeting and Expo to meet with some clients and find out what’s new in the food ingredient industry.
As we walked the show floor, we started discussing the general lack of buzz about “the next big thing” in the food industry. In years past, there seemed to be a definitive sense of something being poised to make a splash.
From that, we talked about whether or not companies should be developing products that they expect to be blockbusters – certainly, there’s a need in the industry for food ingredients and technologies that aren’t necessarily earth-moving, but still have plenty of value. The key insight here for companies is to try to understand the ceiling on a product in order to set the proper expectations for what constitutes “success” so as to apply the appropriate amount of resources into its development.
It’s probably helpful to bucket a product you’re developing into one of four categories. Each of them can have value to the marketplace and the company that’s developing it. The important thing is to have the foresight to understand where the product falls within the following range:
How to Avoid PR Missteps: Know Your Audience
The New York Times recently wrote about a PR stunt gone awry. Last month, ConAgra, and their PR firm, Ketchum, hosted a dinner at an NYC restaurant for food and mom bloggers with George Duran, host of TLC’s “Ultimate Cake Off,” and food industry analyst, Phil Lempert. The bloggers were told they were in for a “delicious four-course meal,” Duran’s “one-of-a-kind sangria,” and to learn about food trends…attendees were also promised “an unexpected surprise.”
The event attendees did mingle with Duran and Lempert, but much to their surprise, the food was provided by Marie Callender’s, a frozen line from ConAgra Foods.
The bloggers were not told they were eating Marie Callender’s food at first. Hidden cameras were put in place to capture the reactions of the bloggers when they found out the lasagna and dessert were both from Marie Callender’s.
Events like this have been proven effective in years past. Pizza Hut successfully promoted their Tuscan pasta line by serving consumers the dishes at a high-end restaurant, and following dinner, unveiled the truth that the food was provided by Pizza Hut rather than the restaurant’s chef. If you’re not familiar with the commercial, you can watch it here.
Keeping in mind it was a commercial produced by Pizza Hut, consumers appeared to be genuinely and pleasantly surprised; even entertained by the bait-and-switch. To ConAgra’s surprise, their event didn’t play out as well with some of the bloggers in attendance.
The Future of “Television”
I think a lot about where television is going in the next few years. What’s exciting to me is that there’s a possibility of evolving the medium in a significant way. Consider that for the most part, television has not evolved since the days of the DuMont network in the 1940’s. Back then it was a closed system: networks broadcast shows to a single type of device capable of receiving those transmissions – a television.
Today, not much has changed. We are still reliant on handful of commercial entities to deliver televised content: but instead of networks, it’s cable and satellite providers. The networks are still there, but have moved down the value chain a notch. If there’s been one major change since the dawn of television 70 years ago, it’s that the distribution channel has become more and more important while the actual network on which the content resides is less significant. When I was growing up in the 1970’s, we had the big three networks: ABC, CBS and NBC. They owned the television landscape. As cable (and later, satellite) became more prevalent, the balance of power shifted to the distributors rather than the networks that owned or licensed the content. And that’s where we seem to be right now.
However, we’re on the verge of a major change. Continue reading
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