Archive for the 'Marketing' Category

Did L.L. Bean need to change its return policy?

L.L. Bean got plenty of publicity when it announced a change to its longstanding policy of “no questions asked” returns. Apparently the cost of abusive returns (products bought at yard sales, twenty-year-old clothing with normal wear and tear) was an unsustainable cost of doing business — to the tune of a reported $50 million annually. The RetailWire panel discussed whether this was a good strategic move, and here’s my point of view:

L.L. Bean is among the last retailers to abandon “no questions asked” return policies. The company is right that abuses of the policy make it unsustainable. A cost of $50 million per year has been reported, although it’s not clear whether this is the cost of “abusive” returns or all returns. I’ve noticed other companies with generous policies (Kohl’s, for example) tightening their processes, in part to avoid being swamped by e-commerce returns to physical stores.

Loyal shoppers will not be put off by the change, but L.L.Bean took a PR hit because of widespread media coverage. There was a missed opportunity to manage the message more effectively, even if the decision was justified, given that the policy was a central branding message.

Advertisements

No, “Big Data” isn’t dead

A recent RetailWire discussion (with the premise that “Big Data” is dead as a retailing management tool) provoked a lot of response. My point of view is that data science combined with action is alive and well:

If you read the recent WSJ interview with the chairman of Fast Retailing (Uniqlo), you might have seen this perceptive comment: “Data would never substitute the merchant. How do you interpret the data? That’s the merchant’s skill set. You need to uncover the insight that is buried in the data and the merchants need to uncover it. Even if you employ artificial intelligence to help you, the numbers [don’t tell] the future.” His point is well taken: No matter how much importance a retail organization places on its ability to extract data from its transactions, the information means nothing if it can’t be turned into action — and some of that decision-making rests on instinct and experience.

That being said, declaring that “Big Data is dead” is an overreaction. The phrase itself may be overused, but data science is alive and well in the interest of smarter merchandising decisions, loyalty programs and so forth. Would Amazon be where it is today without groundbreaking use of data to develop its predictive technology? I don’t think so.

Applying the “4 P’s” to the Amazon model

One of the oldest tenets of marketing and retailing theory is the importance of the “Four P’s” — product, price, place, and promotion. RetailWire panelists recently discussed how to apply these principles to a game-changing retailer like Amazon. Here’s my take:

The discussion of the “four P’s” makes sense as far as it goes — and it rightly points out that assortment is more important than price to the Amazon customer. But there are other secrets to Amazon’s success that deserve at least as much attention.

First, Amazon’s predictive technology does an industry-best job making purchase recommendations based on shoppers’ past buying and browsing behavior. Second, Amazon has created an Apple-style “ecosystem” (from the Kindle to the Echo) enabling its own hardware to drive e-commerce sales. And, finally, Amazon’s TV advertising does a great job creating an emotional connection between the company and its customers.

All of these points would mean little if Amazon didn’t execute well. The level of trust between Amazon and its customers may be the most important brand-building exercise of all.

Does “customer service” still have a meaning?

I’ve long maintained that “customer service” is in the eye of the beholder, especially depending on the type of retailer or website being visited. This is more true than ever in today’s “omnichannel” world, and here’s a recent RetailWire comment on the topic:

Customer service is part of (but not all of) the customer experience. The entire experience includes the store’s “silent salespeople” (store atmospherics, design, etc.), the interaction with e-commerce, the pricing strategy and above all the merchandise.

Meeting or exceeding customers’ expectations for “good service” depends on the type of store, as other panelists rightly point out. Good customer service in a high-touch atmosphere like Nordstrom is far different from what the Target shopper expects: Merchandise in stock, easy to find, and easy to pay for quickly. But getting this right is only one piece of the puzzle for any retailer.

Has data science killed the art of marketing?

RetailWire presents a deliberate (and provocative) false choice to its panelists today: Does the growth of data science mean that marketing and advertising have lost their creative touch? I disagree with the argument, and here’s my point of view:

It’s easy to romanticize the “good old days” of marketing and advertising — think of Don Draper cliffside, coming up with his greatest inspiration — but the reality is that data science has always played a role. (It used to be called marketing research.) The fact that data collection and analysis is far more sophisticated today doesn’t diminish the importance of creativity and instinct. Marketing is in part the art of creating an emotional link through brand equity, but it needs the grounding in facts and results that data science can provide.

Why would IKEA sell its goods on Amazon?

RetailWire panelists engaged in some speculation that IKEA may begin expanding its e-commerce footprint, including selling some of its products on the Amazon Marketplace. Here’s my rationale for the possible decision:

IKEA continues to open physical stores at a very deliberate pace. Here in the Milwaukee area, they are finally breaking ground this month for a store announced last year and opening in 2018 — their first in the market. Yet IKEA has broad name recognition and brand equity among potential customers who don’t live anywhere near one of their stores. Why not expand their e-commerce footprint, especially if the sales data uncovers potential new markets or localized changes in merchandise mix?

What matters more: Merchandising or marketing?

I realize the answer probably depends on your background in retailing, but you can tell from my RetailWire comment that I have a point of view on this one:

With all due credit to marketing consistency, I think it’s overrated as the key driver of customer loyalty — at least in this survey. Communicating to customers — wherever they look for marketing messages — is an important building block in branding, but it doesn’t happen in a vacuum. Marketing needs to function alongside merchandise content, pricing strategies, customer service and so forth — and in a consistent way with the other pieces of the retail puzzle — in order to turn a satisfied customer into a committed one.

By the way, since retailers are in the business of selling goods and services…isn’t merchandise content (the right product in stock when the customer wants it) the most important attribute? If stores don’t execute this, does marketing matter?


Advertisements