Reset!
Engaging Consumers and Growing
Market Share in the “New Normal”
Jon Giegengack, Chadwick Martin Bailey
Steven Dennis, Sageberry Consulting
Table of Contents
1. Introduction
2. The CMB Consumer Pulse
Findings
•
Changes in consumer mindset
and spending
•
What it means to specific kinds
of products and purchases
3. Eight principles to help brands
succeed
4. In Summary
Who is Chadwick Martin Bailey?
• Founded in 1984
• 65 employees in Boston
• Global, full-service custom market
research company
• Dedicated Retail and eCommerce,
Travel and Entertainment, Financial
Services and Insurance, Healthcare
and Technology Practices
• Specialize in brand, segmentation,
product, and customer loyalty
research
• Put out regular research results
through our Consumer and Tech
Pulse programs
3
Who is Sageberry Consulting?
• Growth and marketing strategy
consulting firm for retail,
consumer and luxury brands.
• Founded by Steven P. Dennis
• 25 years at Neiman Marcus, Sears,
Lands’ End, and NutraSweet
• Prior to SageBerry, Steven was
Neiman Marcus’ Senior Vice
President of Strategy, Business
Development and Marketing
• Executive in Residence at SMU’s
Cox School of Business
• Blogger on the “Art & Science of
Customer-Centricity”
4
How have consumers changed, and what does it mean?
• The economy has had a big impact on consumers of all stripes. (No kidding.)
• Many of these changes are permanent. With a few exceptions—today’s
consumer is not the same person you served two years ago.
• What they spend on
• What is important to them
• How they evaluate brands and products
5
How have consumers changed, and what does it mean?
• Entirely new patterns of behavior are
starting to emerge.
• Not the pre-recession “spend at
will” habits
• Not the bunker-mentality habits of
2008-2009
• But a new set of criteria that
consumers have created, and
intend to stick to
6
How have consumers changed, and what does it mean?
• According to our most recent wave
of consumer research…
• 1/3 of people have seen their
personal financial situation get
worse in the last 12 months
• However--most (84%) think things
have leveled off or will improve over
the next 12 months.
• The implication: Many people
consider their current
circumstances temporary. What
will they do when those temporary
conditions have ended?
7
How have consumers changed, and what does it mean?
• Half-empty: many companies’
understanding of their customers and
prospects is out of date.
• Half-full: for companies that
understand
the “new normal,” there are big
opportunities
to gain share.
8
How do we know?
Details on our research study
• CMB Consumer Pulse
• Online study of 1500 consumers ages 18-65
• Recruited from an online consumer panel
• Qualitative chat-based interviews with
selected respondents using iModerate
Research Technologies
• Asked about changes in perceptions,
consideration, and spending across a range of
categories
• The data set is available online via Tableau
Public by following the links at the bottom
of each page
9
What have we learned? Consumer spending is in flux.
10
What have we learned? Consumers have cut back across
the board.
Activities for Children
Books
Designer Clothes
Designer Shoes
Dining Out
Electronics
Home Furnishing
Home Improvement
Jewelry
Subscription
Vacations
Videogames
0%
20%
Stopped Completely
View and play with the data yourself at:
40%
Cut Back
60%
80%
100%
Same or More
11 http://public.tableausoftware.com/views/NewNormalShopping_1/SpendingByCategoryCondensed?:embed=yes&:toolbar=yes
The more useful story: what they intend to do next, and
why.
Activities for children
Books
Designer clothes
Designer shoes
Dining out
Electronics
Home furnishings
Home improvements
Jewelry
Subscription services
Vacations
Video games/systems
0%
20%
Return to my old shopping habits
40%
60%
80%
Establish entirely new shopping habits
Continue with my current shopping habits
12
View and play with the data yourself at:
http://public.tableausoftware.com/views/NewNormalShopping_1/FuturePlans?:embed=yes&:toolbar=yes
100%
As many have suspected: many old priorities won’t be
returning.
Activities for children
Books
Designer clothes
Designer shoes
Dining out
Electronics
Home furnishings
Home improvements
Jewelry
Subscription services
Vacations
Video games/systems
0%
20%
Return to my old shopping habits
40%
60%
80%
Establish entirely new shopping habits
Continue with my current shopping habits
13
View and play with the data yourself at:
http://public.tableausoftware.com/views/NewNormalShopping_1/FuturePlans?:embed=yes&:toolbar=yes
100%
However, only some of this change is driven by necessity.
A lot is just more considered spending.
%8-10
“I am far more willing to shop around for the best deals.”
49%
“Reliable brands and companies are more important than ever when making
purchase decisions.”
34%
“I have made sacrifices in brand choices.”
31%
• “I used to buy whatever clothes and shoes I wanted. Now I only buy when I
need something…like clothes for summer and trying to use as much as I can
from previous years”
• Conservative Spender, $75,000 to $99,999, 35 to 39, Female
• “[I’m] mostly cutting back on the more frivolous purchases and
saving money for the important things…I’m just content with
making smarter choices when it comes to things I want versus
things I need.”
• Liberal Spender, $25,000 to $49,999, 25 to 29, Female
14
New habits are being formed. Significant market share
has been uprooted, and is looking for a home.
Activities for children
Books
Designer clothes
Designer shoes
Dining out
Electronics
Home furnishings
Home improvements
Jewelry
Subscription services
Vacations
Video games/systems
0%
20%
Return to my old shopping habits
40%
60%
80%
Establish entirely new shopping habits
Continue with my current shopping habits
15
100%
View and play with the data yourself at:
http://public.tableausoftware.com/views/NewNormalShopping_1/FuturePlans?:embed=yes&:toolbar=yes
The challenges and outlook differ by category. Some of the
differences are predictable…
More
Rebound
How have you changed your shopping habits?
50%
Vacations
40%
Degree of
Future
Rebound
Jewelry
30%
Designer
shoes
Less
Rebound
Home improvement
Home
furnishings
Dining out
Designer
clothes
Activities
Video gamesBooks for children
/systems
20%
-90%
-80%
Greater
Decline
16
Subscription
services
Electronics
-70%
-60%
-50%
Decline in
Past Spending
View and play with the data yourself at:
http://public.tableausoftware.com/views/NewNormalShopping_1/CategoryMap?:embed=yes&:toolbar=yes
-40%
Smaller
Decline
But there are also some implications one might not expect.
More
Rebound
How have you changed your shopping habits?
50%
Investments in my
Life
40%
Home
furnishings
Degree of
Future
Rebound
Less
Rebound
Designer
Designer clothes
shoes
20%
-90%
Dining out
Books
Video games/systems
-80%
Activities
Subscription
for children
services
Things that
entertain me
Guilty
pleasures
Greater
Decline
17
Home improvement
Electronics
Jewelry
30%
Things I don’t
think about
Vacations
-70%
-60%
-50%
Decline in
Past Spending
View and play with the data yourself at:
http://public.tableausoftware.com/views/NewNormalShopping_1/CategoryMap?:embed=yes&:toolbar=yes
-40%
Smaller
Decline
Group 1: Things that I don’t think about. (Spending that
is built into the budget.)
• People are less likely to cut back on things that they need to “opt out” of, as
opposed to purchase decisions they need to make every time they buy.
• People are less likely to cut back on experiences (especially for/with their
family) than things.
Subscriptions: like broadband,
cable or memberships
Activities for Kids:
sports, camp, music
lessons, etc.
18
Group 2: Investments in my life (Items that I feel I
deserve and will treat myself to.)
• Categories for which there is no easy substitute, or that are an experience vs. a
possession, are more resilient: less likely to be cut back, and more poised for a
rebound as people feel their financial situation improve.
Dining Out: Investment
in my relationships
Vacations: Time to
enjoy my family
19
Home Improvements/ Furnishings:
Investments in where I live
Group 3: Things that entertain me (Spending on fun
diversions.)
• In the end, people still have time to fill. And in many cases, they are looking for
more efficient ways to fill it: best balance of utility (i.e. fun) and price.
Electronics
Books
Video Games/Systems
20
Group 4: Guilty pleasures (Spending that is unnecessary
but enjoyable.)
• “Frivolous” purchases: expensive categories—particularly those where consumers can’t
rationalize a tangible value—face the most difficult road to rebound.
• Particularly vulnerable: the aspiring affluent. People with expensive tastes, but with
incomes that aren’t large enough to be recession-proof.
• Consistent across income levels: even more wealthy people need better reasons to buy.
Designer Shoes
21
Jewelry
Designer Clothing
So…what do we do now?
Consumers have adapted, have marketers?
• Recent poll: consumers are less inclined to believe that brands have adjusted
their marketing to keep pace with this greater spending savvy
“Do you feel that advertisers
have changed the way they
market brands or products
since the economy has
changed?”
Not at
all
9%
Not changed that
much
30%
23
A lot
21%
A little
40%
Adweek/Harris Poll, June
2010
To thrive in the reset economy, brands must become
intensely customer-centric
Slow Growth
+
Shifting Consumer
Desires
=
Battle for Share of
Wallet

Today’s Competitive Advantage:
Understanding more about your customer than your competition
and turning that insight into action
24
Crafting a remarkable customer-centric growth strategy
requires focus on 8 key principles
1. Identify opportunities along the customer relationship corridor
2. Treat different customers differently
3. Defy the “sea of sameness”
4. Redefine the value equation
5. Remember it’s the experience stupid!
6. Embrace the age of conversation
7. Avoid the trap of the promiscuous shopper
8. Ruthlessly experiment
25
1. Identify opportunities along the customer relationship
corridor
Awareness/
Consideration
Familiarity
26
Discovery
Purchase
Repeat
Purchase
Grow
Preferred
Loyalist/
evangelist
2. Treat different customers differently (by knowing
what makes them tick)
1
2
3
Deep
Customer
Insight
Actionable
Customer
Segmentation
Robust
Analytics
27
4
Customer
Specific
Strategies
2. Treat different customers differently
• Track results. Understand “the why” and “the why not”. Respond. Rinse and
repeat.
Employs persona-based segmentation
to drive differentiated store design,
customer service and target marketing
28
Leverages updated loyalty program and segment
specific targeting to retain high value customer
and grow share of wallet with high potentials
3. Defy the “sea of sameness”
Exclusive Product
29
3. Defy the “sea of sameness”
Reinforce brand value, regardless of price point
Incredible Bang
For the Buck:
That gives a commodity item
emotional value
30
Authenticity &
Craftsmanship:
Rational benefits to justify a
premium price
3. Defy the “sea of sameness”
Innovate the delivery
• Game-changing: challenges category
assumptions (as opposed to a different
execution on the same idea)
• Buzz-worthy: drives business but also
attention to the brand
• Results: all passes sold out within one week
• Generated user-created blogs, Twitter accounts
and Facebook groups
• Used as a foundation for marketing by other
travel marketers
• Traffic to JetBlue’s Web-site up 700%
31
4. Redefine the value equation
Gilt Groupe’s New Business Model
• Positioning: Online “sample” sales of
designer/luxury merchandise
• Tactics:
• “Flash sales”: Limited quantities of deeply
discounted merchandise available for short
duration
• Members only, base grown primarily through
user networking
• Daily emails
• Results:
• 2 million+ members
• Started in 2007; 2010 sales approaching $500 million
• Branching out into Men’s, travel and other
categories
32
4. Redefine the value equation
Mine emerging segments
• Positioning: Retail format designed for
aspirational fashionista’s
• Tactics:
• Evolve real estate strategy from factory outlet
centers to major metropolitan areas
• Source product directly from manufacturers
to hit key price points
• Launch supporting web presence
• Results:
• Off 5th (Saks): 55 locations and growing
• Last Call (Neiman Marcus): 30 stores and growing
• Nordstrom Rack: 76 stores, to open 16 this year
• Bloomingdale’s and Lord & Taylor set to open their
own versions
33
5. It’s the experience stupid!
Find your “Purple Cow”
• Positioning: The super-store for
shoes on the web
• Tactics:
• Enormous assortment
• Free and easy returns
• Super helpful, empowered
customer service reps
• Results:
• Nearly $1 billion in annual sales in under 10 years
• Legendary customer service
• Acquired by Amazon for $1.2 billion last year
34
5. It’s the experience stupid!
Success story: The Container Store
• Positioning: sells just one category, comprised of
products also available at other bigger stores
consumers already visit
• Tactics: make big bets on the customer
experience.
• Every new full-time salesperson receives 240
hours of training—industry average is 7 hours.
• Pay 50-100% above the average (with no
commissions)
• Invest in people and keep them.
• Results:
• Created and own new category
• Weathered recession better than most
35
5. It’s the experience stupid!
Be channel agnostic
• Positioning: Accessible fashion
and luxury in the store and on
the web
• Tactics: Multi-year
investments to create a
seamless multi-channel
experience
• Shared inventory
• Virtual assortment available to
in-store customers
• Unified messaging
• Results: Nordstrom continues
to gain share from rivals with
enormous growth in direct to
consumer
36
6. Embrace the Age of Conversation
• You are losing control of your message. Become aware, accept it and use it to
your advantage.
MGM: MGM is making changes to their training methods and
property appearance based on online reviews at sites like
TripAdvisor of their new Las Vegas hotel
Toyota: Toyota develops multi-execution Youtube campaign to
create buzz and engagement for a new product launch (“Swagger
Wagon”)
Comcast: monitors social media sites and reaches out to
dissatisfied customers
Kodak: refined features and even the name of a new camera
based on Twitter and Facebook feedback
37
7. Avoid the Trap of the Promiscuous Shopper.
• Don’t confuse activity with engagement or loyalty
• Don’t confuse sales with profits
• Target based upon current and future profits
• Don’t make it “wrong” to pay full price
38
8. Ruthlessly Experiment
• The days of the big reveal are over and--most likely--you don’t have the gift
of prophecy.
• Don’t be afraid to fail with a new idea
39
D I F F E R E N T I AT I N G
A simple way to get started
Start
here
D I F F I C U LT Y
40
In conclusion
• There is a “new normal” characterized by fundamental changes in how
consumers behave and make decisions. For most brands ”business as
usual” just won’t work.
• The silver lining: Overall growth will be slow. However—there are also
unprecedented opportunities for the best positioned brands to improve
share of wallet.
• Deep customer insight and segmentation are the keys: Knowing what
motivates customers today- and how to target customers and prospects who
represent the best opportunity will dictate success
• Brands that embrace the “New Customer Centricity” will be best positioned
for remarkable growth
• Let’s get started!
41
Questions?
42
Jon Giegengack
Steven Dennis
Director, Retail and eCommerce Practice
Chadwick Martin Bailey
Phone: (617) 350-8922
Email: jgiegengack@cmbinfo.com
President and Founder
Sageberry Consulting
Phone: (214)-520-6555
Email: steve@sageberryconsulting.com
179 South Street , Boston, Massachusetts 02111
www.cmbinfo.com
blog.cmbinfo.com
twitter.com/cmbinfo
100 Highland Park Village, Suite 200, Dallas, Texas 75205
www.sageberryconsulting.com
http://stevenpdennis.wordpress.com
twitter.com/stevenpdennis