A little harsh, but pretty much deserved. You can read it here.
Today, officially, and dare I say, thankfully, we say good-bye to the London 2012 Games, though not without a shout out to team USA’s men’s gold medal winning bball team. (Hey, Melo, any chance you can bring some of that juice home to NYC?)
Companies pay huge sums to be Olympic sponsors, and, theoretically at least, for good reason – for two weeks every two years the entire planet is focused on something positive. Not many marketing opportunities can give you that kind of stage. One of the London Games’ official sponsors, for example, was adidas. By some estimates, adidas paid, based on today’s exchange rate, about $160 million over the last four years for exclusive marketing rights in the UK only, which included the cost of the sponsorship, the ad campaigns and outfitting the athletes. The New York Times reports that the sponsorship piece alone cost (again, based on today’s exchange rate) about $60 million. To quote Macaulay Culkin from one of my top 10 Will & Grace episodes, “That’s a lotta chedda, yo!”
Then there’s Nike. They ran a wonderful, engaging TV ad called “Find Your Greatness – Jogger” that is not only a viral sensation, but has really captured peoples’ imaginations (you can watch it here). Then they stuck it to adidas in their own backyard with this print ad featuring the great British women’s marathoner and current world champion Paula Radcliffe. Then this morning during the men’s bball finals, they ran a “Game On” spot that was as kick-ass and adrenaline-fueled as “Find Your Greatness” was endearing (you can see it here). Cost of the sponsorship? Zero. They paid for media buys and production costs, but they paid no sponsorship fee because they weren’t a sponsor. Net result? Ad Age reported that of 1,034 US consumers surveyed, 37% identified Nike as an Olympic sponsor.
Call it chutzpah (look it up), call it good ol’ American ingenuity. But THAT is how it’s done.
Addendum – August 1, 2012: The original post was written in October, 2011, and given the passage of time and JCP’s financial performance since then, it is clearly dated. I still think the Johnson/Francis team could have done great things – problem is they rolled out the re-branding in a big, splashy way before they could bring the product and stores up to the standards of the so-called new and improved JCP experience. So yes, I have a bit of egg on my face. But it just goes to show you – the best plans in the world ain’t worth the paper they’re written on if you don’t execute.
Original Post: If you follow such things, no doubt you’ve heard that Ron Johnson of Apple Retail Stores and Genius Bar fame and, IMO, one of the few true merchants out there (as I’ve discussed before, Mickey Drexler of JCrew is pretty much the only other one) is set to become the new CEO of JC Penney come November 1st. What you may not know is that Johnson spent his formative merchant years at Target – 15 years, to be exact, before the 11 he spent at Apple. Word is that he was a bit of a maverick at Target, which is not really in keeping with their corporate culture but probably served him well at Apple. Today, Target announced that its CMO, Michael Francis, is leaving the company after a decade to join…(wait for it)…JC Penney as its new president. Francis is the creative brains behind Target’s brand positioning and its best known ad campaigns, including the recent Missoni launch. Interestingly, high profile design deals like Missoni, as well as Liberty of London, Michael Graves and others (full disclosure: I was CEO of Swell, one of Target’s “design partners”) don’t live on the merchant side of Target’s business; rather, they reside within marketing, which was in Francis’ purview.
Have you ever been to a JC Penney? I have – once. It was for research. I very nearly died of boredom. Can you recall a single JC Penney ad or product deal or anything interesting they have ever done? Anything they do particularly well? Anything that distinguishes them from any other retail chain? Me neither. I think that’s about to change.
Let’s take a quick stock of the wackiness that has been swirling around the last few weeks. In no particular order:
- Netflix bums everyone out by raising their prices in July, and then pisses everyone off in September by making one, easy to use service two, far less convenient offerings, one of which has a really dippy name. (You can read my post about this here.)
- AOL makes a not-particularly-well-thought-out investment move involving the head of an acquired company who was promised autonomy, only to have it blown up in its face by the head of another acquired company.
- HP bets its future on a new tablet and OS, decides it was only kidding and scraps the whole thing, including its CEO, only to hire a new, “name brand” CEO that knows nothing about any of its businesses.
- In a similar vein, Yahoo!, which is running neck and neck with HP for the dubious honor of having the most incompetent board of any public company, cans its CEO without any succession plan. In an effort to keep their employees from racing to the door, the board sends a rambling, semi-coherent email letting everyone know that all options are being explored, which may or may not include a sale or hiring a new CEO depending upon which way the wind is blowing, only to be followed by a more direct and pointed email from the acting CEO telling employees it’s business as usual for now and have a nice weekend.
- For those of you who still haven’t become fully used to Facebook’s last round of changes, a whole new round has been introduced (with even more coming next month) because fb decided they know better than we do whether, how much, and what we want to share with one another. Massive amounts of bitching ensues.
- RIM reaches a point where they should just gather up their toys and go home.
All of this begs enormous numbers of questions and observations. There is, however, one commonality, which also happens to be the only factor of real consequence. Every one of these companies has taken its eye off the customer. They are all (rightfully) obsessed with iteration, innovation, fear of obsolescence, and the need to stay ahead of the competition – these are critical drivers of every tech company. But when everyone inside a company is breathing the same air (drinking the Kool-Aid, buying the same bullshit – insert your own metaphor here) things start to get really funky. Do you think fb did a lot of research before coming up with Timelines? It represents a fundamental change to what constitutes a fb profile – it’s no longer a snapshot, but rather a mini-biography, some chapters, I’m sure, many people would prefer to forget or at least right the wrongs of the past and not share again. RIM clearly thought email was enough. It’s not like that stopped being true yesterday. The list goes on.
The lesson here, boys and girls, is really simple. Never take your eye off your customer, whether she is internal to your organization, a consumer, or a business client. She’s the ONLY thing that matters.
One day the story of Netflix and the summer of 2011 will be told in an HBS case study, and the students who are required to study it will respond with a resounding and collective…wtf?
Here’s the very condensed version of how that case study will read:
In July, Netflix announces they are scrapping their “unlimited streaming plus one DVD at a time plan” and instead separating their streaming and DVD plans into two different offerings, thereby increasing by at least 60% the monthly cost for those who want a blended package. Turns out Netflix didn’t anticipate that much as they wanted to exit the DVD business, an awful lot of people still want DVDs – if they’re anything like my parents, the word streaming sounds complicated and scary, and if they’re anything like me, they love the immediacy of streaming but also desire access to the vastly deeper catalog DVDs offer – and the economics of their business were no longer working. (Seems they could have avoided that little bit of unpleasantness with some research, but since HBS case studies don’t editorialize – that’s the student’s job – I digress.) Not surprisingly, the announcement was followed by a very loud customer response, and they were PISSED.
Fast forward to September. The company announces its US subscriber figures, which had grown from 6 million in 2007 (when they introduced streaming) to 24.6 million as of June 30, were going to drop by 600,000 over the 3rd quarter ended September 30 rather than increase by 1 million. Ouch.
Netflix’s stock gets hammered (actually, it has been since the original announcement in July). Then comes the long overdue mea culpa of sorts. Reed Hastings, the company’s CEO, explains on the company’s blog why they did what they did and apologizes for the way it was handled. He also announces that they are going to organize their two separate product offerings into two separate businesses – Qwikster for DVDs by mail, and Netflix for streaming – with separate websites, separate credit card info, separate cataloging of your likes/dislikes and recommendations, etc.
Now for my take. His explanation makes good sense, and I applaud him for taking the step, even if it is two months late. You don’t have to look far – AOL, Yahoo!, MySpace – to see how quickly a once high flier can become irrelevant. But if you’re going to apologize, apologize. That half-assed, “I’m-sorry-if-what-I-did-hurt-you” bullshit is no apology at all. And two separate companies with two separate ways for customers to engage? You just pissed off your subscribers and tried to make nice – now you’re going to make it harder for them do business with you? As for the name – Qwikster – it sounds an awful lot like Quixstar, which is the name Amway used for a short time before they recently went back to using Amway (full disclosure: Quixstar/Amway is a former client of mine). Any idea how many millions of customers and employees Quixstar/Amway have? And finally, to add insult to injury, nobody, it seems, bothered to check as to whether the Twitter handle @Qwikster was available before making today’s announcement. Turns out (a) it is already in use by someone whose tweets make liberal use of very colorful language, and (b) misspelled versions, like @quixster, were available, but once the announcement was made, people jumped on ’em.
For a company that has done so many things so right for so long, they were bound to make a misstep – everyone does at some point. But this was botched in a big way. People don’t like their cherished brands that they have loyally supported to turn on them, and that’s what this price increase/two separate offerings has felt like from the beginning. And with Wal-Mart-backed Vudu gaining steam (and having a much better streaming library IMO), there is a strong competitor in the wings. I hardly think the mistakes are fatal; the recovery process will nonetheless be interesting to watch.
You may already be familiar with the flash sale site Fab.com that launched over the summer. It rocks in a big way. If your style vibe is retro/vintage inspired/whimsical/arty/don’t take yourself too seriously, it’s for you. If it’s not, it’s worth checking out anyway. You may find the options a bit hit or miss on any given day (the site typically features @ six or so new designers/artisans/product collections daily), but I promise you’ll find at least one must-have item in the course of a week. And since the price points range from as little as $5.00 to as much as several thousand, there really is something for everyone – well, everyone who shares the above described esthetic.
And that really is the point – there is an incredibly strong product vision at work here, which tends to be missing in most other flash sale sites. In the old days, this used to be called merchandising – picking the right product, combining it with the right product assortment so as to tell a compelling story, offering it at the right price point and displaying it in an appealing manner to a prospective customer that is likely to be receptive to it and want to buy it. There are sadly almost no real merchants left anymore – there’s Mickey Drexler, who ran The Gap during its heyday in the 90s and more recently reinvented JCrew; Ron Johnson, the genius behind the Genius Bar and Apple Retail Stores, who is leaving shortly for JC Penney (I have no idea why); and no one else I can think of. The Fab folks have restored my faith that some people understand there is more to building a successful retail business than a laser focus on reducing the number of shopping carts that are started and abandoned or maximizing the revenue per square foot – it requires a little art and a little magic. And that, my friends, is called merchandising. Not curation (which word should go the way of “synergy” unless used in reference to a museum or gallery exhibit), but merchandising.
Forbes has a nice piece on the company here. Site is by membership only, BUT they’re running a deal now – if you use the link http://fab.com/wfente you’ll get a $10 free credit when you join. The deal expires at 3:28pm ET on Friday, 9/16/11, so go to it. It pays to know Spamothemag…