In this podcast episode, DeAnn and I will explore two new concepts: 1. How can brand refresh support or distract a brand, and 2. How can luxury brands use automation to make customers feel engaged and supported?
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Table of Contents
Transcript
Segment 1: How Can A Brand Refresh Support Or Distract Customer Perception Of A Brand?
DeAnn/Larry
Welcome to another episode of Retail Mashup. I’m DeAnn. I’m Larry. This podcast is all about the intersection of customer experience and the retail industry.
DeAnn
How can brands maximize their revenue and still make customers happy? And how do customer experience impact technology and profit in the retail industry? In this episode today, Larry and I are gonna talk about two subjects near and dear to our hearts, and I’m going to lead off by talking about brand consistency and brand refresh.
These are two very different things, but when used together, they are important tools in helping companies establish a more successful outcome when change comes up. Change is inevitable in everything that we do today. I’m gonna give a couple of examples here on how this works and didn’t work so well.
Nordstrom And Their Overnight Change
Let’s start with Nordstrom. That’s been around for over two decades. Until about 2018, their revenue was fairly static. They were in the green. They were in the black doing pretty well, ticking along. They didn’t have great ups. They didn’t have great downs because their value proposition, their branding, and their management, and their service to the customer were extremely consistent.
People knew what kinds of products they were going to get. They knew what kind of service they were going to get. They understood what was gonna happen if they needed to return something. They understood the price points. Everything was ticking along at a very even pace, which served them very well until they hit challenging times.
Coming up on our recession in 2007. And then again the slowdowns, COVID, and then their consistency model started to fail them. I know they’ve had leadership changes too when the Nordstrom brothers started to bring in outside management and turn over some of the reigns of their company. Their brand started to struggle a little bit and their profits have gone down fairly significantly.
Angry Customers
In 2016, they decided to reinvent their loyalty program. They did it just kind of out of the blue and they surprised people. Their loyalty program had over 10 million followers and reinventing it caused some hiccups, some strife, and a lot of complaints.
A lot of customers were very angry. Fast forward a couple of years and they have now brought out a brand refresh. They’ve redone their logo. They have re-engineered their loyalty program a little bit. They’ve repositioned themselves in the market with a new message, and some fresh store formats like their Nordstrom local format.
Re-think Customer Experience
Their emphasis is on buying online pick up in stores. They have this gray area where you can buy online and you can go into the store and pick up what you’ve ordered. Because they’ve paired that with a brand refresh, customers can really get their heads around the fact that something’s different. The changes are much more palatable.
Netflix’s New Password Sharing Philosophy
Recap
If you look at the flip side of that, a different company that has handled things in a much different way is Netflix. Netflix. In 2017, Netflix issued this tweet that they are going to regret for the rest of their lives saying sharing passwords is love.
It was part of a marketing program for sharing your password. Now we are several years on, and Netflix is complaining that over a hundred million people are living on borrowed passwords and they’re missing out on all this revenue.
Crackdown
So they’re gonna start cracking down. The way that they’ve done it is simply by cracking down. Instead of explaining what the benefits are, what the problem is, and pairing it with a brand and image refresh to give people more value, emphasize that new value they’re going to be getting.
They have just simply done it, do the deeds started canceling. While they are seeing subscription numbers go up a little bit, as some people are panicking and, and grabbing onto that membership of them signing up for it themselves, they’re also not reporting yet the number of cancellations. With the vitriol and the anger that I’m seeing on the internet, everyone is posting pictures of their cancellation email or the cancellation confirmation.
Brand Consistency Impacted
It’s really going to be interesting to see how this plays out. When they interrupted their brand consistency, they didn’t pair it with a brand refresh. It is a very jarring experience for a customer that has come to form a relationship with your company and has an expectation of how things are going.
So Larry, I don’t know if you have any thoughts on this. it’s just something that struck me is it didn’t have to be this way and it would’ve been a very simple thing to issue a minor brand refresh, to soften the blow, and to reset people’s thinking.
A Deeper Dive Into The Concepts
Larry
I’ll start with Norstrom first. I love their brand refresh.
When they were hitting an obstacle and they were having challenges holding on, retaining customers. They thought to themselves, how am I going to make my existing clientele happy and also bring new customers into the fold? Part of what they were doing is live streaming. As you said, refreshed some of the stores and created some new opportunities for smaller scale stores to entice people to go in to pick up merchandise.
And I love that because it shows that the brand is thinking beyond its core customer base and, also expanding that customer base into something more, something better. That tells ’em that they’re moving forward as a brand versus Netflix.
Many of my friends have shared passwords in the past when they did not have their own accounts. It was something that they talked about as a benefit of having that Netflix membership. And so when Netflix decided to remove the opportunity for people to share passwords around the world, that seemed like it was taking something away from the customer.
Then the question for any customer would be, if you are taking away a benefit that I cherish, what are you doing to compensate for that loss and what are you doing to make me feel better about my choices?
There are a lot of competitors for Netflix today. They no longer hold 50-plus percent of the market share. Disney Plus, Paramount N B C with Peacock, they’re all coming in with a lot of fresh content that is gathering a lot more customers. I wonder, Moving forward, can Netflix continue to build momentum based on its content or will it start losing customers because of the change that they are doing?
DeAnn
Well, and we also have things like super apps that are starting to rise up these platforms.
Walmart Plus is one where that gather multiple streaming services so you can sign up for Walmart Plus and get access to three or four streaming services. Netflix used to be the easiest game in town where you could go online and watch all this great content and then Amazon Prime started popping up one by one.
Well, now these super apps that are starting to bundle together, different programs are making it even easier. If Netflix doesn’t wanna be part of one of those bundles, which currently they don’t it’s going to be interesting to see this sudden drop of consistency in their brand.
At the same time, people are not happy with their content. I know. I’m a member. I subscribe to Netflix and I find it harder and harder to find something I wanna watch, and then the increased competition. So it’s going to be I think a bumpy road for Netflix.
They’ll probably settle out at maybe, possibly even the same place they were when they started this mass. So they would’ve gone through all this for nothing. They’ll. Fascinating to see where they are in even three months’ time, cuz I’m sure they’re gonna start rolling this out in other countries rapidly.
Larry
As this particular new password policy is enforced around the world we wouldn’t necessarily know the impact on financials, subscriber accounts, and cancellations until perhaps after a year from now when we would know how bad the impact may be.
Now that we know there is a new policy are you suggesting that they should also do a brand refresh?
DeAnn
So with Nordstrom, when they first re rejigged their loyalty program, they had a lot of flack because they just did it.
That was in 2016. And in 2018 they decided to pair it up with new store formats, a new store image a new logo of fresher, brighter stores, bringing in new services for customers. They really emphasized, they also simplified that loyalty program, instead of four tiers, they made it three tiers.
They made it simpler to use. They made it much easier to understand the value to you, and they added value or even the perception of value. Customers thought, okay, this is different, but it’s better.
As soon as they initiated that brand refresh, that sudden stop in consistency ceased to matter. Customers accepted something new, they were able to understand, why it was here, what was in it for me and how do I move forward. Great. Ever since then, Nordstrom has resumed their solid trajectory in the profit realm, and they haven’t been losing money the way, they were for those few years.
With Netflix, if they had paired it with a brand refresh, maybe. Tweak your logo a little bit. Add some changes to your website or your app so that things look a little bit different. Bring in some fresh new content. Do something to shake things up a little bit, and then make it clear that you want.
To add significant new content we wanna add these tiers of shows. Give customers a way to offer feedback so they can speak up, they can be part of the process, and help reinvent the service along with you. Then clearly communicate through this brand refresh and marketing, repositioning what’s going to be different and why, and what’s in it for the customer.
Give customers a way to visualize moving forward. Make it palatable for the customer instead of just making it sound like a punishment.
Stop treating your customers like brand image, brand offerings, and value proposition. That sudden stop in consistency, people are still gonna be a little annoyed that, yeah, this is inconvenient. That’s the other thing under a refresh, they could have called it.
We’ll be happy to switch you from a family plan to a group plan for this small increase in fee. And then you can have up to four people that are completely unrelated or four locations that are completely unrelated for the customer instead of just making it sound like a punishment. And stop treating your customers like misbehaving teenagers, and treat them like grownups.
Segment 2: Engagement In Luxury Retailing: What’s Lacking Today?
Larry
Moving to a similar topic, but in a different way. I like that the first segment talked about whether are companies in it for you. Are they there for you when you need them? I think it sounds like Nordstrom is there for you, creating new engagements, and creating new awareness using the brand change versus Netflix by staying put and not really changing their values or communicating their values. Their customers are feeling like they’re being punished and not being taken care of.
My story this week is to do with the luxury industry and thinking about how people want to feel like they’re being taken care of.
Case Study 1: Buy Now But Don’t Hear From Us For Six Months
I have two examples. The first one a friend of mine got was an expensive gift online, but it required a long shipment delay. the luxury rebrand over the last six months did not reach out and provide any update. And so my friend decided to go into the store to see what is happen.
That is the first step of the mishap that he experienced. If merchandise is not available, why should someone have to go into the store to seek an update? Why wouldn’t the store and the retailer decide to send them an update on a monthly? Or in fact, if something is not available for a prolonged period of time due to manufacturing issues, shipping issues, and whatnot, the retailer should offer my friend an alternative so that they can buy it now.
Hold On Or Cancel – Potential Opportunity To Lose Revenue
My friend is thinking to himself since there is no end in sight, as per the shop representative, he has to ask himself, well, do I still want to wait for something that may not be available for maybe another six months or he should just cancel.
There are some implications with canceling. The brand would lose out on revenue that otherwise would be in the bank. Also, my friend may tell the story to others that he didn’t feel like he was given an elevated experience with a high-end retail luxury brand on a purchase that he really loved. Others may decide not to buy certain items from this brand too, because of the testimonial.
And testimonials are extremely important for many brands and that’s why you see a lot of them try to engage more on sites like Trip Advisor, for example, or even Google. Or Yelp, whenever there is a bad experience being documented, the brands try their best to engage in advance and proactively. So story number one is whether or not the brand should have been more engaging, using technology or other means, given that the wait time has been six months.
Case Study 2: Operating Without A Loyalty Program
The second has to do with another friend looking for a particular it. And he went to the store and he asked, well, do you have this bow tie I’m looking for? And the salesperson said, no, we don’t have the bow tie available, but we have a show coming up in the month’s time and there’s likely going to be some bowties in that particular collection.
Why don’t I get your information? I will get ahold of you and tell you about it. My friend’s very happy about it. But then interestingly the salesperson collected my friend’s first name and his phone number, and that was using his phone and it wasn’t an iPad that you need to sign up on.
Will You Contact Me – A Potential Revenue Loss Opportunity?
It’s not that they check if my friend is already a customer in the database or whether or not this person has ever shopped and the store before. This particular brand though, high End, does not have its own loyalty program since it stopped having a credit card product with the bank. So they may or may not have all that information available at your fingertips.
In my friend’s case, he never got the confirmation, he does not know when or not he would in fact, get the information when the show coming, whether or not the bowtie is available, and whether or not he can book a time to see it.
For a luxury brand, a luxury department store, it’s an opportunity to actually lose revenue for them because they are not creating a workflow with the customer to start building that relationship in a holistic way. I was surprised to hear and see in person that they didn’t check if this person was already a customer with the department store so they would be able to say,
“Oh, Okay. Welcome back. We’ll put a note so I will get a notification and you will get a notification at the same time when the fashion show comes up.”
Technology Automation To The Rescue?
I wonder if this particular department store is using technology in automation appropriately and when or not they should include or build a loyalty program so that the sales team wouldn’t have to collect names and phone numbers haphazardly with no place to store them more directly for engagement and awareness-building purposes. Without that information at the fingertips, it would be harder for the salesperson to proactively find out more about the person’s likes and dislikes and promote brands and or items that would increase upsell opportunities. That’s my story.
A Deeper Dive Into The Concepts
DeAnn
Well I love that. It sounds like this company is not even doing the basics that Amazon does. On a regular basis, if I go into Amazon and I look at something, whether I buy, if I buy it or if I don’t buy, I get emails within 24 hours telling me customers who looked at what you looked at also purchase this or are also interested in this.
They remind you of what you looked at or they’ll tell you when it’s back in stock. I’ve also ordered something from Amazon. They couldn’t get it in a timely manner, so they sent me an email saying, you’re welcome to keep your name in as soon as it comes in, we’ll send it to you, or you can cancel it, cuz we can’t guarantee a timeframe to give it to you.
That’s pretty basic e-commerce customer experience, and customer service, and it’s amazing to me how many physical stores can’t seem to tap into that. The technology is available. It is an easy thing to do these days, especially if you do have a loyalty program. And that’s another thing is not having a loyalty program in this day and age is a big miss because it’s basic math.
Your customer is going to spend 68% more money with a retailer in their third year of relationship with that retailer, than they will in the first year that they are shopping with that retailer. The other thing is bringing in a new customer costs five times more than keeping an existing customer happy.
The way to do that is through your loyalty program. It’s really the ROI of loyalty programs is tremendous and it’s proven over and over again. Look at Nordstrom’s Nordi Club membership. They have 10 million people in that club, 10 million names that they can email on a regular basis.
10 million names that they can access and personalize recommendations to. That is an extremely powerful marketing tool, and it’s already paid for, essentially. So that’s really interesting subject.
Larry
It makes it difficult for the sales team to meet target when they have to spend more time individually engaging and individuals communicating with their clientele, possibly one by one, maybe using the company’s cell phone, maybe not. All that information and the discussion would not necessarily be recorded.
I think that’s important because companies especially hire high-end retail they need to be able to all the little tidbits about you to build that relationship so that when something is personalized, something that is relevant to you, that’s in store, they would be able to tell you ahead of time or tell you immediately.
That’s what people are looking for now, rather than just having an email telling you everything in the kitchen sink gets on sale. What we as consumers want to see is something that we have seen at the store, search for inside the store, or online.
We just want what we like to be shown to us in further communication. Not everything was haphazardly, and so I think, there was a last opportunity, a revenue opportunity for not having a loyalty program, number one, and not having a robust CRM system for the sales associates, the sales team to collect that information.
I also think that there is a problem with training in this particular instance because I am surprised they didn’t even try to say have you shopped here before? If you have, and we have your information somewhere as part of the transaction data then we can just put it into your profile.
DeAnn
Yeah.
Larry
And so then you can then associate with that name to you, the salesperson, as the go-to person for all their shopping needs, rather than just being another salesperson.
DeAnn
That makes a lot of sense.
Larry
For the first company, I think technology can come into play. People really don’t like to wait. If they spend money on something important to them, it could be $5 worth, they really don’t want to wait six months before they hear anything, and that they have to take steps to find out what’s happening. All companies should have a policy either use technology or use a sales team to engage customers on what’s happening with a shipment.
What do you think about that? Would you have been okay with waiting for one month and not hearing anything? Or it could be up to six months not hearing anything and you would still be okay?
DeAnn
Oh, we could do a whole podcast on the dynamics of waiting so that customers are in a different mindset before they order. Waiting is painful, every minute is agony, and oh my God, you know, when am I gonna get to the front desk after they’ve placed their order? Or after they understand what’s coming next, they relax and the waiting, sometimes can be boring.
You’re probably looking at your cell phone, something to do, but you’re not stressed about it the way you are before you place your order or the before you find out what’s going to happen next.
So, IKEA’s a great example. So you walk into Ikea and I don’t know if Canada has this yet, but Minnesota IKEA has this. You walk in and you can scan at the kiosk that you’re here, scan your product, and you enter a couple of items like I’m here to return and then they give you a number.
Then the number is shown on this big digital screen over the front counter. You can clearly see that you’ve checked in. They know you’re here. Your place in line is secure, and you can wander around and relax. You can go get a hotdog, you can sit, and you don’t feel stressed because you know that your turn is held for you.
Your place in line is being held and you can see the progress and your number comes up, kind of like the DMV. Giving people information changes the dynamic of their wait.
So your friend, if he had been told it’s gonna be six months, then he would have his expectations set. He would understand. He may not be happy about it, but he is not gonna be stressed or angry about it. It’s like, okay, they were honest with me. Six months. I wish I had it sooner, but I get it. And then sending those periodic updates to remind you we haven’t forgotten about you.
We’re still looking into this. If you changed your mind, you don’t want it, click on this button. That kind of behavior goes so far as helping people stick with you and making the wait much more of a pleasant surprise than an agonizing
Larry
Yeah, there is definitely a potential revenue leakage by not setting up the right expectation at the purchase stage. And also continually reset expectations if that has changed. Unfortunately for this particular brand, they can do that.
Thank you very much for another exciting episode, and we will talk again next time. Sounds great.
Note: This transcript has been modified to improve quality and ease of understanding, as needed. While it is not a word-by-word replication, we preserved the meaning of the concepts discussed.
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