Month: January 2008

How Costco Creates Fans

How Costco Creates Fans

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Note: Costco’s success is well documented, but this weekend I’m going to talk not about their fiscal success, but how they’ve created evangelists and why I am among them. They exemplify a brand that is worthy of a weekend.

Costco TVsTo me, the exciting thing about Costco evangelists is that lurk in unexpected places. There are lots of people who do not need to pinch pennies or stock a house to feed a family of 12 who will still go out of their way to shop at this membership warehouse. Here’s my take on their ingredients for success:

Amazing Customer Service – How do they achieve this? They take care of their employees (paid an average of $17/hour) which reduces turnover and supports a knowledgeable sales staff. Costco both creates internal evangelists and makes the connection between taking care of employees and their motivation in taking care of customers.

Return Policy – They return everything for any reason. They have only recently limited electronics to a 90 day policy due to the amount they were losing on those tech returns.

Controlled Markup – Costco marks prices up by no more than 15% over wholesale. So no matter what a great buy they make, they pass along the savings to customers.

The Treasure Hunt – This is the secret sauce. Costco goes out of its way to surprise and excite its visitors with limited availability designer items. This solves two major challenges faced by warehouse stores – with products sold in such huge quantities, why visit regularly and why buy now? According to CEO Jim Sinegal last month:

“We have used the analogy in the past that one time they may come in and see that we have some Coach handbags and they come in the next time and the Coach handbags aren’t there, but perhaps there are some Fila jackets. The attitude is that if you see it, you have got to buy it because it may not be there next time. We purposely try to merchandise to that type of mind-set…We carry about 4,000 stock-keeping units, and about 1,000 of them are constantly in that changing mode, where they provide that treasure-hunt atmosphere.”

ChurroQUESTION TO THE READER – Costco sells very cheap sodas, hot dogs, and my very favorite – the churro. What role do you think this plays in their success??

OpenSkies’ Collaborative Airline Design

OpenSkies’ Collaborative Airline Design

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Open Skies

British Airways is taking a new, transparent, clutter free approach to launching their new subsidiary airline Open Skies. On the company website – consisting primarily of a blog and contact information – the request for collaborative product development seems quite sincere:

“We don’t want you to simply witness the creation of an airline, we want you to be part of it. That may sound like puffery, but it isn’t. We hope to prove that your contributions will help make OpenSkies a unique and, invariably, a better travelling experience.”

They are certainly off to a good start. Open Skies flights, starting this summer between New York London and Brussels will have only 82 passengers and feature seats that really recline. The 28 most expensive seats will recline completely flat into 6′ beds.

This type of collaborative product development is the type of thing Jackie Huba suggests in her amusing/disgusting “Meatball Sundae” video in her preventative measures of not having to market a “meatball” in the first place.

Open Skies is an exciting experiment. I hope that Open Skies will close the loop and let us know what elements of their customer experience are user designed. I wonder if they’ll filter input coming from real potential users of this limited service vs. suggestions coming from folks like me who are mainly curious about it as a case study. With only 6 months to go until their anticipated first flight, we won’t have to wait long to see.

Marketing Mommyguilt: McCarthy & the Mafia

Marketing Mommyguilt: McCarthy & the Mafia

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Yesterday, my precious pumpkin received his 4 month vaccines.

Last night, for the first time in more than 2 months, he did not sleep through the night. Not even close. He awoke every 3 hours with a blood curdling scream. We ended up feeding him waaaaaay more than we should just to get him back to keep the peace.

Jenny McCarthy on OprahIf I did not voraciously consume media, this would pass as a mild annoyance. As it is, there was a tiny Posh Spice haircutted Jenny McCarthy in my head saying “maybe you shouldn’t have allowed the baby to get the vaccines”. This, despite new reports this week that there is no link between vaccines and autism. Why would I give any credit to Jenny McCarthy over scientific evidence to the contrary? Oprah. Some tiny part of my brain thinks there is a grain of credibility to anything you see on Oprah – despite the fact that Oprah launched Dr. freaking Phil. Today, I resent Oprah for making me doubt my judgment in the deep dark quiet of the middle of the night.

tightPart 2 of today’s guilt comes from the shockingly well written new ABC show Cashmere Mafia. I was fully prepared dismiss this show as a Sex and the City knock off, but last night’s episode has cemented its “tape all new episodes” status in my DVR. A stay at home mom takes her kids and the kids of one of the working heroines to a “Build a Bear” type experience. While there, the kids of the working mother create a “working mommy bear” complete with pearls, little black dress, bluetooth earpiece and voice box that says “Not now. Mommy’s on a conference call.” Kudos to the writers for so humorously exposing so many women’s deepest insecurity. My guess is that this little plot point earned them many new loyal fans.

Today’s exercise is to remember that what I do inside these four walls, not Oprah or the WGA, determines whether or not I am a good mom. I am going to pull a Nancy Reagan and “Just Say No” to the crackpottery and working mom guilt they’re selling.

The Costly Weight of Marketing Clutter

The Costly Weight of Marketing Clutter

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Today, pastor Ben over at the Church of the Customer shared the weigh-in of his unwanted direct mail for the holiday season: a whopping 21.5 pounds. That’s for one household. Let’s pretend we’re being interviewed by a management consulting firm and do some “back of the envelope” estimation.

There are around 100 million households in the US, but based on household income, let’s assume 40 million of those wouldn’t be considered attractive enough to be targeted with this type of weighty marketing (the heavier the paper, the more it costs to mail, etc. A lot of high end modeling goes into whether you receive a catalog, how frequently you get mailed, and how many pages get mailed to different types of households). So that’s 60M mailed addresses.

Let’s also be conservative and assume that the Church is on the particularly high end of the spectrum and discount the weight they received by 25% to get a number that we feel more comfortable extrapolating over the rest of the population, so that would be a household poundage of 16.125 lbs.

Based on these above numbers our (conservative) estimate of the holiday direct mail that cluttered homes is just under 1 billion pounds (967,500,000) or 483750 tons.

treestI’ll also use a low-ball estimate of number of trees per ton of paper (7.68 trees) to offset the fact that while folks like Neiman’s are using close to 15 trees per ton of their catalogs, some marketers (including Dell, Patagonia, and Williams Sonoma) are using more and more recycled paper. This brings us to a grand total of 3,715,200 trees.

I have no idea how to estimate the brainpower used to create the catalogs, the gas burned to bring these gems to my mailbox, and the gas burned to take them from my recycling bin to a recycle center, I’m guessing that it would be enough to make starting a conversation with your customers not look quite so expensive after all.

(If you want to stop receiving unwanted catalogs, visit Catalog Choice. If you’d like to plant some trees to offset the onslaught, visit Plantit2020. If you’d like to know more about opening a dialogue with your customers, visit WOMMA.)