Brand advocates are the most important salesmen a product has.
Graphic courtesy of The Times & Bain
Personal recommendations ensure brand preference, even in the toughest of times.
A survey of 6000 shoppers by Bain reveals that consumers are more likely to “treat themselves” by spending more on premium and luxury brands during these tough economic times. Bain note that consumers recognise the there is an emotional pull by these brands, who are deriving reassurance of quality in their purchases.
In tough circumstances, consumers are cutting back on big ticket purchases (think Best Buy & Comet issues), are holidaying at home (BA reports another drop in passenger numbers) and in terms of homes, they are either holding on and not moving (stagnant housing market) or can’t get mortgages to get on the housing ladder and will continue (or even restart) to rent (today’s Grainger report indicates up to 50% of Brits will soon be renting).
While these are understandable indicators of such hard economic times, many consumers want to afford themselves to the occasional “treat”. When they do, in a surprisingly wide range of categories – including fragrances, restaurants and personal technology – they look to brand-influenced decisions. What is interesting in the Bain study, is the confirmation that
- advertising continues to diminish as an influence on 2st Century brand choice
- personal recommendations are the most important influence
- online activity is important but not as important as the massive shifts in marketing expenditure to internet expenditure suggests.
As Bain says ‘Companies overestimate the importance of online and are underestimating the importance of advocacy. A lot of companies have spent a lot of money on the internet but they should be spending more on getting people to be influenced by their friends and family”.
Brands can succeed next year despite the gloom and doom, by creating advocates, by listening to and creating dialogue with these consumers and by recognising that by doing so, consumers imbue these brands with quality associations, beyond the basic product attributes. Brands that do this understand the new customer journey has many touchpoints that require new thinking and smaller, consistent actions that reinforce the expectations of the brand promise.
Hailey’s Comet – innovate the brand rather than cut off the tail
When Best Buy shut down UK operations yesterday, a John Lewis spokesman got it right when saying :there was no gap in the market. Today, Kesa shed itself of Comet for £2 to a group of companies under the name “Hailey” advised by retailer turnaround specialists OpCapita.
Hailey’s Comet – geddit?
Kesa have invested £50M into Hailey and covered the staff’s final salary pension fund. Hailey’s Comet will burn for at least 18 months (they “promised”). The goal is to sell it on then or after for £70M+ assuming the chain has indeed turned around. Kesa had already been fighting the downturn by shutting down 17 stores and was “right-sizing” more. Hailey will no doubt be fast tracking this faster and deeper to drive profitability on declining revenues.
Which makes one wonder what the future of these bigger out of town operations? Especially for infrequent big ticket purchases? No doubt people will still buy what the big Electrical Outlets offer – once a year or less rather than what was twice a year or more.
But with everyone becoming savvier in online research and the importance of recommendations, what will drive people into the stores that they do not pass frequently? Smaller High Street stores work for smaller electrical and tech offerings (Carphone Warehouse’s skills not Best Buy’s) or offer an all encompassing experience (Apple Store) that will draw more regular visits without a desire for specific purchase. Argos has cracked its digital search app brilliantly to order & reserve before going to store to pay & pick up – and use GPS to make it yet more relevant.
How can Hailey turnaround what Kesa couldn’t? Cost optimisation will not be enough. The Comet Brand Experience will need to be reinvented – and that cannot start with price promotion advertising but with innovations on the whole customer journey. Innovations that should include a new digital dialogue or friendly & rewarding search and information applications and then through to expectation beating in store experiences. The aftercare option cannot be confined to selling expensive and unwanted product liability insurances.
There are enough Comet stores that Hailey can test out different experiences on different customer journeys – and then accumulate the total learning into the whole group. Such a programme could and should lead to turning around revenues as well as whatever Hailey decides to do with cutting off its tail.
If they fail, there may well be a gap in the market – the real Hailey’s Comet is due back in our solar system in 50 years…what will be happening in retail outlets then?