Marobella's Branding SoapBox

Maintain Your Brand's Reputation In The Recession

Desperate times sometimes call for desperate measures. We are human, after all and tend to get caught up in the newspaper headlines, lead stories on MSNBC, the content of the new President's speech and all of the water cooler talk. Sometimes this paranoia and fear trickles up to the executives in America's corporations, permeates the board meetings and finds it way into marketing strategies.

Via The Consumerist comes the case of a brand that is working hard to maintain their customer base in this era of uncertainty. Insurance and benefit companies have an indirect relationship with their group-based consumers. It can be a complicated situation as the group controls the business relationship, but the consumer is the closest to the benefits and services of the provider. When corporations decide to trim staff, people have the option of choosing COBRA, gambling with no health insurance or joining an individual plan. From the provider's perspective, losing a "subscriber" is not a good thing, it provides the company with a smaller consumer-pool with which to spread the risk. In simpler terms, healthy people pay for the sick people. So, when a company lays off people, the health care company could try and retain them into an individual plan.

So, when Aetna sent this letter to their subscribers, they probably had best intentions of pre-empting a possible layoff at their subscriber's corporation to try and keep them as a customer, one way or another. The issue with it is that they played the "fear-card" and clearly created one pissed-off potential current and future customer. A strategy like this raises more questions than answers and can wreak havoc not only for the consumer, but for the HR and benefits people. And, they are not to be messed with since they control whether or not they go out to bid when the program comes up for renewal.

If I were a fly on the wall in the strategy session where this marketing scheme was hatched, I'd bet that they discussion revolved around a strategy pillar such as, "We need to strenghten the relationship directly with our consumers and let them know we are there for them.""Let's make them feel better about having Aetna as their health insurance provider and put their mind at ease if they lose their job." Unfortunately, I imagine that the spirit of the compassion and sound strategy got lost in legal-translation and watered down by layers of marketing approvals. I would think that there are many marketing fingerprints on this letter and somewhere along the line, someone said let's be more aggressive and play into people's fears. Probably someone with a parking spot.

The learning here is that this downturn will end. And when it does, people will remember the brands that were authentically compassionate and altered their pricing and product strategies to help people get through the hard times. Like the Hyundai Assurance Program where people can walk away from their loan or lease without worrying about negative equity after qualifying. I must admit, I've even thought about looking at Hyundai after hearing about this promotion. It's pure genius, communicated with a genuine tone of caring and compassion. This is the way to market to your consumers that you understand times are tough and you'll be there for them.

Costco vs. Sam's Club. The Face Off.

Today, my wife and I took Sam's Club for a spin. We've been loyal Costco customers even since we've moved to a town that forces us to drive about 35 minutes to get there. However, we found a Sam's Club that is considerably closer so we thought we'd see what's what. Here is how I scored the day starting with the front door.

1. The Approach: Walking up to Sam's Club today it looked somewhat like the entry to a Costco, sans the neat and organized cart system that Costco maintains. The carts were scattered and seemed tattered and old. The person at the front door was not friendly and seemed to ignore me when I asked where the membership desk was. Off to a good start. I approached the membership desk that seemed disheveled and chaotic because it was co-mingled with the returns desk. Signing up was quick and painless other than the woman spelling my name wrong on my card. Not sure how that happened as she was staring at my license as she entered it. Small detail, but Morobella annoys me. Once we wrangled a cart it was off to the races.

2. First Impressions:  I started to feel that this felt like a Wal-Mart except it cost me $40 bucks to get in and the mayonnaise jars could eat you. The store had similar sight-lines to Costco but didn't have the racetrack format of a Costco with the infield merchandise. It was hard to get my bearings as the aisles seemed to have no rhyme or reason. I'm sure I missed merchandise as I shopped. The entry had awesome pies and cakes which tempted my daughter and were very reasonably priced, so far so good. The same Vizio flat screens greeted us as they do at Costco along with the iPod's, hp printers and more electronics. Then, we were intercepted by a DirecTV sales man who tried to convince me that saving 7 bucks a month was worth me ripping out all my Comcast equipment, having my credit checked and putting a large dish on the side of my vintage house. I shook him off and kept moving.  For a Saturday afternoon, it didn't seem as hectic as a Costco. Is that a good or a bad sign. Let's find out.

3. Merchandise: One of the things I like about Costco is that they have luxury and semi-luxury brands interwoven with the values. Also, even their clothes are quality as you can sometimes find Lucky jeans or Calvin Klein shirts. At Sam's Club, it felt like someone took a truck from the Wal-Mart next door, loaded it up with clothes and brought them over to Sam's. Another part of Costco I love, is the books. The book section at Sam's was brutal. I mean, don't they study Costco and see how their merchants build that area? Why wouldn't they at least hold ground with them? There were about 25 types of bibles and a whole section of Spanish language books, but very little in the way of current best-sellers. Bummer. Food: We usually buy all of our bulk items like diapers, cereal, snacks, Vitamin Water etc at Costco and Sam's Club did okay in that area. But in places like the take and bake pizza, the portions were smaller and not as rich as the Costco pizza. The bread and frozen seafood were nice selections. Part of what we were looking for today were toys for Xmas. Their selection did not rival that of Costco which, is surprising since Wal-Mart could buy in larger quantities and parse toys over to Sam's. There is more to write about the merchandise, but it felt more like a Wal-Mart than the treasure-hunt that is Costco.

4. The Service: A bummer all around. Starting with the unfriendly greeter at the front door to the DirecTV guy through to the people at the checkouts not helping us like they do at Costco all the way to the rude guys at the hot dog counter the service experience was consistently bad. The employees did not have the same professionalism as they do at Costco (all relative) and they did not seem as happy with their jobs.

5. The Hot Dogs: We can't go to Costco without having a hot dog after we checkout. We love the $1.50 hot dog combo you can get at both Costco and Sam's. We think the edge goes to Sam's because they hot dogs are Nathan's from New York. Yummy. However, the condiment station had gnats and flys all over it and was disgusting. I was not happy about that.

The verdict is that we will continue to drive to Costco but when we need to make a quick run for a cereal box big enough for a small family to live in or my baby needs diapers, we will shoot down to Sam's for a visit. We intend to use Sam's as a big-box convenience store, but will not give up the red & white carts at Costco.

Some suggestions for Sam's Club would be to downplay the Wal-Mart feel. Maybe replace the blue smocks with orange ones or go even something more unique. Try to at least beat Costco at some key categories and steal some share from Costco by beating them in key areas. Also, creating some targeted experiences or store-within-store that immerses the consumer into an experience would beat Costco. Like a Wii experience or a Magnolia-type home theater environment. Sam's certainly has the resources to make it happen. Oh and, hire some people that are happy to be there. It is well documented that Costco pays well ($17.25 an hour on average) and pays 90% of benefits. It really shows and plays as part of the experience when the people working there seem like they want to be there.

Schwab Marketing to Generation X

I've always been a big fan of brands creating targeted customer experiences, especially when it is aimed at a generational segment. Oddly enough, it's still a rare strategy for big brands. I was pleasantly surprised to read on Marketing Daily that Schwab has created a new website that's focused on answering the questions of GenX (aged 29-40) about money, investing, debt and saving. Of course, the conversion metric is to get the person to open an account with Schwab, visit a branch or make an appointment. In all candor, I have been considering using Schwab primarily because I dig their new Talk to Chuck campaign and felt they understood where I am at in my life. This website, www.schwabmoneyandmore.com has put me over the edge in becoming a Schwab customer.

The entire site, including the content and feature set are all very insightful. For example, they have a little application that allows people to compare themselves to other people in the generational set. This, of course, plays off the "keeping up with the Pitts" mentality. However, it is very sticky and it leads to a leading question "How much do you think you need to open a brokerage account?" I answered 50k. The answer is "It doesn't matter". I am sure this is based on research that people think you need a ton of dough to get started with financial management people. Once they tell you it doesn't matter, they ask for your zipcode and guide you to the closest branch.

They've also done a nice job of building in a support/community area where people are asking benign questions about money and related issues. One question I liked, "Has anyone used LegalZoom?" It is a question I have been pondering myself - a couple of people answered the question and helped that person along. This plays into the altruistic sense of humans.

Couple of ideas for the site:

- I would have liked to have had a face with the branch closest to me. I still feel like I want to see the person I would go and talk with. Walking into branch and having the first person that greets me to become my money manager is a little sketchy to me. They could humanize the closing process of the conversion.

- I think they are going down the right path with pre-populated questions, but they seem light to me. I am GenX, have already owned a few homes, have 2 kids and am getting ready to put my 20-yr plan in place. I think that the questions were aimed at people younger than 37. Some more depth to the content would be great.

- There is no opportunity to scrape content or take anything from the site to share with my friends. I have many friends that could or would use Schwab. The viral, pass-along component of the site seems to be missing.

Overall, I love the strategy of taking the overall brand positioning of Talking to Chuck, making money more down to earth and conversational. The idea of creating a community that opens a conversation about money and makes it safe for GenX'ers to start the process is very cool.

Nicely done, Chuck.

Will People Continue To Spend?

According to "How America Shops," a bi-annual shopper study by retail marketing consultancy WSL Strategic Retail, New York, 65% of consumers in the $40,000-$75,000 income group said they are watching what they spend on other things since they cannot control gas prices and mortgage payments.

65% seems awfully low to me within this income demographic. I am not in this income demo and I can say that I will be watching what I spend on. My spending is much more deliberate with more infrequent moments of splurging (though it still happens). I believe that people will still spend on life's luxuries, whatever that may be to that person. To me, it might be a watch - to someone else it might be a better brand of beer or Starbucks vs. Cafeteria coffee. My theory is that people do not want to feel defeated. They  want to feel in control even if they can't control oil prices or the credit crisis. Hopefully, the spending won't get America deeper in credit debt as a result.