A Marketer's Guide to the Digital Evolution

A marketer's guide to the digital evolution Having worked with BrandHook over the years, it came as no surprise that they would be at the forefront of thinking on marketing and digital transformation - where there’s often more promise than real delivery of results. What they have compiled in this book and via their Podcast series is not only a fascinating insight into what leading CMOs are thinking, but ways, means and strategies of closing this gap between consumers and marketers.

This book weaves in global trends, local challenges, best practice examples and thought provoking strategies that can help get the right conversations started in marketing departments, digital teams and even around the boardroom table. It’s a credit to Pip, Paul and the whole BrandHook team for embarking on this adventure and, true to the essence of the book, delivering it omni-channel. I highly recommend it!

Holly Kramer, Non-Executive Director - Woolworths, AMP, Australia Post and Nine Entertainment

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First published in Melbourne in 2016.

Inspired by Serial and Start Up, two of our favourite podcast series, 2015 saw us embark on our own called ‘Closing the Gap’.

Starting as a keynote and a dinner topic, we decided to take it a step further and interview some senior marketers and thought leaders. This 12 part program brought to life the issues that most marketers are now facing – the gap between how consumers are behaving and what business is delivering.

Distributed through the CMO Magazine over 12 weeks, we chatted to business leaders from Australia and the UK. A big thank you to all our Podcasters - Mark Camer- on, Stephen Loftus, Genevieve Elliott, Carolyn Bendall, Madeleine Morgan, Dan Gregory, Kristian Taylor-Wood, Andrew Baxter, John Broome, Sandra Arango, Christophe Ey- mery and Darryn Wallace. Everyone came prepared for a great and honest discussion. We explored the strategy outlined and referenced global brands that are doing things differently.

We have transcribed those podcasts, added in the theory and scattered loads of examples throughout.

Special thanks to the whole BrandHook team, in particular Alex Johnston for his tireless research and overall contribu- tion. In addition, thanks to Nadia Cameron, Associated Publisher & Editor CMO, for the opportunity and ongoing support. Thanks to Holly Kramer, for her kind words and being a BrandHook supporter and to Karen Comer, for her editing skills and patience.

We hope you enjoy this book and take away a few new strategies that you can apply to your business and brands. PART 1 CONSUMER BEHAVIOUR HAS CHANGED

Introduction 2

Chapter 1: 6 Why digital transformation is a matter of business survival with Mark Cameron, CEO at Working 3

Chapter 2: 18 The changes in consumer behaviour with Stephen Loftus, Head of Marketing, Brompton Bikes, UK

Chapter 3: 29 How digital is affecting consumer’s shopping behaviour with Genevieve Elliot, Head of Data and Strategy, Vicinity

Chapter 4: 44 What a decrease in customer loyalty means for your brand with Carolyn Bendall, Head of Marketing, ANZ PART 2 THE SEVEN WAYS TO CLOSE THE GAP

Chapter 5: 58 Chapter 8: 104 The first way to close the gap – The fourth way to close the gap how to build a consumer – building an intuitive brand practice with Madeleine Morgan bond with John Broome, Vice from Rosetta President Marketing ANZ at Unilever Chapter 6: 69 The second way to close the gap Chapter 9: 116 – understanding the customer The fifth way to close the gap – journey with Andrew Baxter, iterative collaboration with CEO at Publicis Sandra Arango, Head of Marketing, Heinz Australia Chapter 7, part 1: 82 The third way to close the gap Chapter 10: 129 – storydoing, not telling, with The sixth way to close the gap Kristian Taylor-Wood, – consumer dislocation with Photographer Christophe Eymery, Head of Digital and Media, L’Oreal ANZ Chapter 7, part 2: 90 The third way to close the gap – Chapter 11: 142 storydoing, not telling, with Dan The final way to close the gap Gregory, CEO, The Impossible – market-a-bling – delivering Institute a true return on investment on marketing with Darryn Wallace, marketing director at the Daily Drinks Company It took 10 years for the internet to become a basic and essential part of our daily lives yet what is really frightening is how quickly we will adopt technology in the future. Technology is now central to everyday life and pipe dream ideas have now become a reality.

Our home appliances can talk to each other, order out of stock products and pop on the heat- ing. These kinds of technological advances change the way we feel about brands and the way they deliver their customer experience. The one-sided relationship where brands and marketing could effectively tell consumers what to do is gone. While there’s social, political and economic factors driving this change, it’s the technology factors that are most influential.

Catch a tram, jump on a train or spend time in people’s homes like we do and it is obvious that we are living in a digital world. Down time is the new up time. We have seen an explosion in consumers becoming multi-channel users as the proliferation of media becomes commonplace and the benefit is that we have access to incredible amounts of information. According to a Smart Insights report(1) over 80% of people use their smartphone to access the internet. In fact, in 2014 between July and December, an increase of 4% of consumers (57%) switched from just using a laptop to using laptop, phone and tablet to access the internet. On top of this, approximately 15% only used a phone and tablet to access the internet which highlights the sheer growth of ease of access to the internet.

This has been a huge behavioural shift and as marketers, we also know that the digital revolution has completely transformed the way consumers are interacting with brands. There is no doubt that access to information has changed the way people judge value and interact with the brands they buy.

Part 1 of this book outlines those changes in consumer behaviour and Part 2 highlights the strategies that marketers can employ to close that gap.

(1) Mobile Marketing Statistics, 22nd July 2015 About BrandHook

We are a brand insight agency that keeps brands moving in the right direction.

As the world shrinks and the consumer Our promise is becomes more empowered, the pace of behavioural change is challenging most to deliver that businesses. Globalisation and an increasingly digital world has reshaped our culture that momentum and means consumer behaviour is hard to grasp. In fact, we believe that in today’s multichannel clear thinking ever-changing world that you and your brand can never sit still. that keeps your BrandHook is a fast growing, independent brand and brand insight agency with offices in Mel- bourne, London and Sydney. We are set up business moving to help our clients keep moving and find the clarity of what is and what is most likely to be. in the right Our suite of Research Frameworks, our Collec- tive Clever & our Provocative Thought Lead- direction . ership helps identify and anticipate where your customers will be today and tomorrow. Using these frameworks we are able to help you take the first step, then another, until you gain the momentum you need that drives brand success. We find the clarity not as an end point but as the ever-moving way forward.

http://www.brandhook.com @BrandHook

Closing the Gap · 3 About pip stocks

Pip is the joint CEO and founder of BrandHook Australia. She is an award winning keynote speaker, regular industry commentator, a seasoned brand strategist and thought leader. Follow Pip on twitter at @PipStocks

About Paul Dixon

Paul Dixon is the joint CEO and managing partner of BrandHook and has worked in research for almost 20 years, successfully running businesses in the UK, USA and Australia. Champion of online methodologies, a qualitative and quantitative researcher and award winning author. You can follow Paul on twitter at @Paul__Dixon

About Closing The Gap Podcasts

The Closing the Gap Podcast series was developed by the BrandHook team as a result of spending so much time with consumers. We observed and crystalised how consumer behaviour has changed so much as a result of the digital transformation and how most businesses were finding it hard to keep up.

This series was launched through CMO Magazine and BrandHook’s own iTunes account.

4 · Closing the Gap PART 1: CONSUMER BEHAVIOUR HAS CHANGED

In the early chapters of this book we talk to marketers about the changes in consumer behaviour and how this has been driven largely by the digital transformation.

These changes were outlined in our white paper called Closing the Gap. The key changes are: • Consumers are now in control. • They are researching differently. • Consumer to consumer recommendations are a new key driver of preference. • Consumers are now building our own solutions. • More and more we evaluate across category. • Consumers have redefined the idea of negotiation. • Consumers are less loyal (if they ever were at all!).

The following chapters outline each of these changes in detail, the marketer perspective on what’s driving these fundamental shifts in consumer behaviour and how marketing is trying to respond.

Closing the Gap · 5 chapter 1: Why digital transformation is a matter of business survival with Mark Cameron, CEO at w3 Digital

Alarmingly, in the Accenture 2013 Changing Behaviour report, 74% of senior executives across 10 countries stated that their understanding of consumers’ behaviour was incomplete.

According to the PWC CEO 2015 report, digital innovation and its impact on customer behaviour is a particular concern, with nine of out ten CEOs in Australia listing it as the number one disruptive trend they face.

6 · Closing the Gap About mark cameron

In the following podcast, we chat with Mark Cameron to set the scene for this podcast series and discuss the impact of the digital revolution. Mark is the CEO of customer experience innovation consultancy W3 Digital. He writes about digital strategy and customer experience in columns for CMO.com.au, Business Review Weekly and Marketing Magazine.

His business works on customer experience innovation and digital strategy for clients such as The Body Shop, GlaxoSmithKline, SAP North America, Australian Pacific Touring, Save The Children, Special Olympics International, Fonterra, Emerald Grain, Masterpet, Netball Australia, Swimming Australia and Deakin University.

"Digital i s starting to be the force driving a lot of decision making."

Closing the Gap · 7 Pip: So my first guest for chapter 1 is Mark Cameron. Hi Mark, thanks for being here. You’ve written a lot about the digital transformation and recently said that, ‘Now it’s a matter of business survival rather than a luxury, that businesses need to adopt and take on board the whole digital transformation world.’ What do you mean by that?

Mark: What do I mean by that? It’s a good question. I mean that right now we’re living in a stage where the term digital has somehow become separated from things like customer and marketing and so on. And it’s right now where people are starting to define what it actually means. So what’s going on now is there’s digital departments within marketing teams. There are digital specialists, particularly around different channels like social media and email marketing, for example. But the truth is, digital is everywhere. It’s prevalent through the entire customer journey even when you start thinking about instant response within print media or TV. Digital is starting to be the force driving a lot of decision making. A lot of our clients are starting to think through how they are using digital techniques. In particular, they are thinking through data analysis and customer data analysis to drive new ways of thinking about segmentation. They are critically re-thinking their investment strategy and finding the inefficiencies that -cur rently exist in the way they are structured. Beyond that, it’s really coming down to the customer. The customer’s habits are changing and because of that, businesses are starting to have to change to respond.

Pip: We’ve seen the customer experience map now become quite chaotic and it’s gone from a very linear approach to buying a product to something that is very scary. In fact, I think Accenture did a study that said 74% of senior executives around the world feel like they don’t understand the customer experience. Do you think that’s the biggest impact of the digital transformation?

Mark: Yes, it is one of the big things that we’re hearing on a constant basis from a lot of customers that we deal with. People understand

8 · Closing the Gap intrinsically that reshaping the business around the customer is valuable but just how to do that is really, really difficult. A big part of that is actually building a solid business case that a leadership team or board can get behind. In the end, the board understands that keeping customers happy is important, that cutting out costs where possible is important and making sure that they’re spending on the right things is important but they are not always clear just how to do that - this is particularly complicated within the framework of this whole new world which is digital. It’s full of a lot of new terms and a lot of new tools and techniques and dealing with people with skillsets they’ve never seen before. So thinking through how you build a very, very simple business case around that and making sure that it ties all those elements into it is absolutely critical for success.

Pip: You were telling me before about a client of yours that was worried about plans not being implemented because their business may not be structured to deliver these strategies. You discussed with them the need to restructure their business. Are you seeing businesses adapt internally to understand the new customer experience journey?

Mark: Yes, absolutely. Quite often businesses start with "Frequently, it understanding the customer either because of competi- becomes very clear tion or because the CEO or someone on the board has asked. It’s the customer’s experience map that depicts that the business the behaviour and then business can ask, ‘What do we model that they have to do about that?’ That’s when the digital tools, the techniques, developing the data strategy comes into have in place is place and then it’s important to design the financial simply not going to models or the frameworks around that. The next critical step once that’s in place is – what are the capabili- exist or be able to ties? What are we missing? Frequently, it becomes very deliver the value clear that the business model that they have in place is simply not going to exist or be able to deliver the value that it should do..." that it should do in the years that will follow after this kind of strategy is executed.

Pip: One of the things that does surprise us is there was another study that showed how marketers are not prepared for this. As you say, I don’t know whether they’re frightened by this new world or whether in fact they don’t have the skills to do it. Apparently, only 30% of marketers feel ready for the digital transformation. This is surprising for us as we are already living this because we’re so in touch with the consumer. It surprises us because we really feel like we’re actually in the middle of it. We’re not at the beginning of this journey. What skillsets do you think marketers are going to need to move forward?

Closing the Gap · 9 Mark: It depends where they sit but we’ll need to come back to the financial modelling aspect of it. One of the most important things that marketers are going to have to do is work out how they can value customer engagement and customer data. Then they need to build this into their plan, saying – ‘this is how it’s going to be an asset for our business’. Once that’s done, thought through and tested across the business in a big way, then all the other elements that fit underneath it become quite obvious. The skill that is clearly critical is going to be data analysis. We’ll need data scientists and people who look at information, not just to see what it’s telling them, but to make the logical leap and question, ‘What’s the story behind it? What is this telling us about the customer?’ Business will need people who really understand, really deeply understand, how some of the different pieces of "Nike is a really technology fit together and that’s probably more important than thinking about good example of a individual pieces of software or individ- brand that said, ual channels. The big issue for business is to identify who the person is that will What is our brand tie everything together and join the dots about? and create value. It's not about Pip: It’s also the implication of that data as well. For selling shoes or example, I told a story in a keynote speech recently about how I went online at 10am to investigate chairs selling clothing. for the office. The company that I looked at first sent It's about me an email at 6pm, saying that someone would be in contact with me in the next 48 hours. The ability to performance." take that information and understand what it means is crucial, it’s all about real-time reaction.

Mark: I think that’s the area where brands are going to really excel or suffer. It’s the area where it’s a true reflection of the brand. Regarding how people think about data right now, the message is, ‘Let’s collect lots of data, let’s analyse it and let’s use it to send out messages in many ways’. Unfortunately, that mindset is putting us in to a state of creating smarter and smarter spam. The brands that are going to really, really excel in the future are going to be the brands that say, ‘What is this information telling us about our customer and how do we develop a whole new line of services around that?’

In your online office chair example, how do we design tools that make people feel like somebody’s holding their hand through the process? How do we put the human element back into it? Nike is a really good example of a brand that said, ‘What is our brand about?

10 · Closing the Gap It’s not about selling shoes or selling clothing. It’s about performance. Can we help our customers’ track and improve their performance? Well, we can if we generate the right kind of information.’ Hence they created the Nike plus platform and hence they created a really sticky echo system around it that is data-driven. They didn’t go to that point of saying, ‘Let’s collect and send lots of messages out.’ They said, ‘Let’s use data to really, really express our brand’.

Pip: You talk a lot about the importance of keeping the consumer at the heart of the business and you know we believe the same thing, which is great, Mark. But shouldn’t brands always keep the consumer at the heart of the business? What has changed? Why has the digital transformation made this even more important?

Mark: You’re absolutely right. Brands should always keep the consumer at the heart of the business. The recent issue has been media fragmen- tation, so reaching a consumer and reaching them in a meaningful way has become much, much more difficult than it ever has been. So in the past organisations can grow and grow and grow around some really reasonably simple ways of thinking about the consumer and reasonably simple ways of thinking about segmentation. That’s no longer the case so where we are now is the prevalence of data-driven marketing. There’s been the GFC that forced a lot of businesses to start thinking about what they are doing. When pain hits people have to start doing something about it and all of those things combined together has really driven a whole new way of thinking about customers’ interests. I suppose people understand now that we can take the opportunity to change and really perform better than our competition or we’ll suffer. I suppose that’s really what’s going on.

Pip: I think that’s part of the reason why we came up with the seven steps for marketers so they would not be so scared about the digital transformation. So the things we’re going to talk about in this series are the importance of building a Consumer Practice which we are calling a practice because we want it to be embedded in the business. We talk about plotting the Customer’s Wandering so the idea that it’s not just a customer experience map anymore but it is this disparate kind of chaotic wandering. We talk about ensuring that there’s an Intuitive Bond with the brand because you need to understand how a brand like Nike has done so well. It’s becoming an intuitive choice or a habitual choice. We talk a lot about storydoing, not just storytelling, so yes have a great story but also prove that you actually deliver it in an authentic way. We’ll also talk about the importance of an Iterative Collaboration - co-creation with your consumers. The sixth thing we’ll talk about in this series is Consumer Dislocation so the idea that you can grow your brand by disrupting other people’s habits, and then finally one of our favourite phrases - Market-a-bling! Find- ing ways to measure your return on investment and actually getting marketers at

Closing the Gap · 11 the top table because that seems to be one of these things that’s still not happening. So through these series we’ll talk about those seven things and we’re going to talk to some marketers through that process. What do you think would be the number one thing that you would recommend?

Mark: Your last point, about having marketers with a voice at the top table, is absolutely critical because so much of the business environment now has become completely commoditised. Where are businesses going to be able to compete? It’s all around the experience of the brand and how that brand starts to resonate. Price has become pretty much an anoma- ly, and if you start competing with prices it is a downward spiral. If it’s competing just purely on product then lots of people can copy a product or do things in a similar way. It has to be around the brand so that means understanding your customer, understanding where you are directing the experience of your brand and how that’s going to impact the whole of the business. You need to think more broadly about marketing if you have a seat at the table because all the information that’s been generated by that activity is telling you where your customers are going, what they want and that should impact on product design. It should impact on many, many different aspects of the actual business itself, as opposed to just that one channel of around positioning of the business.

Pip: Picking up on your cheap or interesting point we’ve recently said to clients. ‘You’ve got to be cheap or be interesting. You can’t do anything in between.’

Mark: Exactly right!

Pip: You’ve either got to be really cheap and that is your proposition or develop your story and be interesting and do it from something authentic. Mark, which companies do you think do a good job in this new world, if any?

Mark: Well, I mentioned Nike before but other than that there are a lot of businesses doing bits and pieces really, really well. But there are very few brands that are doing an exceptional job! The reason behind it, I think, is probably the fear factor that we talked about because a lot of brands are looking for what’s best practice at the market without realising that they have to create best practice for their customer base. Best practice for one business is not going to necessarily suit another business. There is a real maturity needed in the way that they think about digital, that it’s not just another way of sending out messages. Digital has to be thought about as – what is the service that we’re creating that goes along with our product? And if you can get that bit right you can be outstanding in the market. This is where some brands are doing things very, very, very well.

12 · Closing the Gap Pip: We’ve seen in retail that there’s some companies that have produced apps that may be a certain part of the customer journey that seem to be capturing people’s needs. Macy’s is providing a service where you can take a photo of an outfit you like and they’ll track it for you, and you can buy it straight away. As you say, there’s bits and pieces being done but it doesn’t seem that anyone’s really embraced this as a proper customer experience.

Mark: Exactly right. What’s going on is that there is experimentation in pockets but nobody’s really saying, ‘How does this all tie together? What is our customer platform? What does that look like?’ That’s the jump. When we talk about Nike and the Nike Plus, that’s the jump they made that is absolutely exceptional in the market. ‘Our brand stands for performance, not selling things. How do we build a platform around performance and helping our consumers perform better?’ That’s the jump that really led the market and now there’s obviously fitness trackers and all those things that have become commonplace. Every brand has the ability to say, ‘What does our brand really stand for and how do we use the data that we’ve got with our customers? How do we create new information to help our customers or help our customers live that brand or become something exceptional in the market?’

Pip: Thanks, Mark.

Mark: No problem at all.

Pip: I want to thank Mark and thank everyone who’s listening. Next week we’re going to talk to Steven Loftus who’s the CMO of an iconic English brand called Brompton Bicycles and we’ll start discussing the changes in consumer behaviour. Then the second half of the series is going to be talking about those seven things that we think marketers can do to start to close the gap.

Closing the Gap · 13 Let's Stop Calling It 'Digital Transformation' - It's A 'Marketing Evolution'

There has been plenty written about digital transformation, but recently I have wondered whether ‘digital transformation’ is the right BLOG phrase for what is going on. Maybe we should really be talking about By Pip Stocks a ‘marketing evolution’. 24 / 07 / 2015 Article in Marketing The phrase digital transformation implies a one-off (albeit gargantu- Magazine - marketing- an) shift. Something that we only have to deal with once. mag.com.au But this world we are living in is not a one-off. It has resulted in ongoing shifts in consumer behaviour that have changed the way marketers should be thinking about their brands and their planned and unplanned activities forever.

Few marketers are ready for this transformation, this rather large shift. Only 30% of them feel ready and prepared, according to an Ac- centure study last year.

But if, in fact, we had called this a marketing evolution, would marketers have taken this more seriously? Would they have up-skilled, built a consumer practice and become so intimately fused with their consumers that they had no choice but to adopt this new way of marketing?

This is not the first shift marketers have had to deal with. There was the move from radio to TV, the move from product attribute building to brand innovation, from putting products on a shelf to building engaging brand experiences. Why has this shift caught most marketers on the hoof?

Probably because the consumer path to purchase, or as we call it, ‘the consumer wanderings’ has changed beyond recognition. It now appears random, ever-changing and chaotic – it quite frankly scares the bejesus out of most senior executives.

Maybe instead of sticking their heads in the sand about this transformation they could just think about their job as an ever-changing dynamic discipline that needs constant attention and the regular voice of their consumer.

We are in a marketing evolution, people, and one that we need to get on board with – now.

14 · Closing the Gap making energy engaging to consumers

I don’t have a lot of interaction with my energy provider. I get my energy, I pay my bill and that’s it. I switched a couple of months ago because another provider had a better financial offer and would BLOG organise the switch for me (no hassle, love it). Yes, great, done, and I By Anouk Möller never looked back. 01 / 09 / 2015 BrandHook blog But last week I received an email from my energy provider Simply Energy, saying: ‘Anouk, last week you spent $24, find out why’. I can’t remember ever reading any emails from my provider (unless it’s the bill) but this one showed me a quick and easy-to-read table with interesting information: my total spend last week, my total spend last quarter and an estimated total spend on the upcoming quarter... plus a link to my portal.

I got curious.

One mouse-click and there I was in my personal tracker, showing me how much I spend on energy every day. Call me naive, but I had no idea they could read this... Another mouse-click, and I am looking at a table showing my usage on July 27, every 30 minutes! So much detail, really interesting stuff!

Transparency comes to mind. I like that. It feels like some sort of proof that you’re not being conned by your supplier because let’s face it, they can pretty much charge us anything they want... but if any energy providers are reading this, please don’t!

But it’s more than just proof, it’s also an eye opener. It’s great to see how your usage varies during the day and to learn about the changes between weekends and weekdays. Energy becomes more tangible and it can even be quite confronting… Why did we use that much elec- tricity when we were asleep last Tuesday? Did I forget to turn out the light that night – again?

So far. So good. Simply Energy used technical and digital possibilities to provide me with an easy and insightful look into my energy usage. This resulted in me being engaged by a company I had hardly ever paid attention to before.

But this is where Simply Energy loses me. After setting a budget, I am

Closing the Gap · 15 back on my own again. I think this is a missed opportunity. With all the interesting data that they possess, are there not more ways to keep me engaged now they’ve got me in?

Based on my current usage profile… what can I do? How can I save?

Knowing I am a family of four with two young kids, what would make sense? What can little kids do – how to involve and engage them? Can I get a look at what other customers do? Can we exchange facts and tips? What kind of incentives can help keep me involved? And so on!

Although I love the gesture, I fear Simple Energy has tried to close the gap between them and their customers with a bridge too short.

Dear Simple Energy, be swift and get out there to find out what online support your customers need and appreciate, and enthuse them to use the data available so they can make a lasting difference in their energy usage. It’ll be a great way to connect, I promise.

be cheap or be interesting: how brands succeed

For many years now we have said that the middle market is dead.

BLOG This conversation started in retail – think Kmart versus Target. Kmart is the cheapest – what is Target if it’s not the cheapest? Think Aldi By Pip Stocks 02 / 09 / 2015 versus Woolworths. Aldi will win on price – what is Woolworths if it’s Article in Marketing not the cheapest? Dan Murphy’s price check every day to make sure Magazine - marketing- they are the cheapest. So what is Liquorland? mag.com.au Brands can’t sit in the middle. The middle means nothing.

When your customers can find alternatives at a drop of a hat and research their best options (remember that small thing called the digital transformation), then being in the middle won’t cut it. You offer no benefit to your customer by being in the middle.

16 · Closing the Gap I believe that you need to be cheap or be interesting.

Brands like Target, Woolworths and Liquorland need to build their brand stories. If they are not going to be cheap, then they must be interesting.

Great storytelling starts with anchoring your brand in its heritage. Psychological research tells us about the importance of storytelling when connecting with your consumers, and building those emotional codes with your consumers is the key to being interesting.

Twillory, a men’s shirt company in the US, delivers its shirts with a return envelope so you can pop your old shirts back into that bag for them to launder and hand over to Careergear, a charity that helps out-of-work people get dressed for interviews. They are a brand that believes in quality and social responsibility and demonstrate this through their customer experience. They are really interesting.

Patagonia, the upmarket outdoor clothing company preaches the value of the simple life, and takes a stand against conspicuous consumption by urging us to consume less. Far beyond a genius marketing ploy, the company walks the walk by offering a repair service for its clothing and by providing a platform for its customers to re-sell their Patagonia goods on Patagonia.com or eBay. In a world that screams at us to consume more, Patagonia’s stance is a breath of fresh air. That’s interesting.

We think brands should be interesting and have a point of view. I would love to know what Target, Liquorland or Woolworths would find if they searched through their archives and history – what interesting bits would they discover?

Closing the Gap · 17 chapter 2: The changes in consumer behaviour with Stephen Loftus, chief sales & marketing officer, Brompton Bicycles, UK

CONSUMERS ARE NOW IN CONTROL

Consumers have the opportunity to buy what they want, from where they want, at any time they want. Due to the emergence of brand collaboration, they can also define the customer experience they want. Consumers have access to unlimited information and therefore can make the most informed decision on what to purchase. They have more access, more availability, more opportunity, not just to have control over purchase opportunities, but also to know if they want the opportunity in the first place. Consumers can tailor interaction with brands at their own leisure, giving them the edge.

And it’s not just about informed decisions. With smart home technology now a reality, consumers can automatically re-order laundry detergent as they scoop the last lot into the machine. Amazon Dash is doing just that. All those mundane habitual purchases can now be ordered through the push of a button.

With the customer experience mapped out, brand leaders must use the real-time data to deliver a powerful and dynamic marketing plan.

The ‘new’ marketer must combine detailed data knowledge and digital mastery with the ability to think strategically. Only marketers with these skills will appreciate how to manage a consumer in control.

RESEARCHING DIFFERENTLY

Another way consumers are behaving differently is the way they research products and brands. In the old days they could look at two or three different options on a shelf or in a magazine, read what each product delivers and then make a choice. This all happened at the point of purchase or certainly close to it.

18 · Closing the Gap Now it’s different. Consumers spend a lot of time researching online and looking at a range of interesting products and services.

But it’s not just about the copious amounts of research consumers do online – it’s that the consumers keep products that interest them on their radar for a long time before they commit to a purchase.

Consumers are also using other brands to validate their own online research and to find a better deal. The uptake of the comparison website was meant to make consumers’ lives easier but with the growth of the savvy customer, a new use for these websites has become apparent. Consumers are using them to price a product or service but will ring their current supplier or call the brand directly to gain a better deal.

CONSUMER TO CONSUMER

In the past consumers would compare a number of products sitting together on a shelf and choose the one they thought would provide the best benefit. Now consumers seek out peer-to- peer recommendations to measure the idea of product value, and brands are no longer the sole information source.

88% of consumers use the internet to start their product research(1) and as part of the process, seek out peer-to-peer recommendations, comparison websites and product review sites for guidance on what to buy and why.

Digital technology has given consumers enhanced knowledge of products and services. The company does not have the monopoly in product knowledge – information and opinions on which to base purchase decisions are a click away.

(1) DigitasLBi’s Global Survey, 2014 Closing the Gap · 19 About stephen loftus

In this podcast we chat to Stephen Loftus, chief sales & marketing officer, Brompton Bicycles, UK. Stephen has extensive experience in the FMCG space with brands such as United Distillers, BAT, Diageo, Allied Domecq, Red Bull, Constellation Europe and Accolade Wines. He also has startup business experience with strategy consultancy, Cognosis, and worked in sales and marketing for Red Bull/ Siam Winery and innovation at Quintessential Brands. He took on the challenge of leading sales and marketing at Brompton Bicycle in November 2014.

" Building-up and personalising a Brompton's bike is a huge part of people's excitement ."

20 · Closing the Gap Pip: Today Stephen and I are going to talk about the first three ways consumer behaviour has changed as described below:

1. Consumers are building their own solutions because they can’t necessarily find what they want, so they are starting to look through the digital world to develop their own products and services. 2. We know that consumers are starting to evaluate across categories so their detergent brand is being compared to their cafe customer experience. 3. We’re also seeing a lot of consumers negotiating price differently so they’re using comparison websites and then negotiating with their current supplier to gain a better deal.

Firstly, what’s it like moving from a drinks industry to the bike industry – is it very different?

Stephen: Well, I moved about nine months ago so I would say now it’s not so different but at first, of course, obviously it was a big change. The difference that springs to my mind is the difference in terms of the retail environment – as drinks are part of FMCG, it’s dominated by some pretty sophisticated retailers. So I’ve been used to the customer being ‘king’ in your daily life. The bike industry is more fragmented. It does not have the same level of dominant retail players which has an effect on how you are dealing with your customers, your responsiveness – you know what is required and how much they lead the agenda versus you leading the agenda. I am very lucky to work on a brand like Brompton which has a very strong position in the market, giving the brand owner a position of strength versus balance with the retailer.

Pip: It’s an incredibly iconic brand in the UK. It’s got such power over there but it’s also getting quite a bit of traction around the world, isn’t it?

Stephen: Yes, I know – completely. Only 25% of our sales are in the UK – there’s a very broad spread internationally, and Asia Pacific has been an incredible area of growth. So in the last 10 years it has gone from 1% of our business to 34%, and cities such as Tokyo, Seoul, Hong

Closing the Gap · 21 Kong and Singapore. We are increasing sales, in Melbourne and Sydney – we are really developing our business internationally as we always have. We’ve been quite an international business for 15-20 years now. The greatest area of growth most recently has been in Asia Pacific.

Pip: So you would see a fair bit of consumers building their own solutions, in fact tailoring their Brompton bike is the done thing with Brompton bike owners - you can buy all the parts and consumers can have the style of parts they want. What kind of evidence are you seeing in the marketplace of consumers building their own products and services, and essentially their own solutions?

Stephen: Building-up and personalising a Brompton’s bike is a huge part of people’s excitement at being part of the Brompton world – made for you is one of our core brand messages and we are helping provide that platform. We have a bike builder online which enables you to build or customise your Brompton. We provide a certain amount of accessories but a lot of it is out there in the market. People are creating themselves and obviously there are a lot of other companies. There is Bromification which is all about the finite details of where you can customise your Brompton. I had a trip across Asia two months ago where we have our world championship events – I went to the Tokyo final. It was incredible seeing 250 people race in this event around central Tokyo. Previously, we haven’t had the ability or the desire to go into the fine detail of customisation but the Brompton’s owners have found their way to either creating solutions or finding people that create the solutions for them.

Pip: That is a very sophisticated attitude for a marketer – as you say, consumers are more in control and they are demon- strating that through this experience. Rather than fight it, you have embraced it and work with the consumers and customers of Brompton’s to make that a good and enjoyable experience.

Stephen: I think that is very true – whether or not it was conscious at the time. It was the nature of our business with a wonderful product that people fall in love with, and it becomes an important part of their life. Our growth has been about word of mouth. We have not wanted or needed to be over-the-top in terms of our marketing or advertising.

Pip: It seems like you guys have really cracked the brand experience and are delivering what consumers are after. I look at the wine industry and I think it is so fragmented now – trying to deliver a unique wine to a unique customer – your previous career - and it has almost gone so far down into a type of customisation that it has lost its way. There’s too many wines, there’s too much choice - it’s interesting as you could go too far down this road as well.

22 · Closing the Gap Stephen: Yes. I am learning the differences between the two. It takes time. Particularly when you are spending a bit more – even if you are spending £300 on a bike you are using regularly. It’s not like something you consume and then can replace with whatever else you want to or whether it is the latest trend or deal. And I have been very fortunate to come into a business built on the legacy of Andrew Ritchie. He’s still in the business – I met with him yesterday. He created an exceptional design, a really unique design that is incredibly clever, and so through that kind of "It may be engineering innovation we have a point of difference that enables us to create loyalty. As a result of that necessary to ditch design, a product that can last. People have a Bromp- the existing ton bike for 10-20 years and it is a part of their life. They might want to upgrade certain parts and they infrastructure might even get a new model but they stick to the so that you can ‘what is Brompton’ and its exceptional design.

be effective and Pip: I’ve certainly seen the love there, that’s for sure! respond to the You know in the old days you would go to the shops to buy your laundry detergent, compare them a request and number of products on shelf and buy what presented deliver products the best value to you. Today, customers compare all the things that they are experiencing from banking on time." to drinking soda. A lot of that has to do with the fact that consumers can now research online and they can investigate alternatives. What evidence are you seeing of consumers evaluating across different categories and taking that back to Brompton? How have you seen consumers judging another category and how have you then had to influence a Brompton experience because of that?

Stephen: I think you are right in that expectations are high, particularly for customer service on a product that becomes part of their life, which is our status with Bromp- ton. Now we are starting to do lots of purchasing online, we expect things to be delivered on time and to have an option to talk to people. You know what is good and what isn’t good. To deliver that kind of great experience in a relatively small company is challenging, based on the number of people you might employ. It may be necessary to ditch the existing infrastructure so that you can be effective and respond to the request and deliver products on time. Some businesses may not have sophisticated IT systems and structures in place because it was an investment they may not have been able to afford. As a result they won’t have the best state of the art infrastructure, particularly from a digital perspective, to support the level

Closing the Gap · 23 of service and information that you need to provide to your customer. I find that is the biggest hurdle we face and yet it is an opportunity indeed because if we get that right, we have a highly engaged customer base but it is difficult. Even if we have a huge amount of desire to provide that level of service, if the information is lost in different structures or if it’s not very sophisticated, it is very hard for the people who are trying to respond to the customer on time in the right way. So that’s one example.

Pip: We have one last question, Stephen. Regarding your position in the UK, which brands do you think are responding well in this new digital world, particularly when you think about the customer behaviour changes? Who do you think is doing a good job over there?

Stephen: The one that jumps to mind is Uber. They are now providing a fast, quick solution to people who often struggle with finding taxis in London – that’s a real problem when you are either planning your night or out during the night, whatever the time might be. So Uber is really an example of one that has broken the model and used digital as an enabler to really change the market.

Pip: It is interesting with Uber. I was talking to another client and he said that they have reframed the expectation of how long a taxi should take to get to them. This is particularly relevant thinking when consumers are evaluating across category. He said he was waiting for 17 minutes for a normal cab and then got onto his Uber and within four minutes was picked up. He just said now my expectation time for waiting for anything is four minutes.

Stephen: It’s not just the waiting time – it’s the knowledge of when the taxi is "Uber: knowing going to arrive. With mobile phones, if you know your friend is going to be 20 exactly when you need minutes late you can communicate that a taxi and exactly with a text and that has been happening in our lives for a while. But knowing when it is going to be exactly when you need a taxi and exactly with you - I think when it is going to be with you - I think that is incredibly empowering. As well that is incredibly as arriving in four and not 17 minutes empowering." you know exactly where it is and that it is coming, you don’t have to wait there, hoping that it is going to arrive.

24 · Closing the Gap Pip: It’s the unknown, isn’t it, the feeling that you don’t know where it is and when it is going to come. That’s the most frustrating part.

Stephen: And that leads to huge opportunities. It takes a bit of time to build a Brompton –and a lot of effort. We’d love to have that whole experience online. So you would literally go from researching your Brompton, into the store, check it out in a bit more detail then order your bike. Let’s say it is a customised bike, so it would take four to six weeks. We would love people to go through the experience of seeing the brazier actually brazing your core frame, seeing it go down the production line and knowing when it will be ready and understanding how it has been created and why it has taken four to six weeks or whatever the time frame might be. And then they would have the joy of when the product is about to arrive and the excitement of it so you take that time. If you didn’t know what’s involved, you might say, ‘Why is it taking four to six weeks?’ You are actually adding a huge amount to the whole joy of buying a product. But, do we need to put that infrastructure in place, take that opportunity from a digital perspective, an IT perspective? You know it’s quite an investment but it’s definitely something we are looking to do – we are trying to do as much as possible which is to take that experience and share it. It does link to Uber, actually. They would have gone in with that as a key point of their business model – that would have been one of their key investments.

Pip: Well, it sounds like you are doing all the right things, Stephen. Thank you very much for your time today on Chapter 2 of Closing the Gap’s podcast and we’ll see you soon in London.

Stephen: Cheers, bye.

Closing the Gap · 25 traditions change and new habits emerge

Traditions change and new habits and rituals emerge all the time. I now read the news in 100 characters or less, I fill my wardrobe by BLOG purchasing online but the biggest tradition that I have changed is how By Sarah Bugden I watch TV. 09 / 07 / 2013 BrandHook Blog Maybe it’s the Gen Y in me but I love not having to wait a week for a new television episode. I have got into the habit of streaming a series after it has been on for a few seasons so I can bang out three or four episodes in one session.

I was chatting with some friends about a popular television show over the weekend. There were a lot of disappointed sighs, groans and screams as previously unknown plots were revealed to the laggards in the group. (To the Game of Thrones fans: Red Wedding. You get my drift …)

And with Netflix releasing all episodes of a show’s season in one go, many of us are marathon-watching our favourite programs rather than seeing them over a number of weeks or months. Netflix’s game-changing innovation has driven its competitors into action, with Amazon’s LoveFilm currently offering up 14 new pilots and asking users to decide which shows get a full series.

This conversation got me thinking – is streaming and Netflix just a change in how we watch TV or is it also changing the way we interact socially? Perhaps the days are numbered where we can sit down with friends to dissect and discuss plot lines every week? With all my peer group watching different shows in the series are we going to have to wait until we all catch up?

Some new habits are hard to get going and others happen really quickly. It can take between 21 – 84 days to create a new habit de- pending on the ease and complexity. My new TV ritual or habit has happened without much effort at all but will it be as easy to create a new way to talk about these shows with my mates?

26 · Closing the Gap less is more

With the rising prices of education, childcare, groceries and rent, we wonder where all of our hard-earned income goes. Apparently, the world is becoming an expensive place to exist in. It is strange then, BLOG that when comparing prices from 2006 to 2015, the costs of house- By Paul Dixon hold goods have been dropping steadily. The cost of televisions has 01 / 04 / 2015 decreased by 80%, PCs (60%), toys (40%), sports equipment (10%). BrandHook blog According to a recent TIME magazine article, this has resulted in (especially in the USA) a nation of hoarders.

Consider these two stats: 1. Most household relocations outside the USA weigh between 1,110kg – 3,400kg. In the USA, the average is 3,600kg. 2. While children in the USA make up 3.1% of the world’s children population, USA families buy more than 40% of toys globally.

Poet Robert Browning in 1855 coined the ‘less is more’ phrase, and although this seminal piece of wisdom may have been heartily ignored for a period (see the 80s), it seems to be finally making a comeback. Less is more is becoming a western trend, not only in the USA where families are paying organisations to help them declutter and reduce over-consumption, but also among the Millennials abroad who simply don’t want or need the excess possessions.

Let’s start with the families and where the trend to reduce has come from. You could argue that especially within the USA, the recession brought about the need to downsize, and the expenditure on unnec- essary items simply became a reality. However, the enabling factor of online shopping (thankfully) also came about at roughly the same time. As the recession hit, the ability to purchase quickly became easier and easier. The low cost retailer model means it’s not about ‘having stuff’, it’s about ‘replacing stuff’. Now, you don’t keep up with the Jones’ – you outpace them. The winter refresh of your living room, the disposable mentality, the rise of retailers like H&M, IKEA, etc. could all be contributing factors.

And while it’s all disposable and interchangeable, are families still living with the recession-led mindset that it’s hard to let go? That while the $10 lamp was a bargain to buy, disposing of that same $10 lamp six months later is still somehow considered frivolous?

Closing the Gap · 27 The Millennial generation’s adoption of less is more is somewhat easier to understand. They don’t have photo albums, they have Facebook. They didn’t grow up with CD towers, they have Spotify. They don’t need a car as they want to live in the inner city where they can get around by foot or bike. They value engagement and substance versus simple material possessions.

So maybe it’s the Millennials teaching the families a lesson in over-consumption and hoarding. Or maybe the American families are simply running out of space. Regardless, it’s becoming more and more obvious that less is more.

28 · Closing the Gap chapter 3: How digital is affecting consumer’s shopping behavior with Genevieve Elli- ott, general manager-data analytics & customer strategy, Vicinity Centres formerly Federation Centres

BUILDING THEIR OWN SOLUTIONS

When consumers can’t get what they want from companies and brands, they will seek to create the perfect product on their own. The big issue is that the reasons consumers are personalising their own customer experiences are often hidden and unknown to businesses.

We recently ran an innovation program for a Big 4 bank where we spent four months studying the needs, behaviour and attitudes of the younger banking customer. What we saw was a group of consumers developing their own products or service to suit their particular needs.

When they couldn’t get help from their bank to manage their money and budget effectively, a large proportion were putting what little money they had into different plastic bags labelled with its purpose. When the bag ran out of money for petrol, lunch or university parking that was it.

More agile and innovative businesses are already allowing for a personalised experience, and we have seen a growth of businesses that provide customisation. From a consumer perspective, this ability to customise is empowering and allows for self-expression.

Aussie furniture retailer Evolvex allows customers to use a digital interface to design their own furniture that is then sold at affordable prices. Created in 2009 by Jodie Fox, Michael Fox and Mike Knapp, Shoes of Prey help customers design their dream pair of shoes from scratch – online and offline. They have just done a deal with Nordstrom in the US, which will triple their business.

In 2014, Selfridges took experiential customisation to the next level by taking customers on an immersive journey to create their own perfume in the store’s fragrance lab – on show for all to

Closing the Gap · 29 see in the storefront window. Customers were challenged to ‘bottle a memory’ based on their favourite aromas. Upon entering the lab, shoppers completed a set of tasks that engaged the senses and measured their preferences. They left the building with their own signature fragrance for £65.

EVALUATING ACROSS CATEGORY

The expectation of quality has changed. It is always surprising when marketers say things like ‘consumers see us as a leader in the category’ as if the consumer world is full of different departments.

When you are in the homes of people you see that their world is just that … their world, and not a series of different household divisions.

Whether their detergent is delivering carries the same weight as whether their utilities company billed them correctly. Consumers are comparing less and less products to similar substitutes – they now look at how these brands and products are delivering and helping them in their lives. So what does this mean?

It means that brands and their experiences are judged to the highest standard. They’re not just compared to all the brands, products and services people deal with, but consumers are also comparing those experiences to what others around the world are saying about them.

If Amazon responds to a faulty delivery and deals with the problem immediately, consumers will expect the their local supermarket to do the same. If the local ice cream shop offers new and innovative flavours each week, then surely the consumer’s local convenience store could also offer something new and interesting. If there is a choice of store, the one who is providing what is perceived as good service (like their ice-cream store) will be more relatable and agreeable to the consumer. Obviously in different markets, consumers will expect more or less of their provider in comparison, but there is a growing expectation due to the ease of comparison.

30 · Closing the Gap The most noticeable effect is that consumers’ expectations are rising and brands’ influence is declining. It’s arguable that consumers’ expectations of standards are rising more quickly than business standards actually are. This makes consumers harder to satisfy and quicker to complain, leading to higher dissatisfaction levels. Consumer complaints are on the rise. A survey of 1003 people by the W.P. Carey School of Business found that half the people had a problem with a purchase they made in the past 12 months. This is up from 45% in 2011 and the problem is affecting consumers on an emotional level with 68% of consumers (rising from 60%) saying they were ‘very or extremely’ upset.

THE REDEFINED NEGOTIATION

As they strive for the perfect idea of value, consumers are using digital tools to set an expectation and bargaining with brands to get that result. The financial crisis created a new breed of savvy shoppers around the world. 70% of UK consumers have changed their shopping habits, up to 60% buy more in-store brands now(1). These customers are defined as being shrewd shoppers who spend time looking around for a good deal but not compromising on quality. We have seen consumers only shopping during a sale but they have chosen their products earlier in the sales cycle.

Consumers who understand their brands will know when a sale is due and know what the best deal is. The use of online websites, for example, can be used as bargaining power to get more value from their current service provider. With the rise of Pinterest, online users can now be notified when products they are keeping track of (have a pin on) have a price drop.

Macy’s is one of the major retailers that is catching on to this and uses it to alert their customers of a sale. It currently has over 108,000 followers, all of which are keeping track of products that could lead to potential sales.

(1) ‘The rise of the savvy shopper’, by Maria Sealey / Aimia, 2013 Closing the Gap · 31 About Genevieve Elliott

We interviewed Genevieve Elliott, the General Manager - data analytics & customer strategy of Vicinity Centres (formerly Federation Centres) for our third podcast.

Genevieve is responsible for building Vicinity Centres’ data strategy to drive business critical insights - across consumers, retailers and the internet of things.

"if we are not giving the customer what they want, there is plenty of choice in the market and they will go and find it somewhere else ."

32 · Closing the Gap Pip: Hi, Genevieve. Last week we started the conversation about how consumer behaviour has changed due to the digital transformation and we covered three things: consumers are building their own solutions, evaluating across category and negotiating price differently. Today I want to cover the next three: 1. Consumers are now in control 2. Consumers research differently, and 3. Peer-to-peer recommendations are more likely to influence a consumer than an ad.

Let’s start with your new job title, that’s very exciting!

Genevieve: Yes, it is.

Pip: So why has customer data and analytics become so important for Federa- tion Centres?

Genevieve: I think historically the retail property industry has been very focused on its core customer being its retailer, and it’s only recently been understood that retailers are a direct product of the consumers that come and visit them. So for us, focusing on the consumer, understanding what it is that they need and trying to provide that, because as you have alluded to, the customer has become all-powerful. So if we are not giving the customer what they want, there is plenty of choice in the market and they will go and find it somewhere else. When we are thinking about how we find out more about the customer there are many different traditional research mechanisms but we are also dealing with a brand new technological age which means that we can implement very serious Wi- Fi networks across our properties to actually understand empirically what customers are doing.

Closing the Gap · 33 Pip: I’m really fascinated by that Wi-Fi understanding of the customer. We are going to talk about it. I want to ask you – how are you closing the gap between what businesses are providing and what consumers want? We are seeing that this gap is vast and getting bigger, and in big organisations like yours, this is fairly innovative thinking.

Genevieve: I think it is innovative and a number of our peers are also thinking like this because they recognise the impact that online shopping has on the physical bricks and mortar space – innovation is key to stay relevant. There is recognition that the consumer is going to drive where our business goes. It is critical to acknowledge that, understand what they want and collect that data but then the most critical aspect is applying it to our product. So we need to start understanding how people are using our product, how do they get there, how easy is it to park, how easy is it to find the right entrance, how easy is it to find what they need in the centre? We also recognise that one of the main drivers for coming to a shopping centre isn’t actually to purchase a product, it’s actually to have an experience. It might be coffee with a friend, going to a movie, so it’s important to make sure that our product evolves with what their needs are. Most shopping centres take the view we are just a box full of shops. We want to take it one step further which takes into account the local environment in which we reside and making sure that whatever we build or develop reflects the local environment.

Pip: There is a Disney bracelet that came out two years ago and I believe they have been doing similar things, mapping the consumer’s journey through the park. Obviously there is a benefit to the consumer as they can have priority lanes, buy food, don’t have to carry money, all that kind of jazz. It’s the back end which is really interesting, where you can start to see the footprint and start to tailor the footprint for the customer. Is that something you have thought about?

Genevieve: Oh yes. We are new to this but we have implemented a pilot Wi-Fi roll-out at a couple of our centres and we have just started looking at what this has been able to tell us. At one of our centres we have just worked out that 26% of customers coming in at a particular entrance only go to that zone and leave. So a quarter of the shoppers go to one part of the centre without visiting any other part of the centre and leave. So we are offering convenience around that but I guess our challenge is … how do we disrupt them to get them to recognise there is value in going to other parts? Without the implementation of that type of technology or infrastructure we would never have known that.

Pip: I had someone come to the office and talk to us the other day about a way of measuring NPS in the store environment. I

34 · Closing the Gap thought it was very interesting because there are all these things that are going to pop up. Are you going to be a part of ensuring that these things happen? How do you feel about being that kind of thought leader in that position? Is there any work you are doing with collaborators to bring these new technologies to life?

Genevieve: Yes, there is a lot of thought being given to it at the moment. One of the questions we have been asked is ... are we going to introduce beacons? I think the answer is yes, absolutely we will, but we have to work out what we want to implement those beacons for and make sure that we do it in line with the strategy consistent with what we "There is want to offer consumers. People are very scared about implementing beacons haphazardly. Retailers recognition that the want to do it too, but we start to alienate shoppers consumer is going to by actually pushing information to them that is not invited. I think that is only one use of beacons. You drive where our need to think about all possible applications. business goes. It is Pip: The emergence of peer-to-peer recommen- critical to dations has been a massive trend in the way that acknowledge that, consumer behaviour has changed. For me to see this shift has been quite amazing. Are you seeing the understand what they influence of that in retail? want and collect Genevieve: Absolutely but I don’t think the concept that data but then the of it is new. Some years ago in a previous life, I did most critical aspect some work on the concept of trust for financial planners and it turns out that people will trust finan- is applying it to our cial planners who have been recommended to them product." by a friend or colleague far more than they would trust someone they had looked up in the white pages. But there’s still that implicit trust in someone that you know recommending so I think this is a much broader application of it, because we now have the technology and means to do it. There wasn’t a Trip Advisor 10 years ago but people still surveyed their friends on where they wanted to go on a holiday. This is actually just a broader community, a manifestation of that. I think we are seeing it definitely in retail and I think the reason for it is that with friends and family you don’t typically assume an agenda – there is always an agenda with a sales person working at a retailer and that’s why I think there are lots of retailers going down experiential routes. Retailers are trying to develop that trust and that connection with the consumer and it is manifesting in the form of an experience. But it is also happening with retailers allowing consumers the opportunity to share on social media, getting feedback from their friends imme-

Closing the Gap · 35 diately on social media on a particular outfit. Facilitating the need that consumers have for peer approval and recognising it, that is pretty important.

Pip: I know it’s true that we always seek advice from our loved ones or closest friends and you are right, we now have a platform to bring that to us en masse. The other thing we are seeing is consumers researching differently with regards to what they want. In fact, we did a study recently that said 26% of the customer experience was about starting online to find what they were looking for, which is obviously a new shift in consumer behaviour. When we go to the podcast chapter about consumer wanderings, you can see how chaotic it is. There is really no start or finish. How are consumers researching in the store environment? We know that a lot of it does start online but do you think there is also a difference in the store environment?

Genevieve: We can see that there is. From the pilot we have started running we can see what people are browsing online in the centre. So one aspect of the pilot is seeing online researching on different retailers in the centre. It could be at a discount store comparing with another discount store. We can research even smaller stores if they have an online presence but we’re also seeing online research in centre for offshore retailers. Last month, for example, Amazon.com was among the top 5 most searched websites in our centres.

Pip: Wow! As they are shopping? That’s amazing.

Genevieve: So they are comparing online retailers and then weighing up the pros and cons. Do they pay a bit more for it and get the immediate gratification of making a purchase or is the cost-saving sufficient for them to be waiting up to two weeks for their delivery from offshore?

Pip: That is one of the trends that we talked "we're also seeing online about, that whole idea of re-negotiating research in the centre price. So the consumers are looking at what’s happening in store and looking at for off shore retailers. their phone to see if they can get a better Last month, for example, deal – that’s quite amazing. Do you then know who has purchased in store or on- Amazon.com was among line? the top 5 most searched Genevieve: No, unfortunately we have not websites in our centres." taken it as far as the transaction at the point of sale. I think that is only a matter of time.

36 · Closing the Gap Pip: We talk a lot to our clients about a seamless omni-channel experience but that really is taking it to the next level. Retail was one of the first categories in my mind to be really affected by the digital transformation. What we find truly amazing is that something like only a third of CMOs around the world feel ready for this transformation. In fact, we believe we are already halfway through it or in it and we start to talk about it, as it’s really a marketing evolution, not a transformation. If you think about it as a transformation it’s almost a one-off but an evolution means we all need to change our behaviour. What are the obvious signs of the digital transformation you have seen in your own world or particularly in retail?

Genevieve: I think that retailers understand they need to accept omni-channel to be even considered for purchase. Having spent some time offshore I think Australian retailers are making up ground but are still well behind. It took them a while to realise it, and as a bricks and mortar offer as well, we are behind the eight ball in terms of how we can offer a better customer journey. We are doing a lot of thinking about it but execution is going to be a key challenge. Parking solutions, for example. If you have a look at the pain points in a customer’s journey in a shopping centre, typically they will mention parking – so having to go to five or six places to look for a similar item and then leaving. We need to do a lot more thinking about those and I am yet to find a shopping centre provider that has made those pain-free.

Pip: Even overseas – you’ve not seen anyone deliver that? You said that we are behind, what have you seen overseas that you think was a bit more advanced?

Genevieve: I think retailers like John Lewis – who are a very, very traditional retailer with a very traditional customer base – they now have 35% of their sales online. They have attracted a whole new customer base and have retained their existing customers but provide it in a way that customers want. Not all customers want to shop online. Some do like the click and collect option and some are recognised as doing the research online but you can still come in and do your traditional purchase. It’s no different to what others are doing but I believe it is around the execution and user experience they deliver that really stands out for me.

Pip: There is a lot more entertainment. Obviously, we’ve got Myer windows but that seems to be all we’ve got. If you go overseas, there is a lot more interactivity with the store and the phone. Windows at Christmas

Closing the Gap · 37 but even throughout the year there seems to be more ability to entertain ourselves both online and offline in the shopping centre environment.

Genevieve: Yes, marketers definitely need to look at the interaction between physical and digital. There is a lovely example of a treasure hunt held recently at our competitor centre that was done on people’s iPhones. Looking for the clues, checking in and I think this is only going to increase because people are going to expect it more and more. I think the other thing that we will see as well is that often a lot of things held in centres aren’t as connected to retailers as they could be and I think we will see more engagement with retailers and partnering with retailers to offer those in-centre experiences which is mutually beneficial both to the owner and the retailer. Not that sort of disconnect with just the school holiday one-off piece of entertainment.

Pip: An ongoing experience. Do you think the shopper is interested in a treasure hunt or is that a particular tribe?

Genevieve: I think anything that makes a family’s journey to a shopping centre easier is attractive to most people. Now there will be some groups that don’t have to use the shopping centre as the experiential journey or excursion that it is to some but I think if it makes it enjoyable, more pleasant and gives the parents the opportunity to just relax for a bit and from a very selfish perspective look at two or three more shops, I do think there is an appeal.

Pip: You talked about pain points before. We did a study recently that looks at what makes a great customer experience. This was a global study and the brand that came up trumps was Amazon. Consumers just said things like ... ‘there were no questions asked’ … ‘when I didn’t get my delivery within 24 hours I rang up and said it hasn’t been delivered and they just sent another one’. They didn’t question, they didn’t ask for a reason, they didn’t ask for a receipt number, there are lots of those kind of deliverables that I think the global retailers are offering that makes the customer think - that was amazing! I am not sure if there is anyone in Australia doing that no-questions asked philosophy. It’s not in our nature, is it?

Genevieve: It’s not and I think consumers, because they have more knowledge, have become more confident. You know if you are going in to do a presentation and you feel absolutely confident in the information you are going to present you go in with much greater confidence and belief. So through the internet the consumers are a lot more confident because they have all this research at their fingertips, they are also more

38 · Closing the Gap demanding in regard to expectations. You are right, I cannot think of anyone in Australia who is offering service to that level.

Pip: We could really learn something, especially from the States, about how they deliver great customer service. Thank you. Let me finish off with two questions – you talked about John Lewis being a retail brand you thought were doing well. Is there anyone else that comes to mind globally that you believe is doing well? If not in retail, maybe in another category?

Genevieve: I have to say I really "I really like what like what Domino’s is doing. I think Domino's is doing. it’s just in Australia but it could be globally. It feels like they have used ... It feels like they digital technology to develop a great have used digital ordering experience but to also build a community The fact that you can technology to build your own pizza, brand it and develop a great then for every one of those sold – shared with your whole social media ordering experience network – you actually generate a but to also build a return for yourself. In terms of a brand embedding itself from a loyalty community." perspective, it’s fantastic and the user experience is very good too.

Pip: I like that example too, because it is not a brand that started on the back of the digital transformation like an Uber, it’s a brand that has embraced it quickly and moved forward. I saw the MD Don Meij speak about this – it was fascinating.

Well thank you, Genevieve – that was fabulous. It’s really great to get a retailer’s perspective. I would like to thank everyone who is listening. The next chapter is with Carolyn Bendall who is the CMO of ANZ. We are going to talk about the last shift in consumer behaviour which is really around the change in consumer loyalty. Thanks, Genevieve.

Genevieve: Pleasure, thank you.

Closing the Gap · 39 DHL trickery Or ASOS Cleverness? Creating Advocates The Smart Way

German ad agency Jung von Matt/Neckar devised a clever delivery service viral marketing campaign for DHL in which competitors were BLOG employed as unwitting promoters of DHL. The agency created boxes By Selma Mehmedovic that appeared black when cold – they were stored in walk-in freez- 19 / 05 / 2014 ers before being picked up – but then would slowly reveal the words BrandHook Blog ‘DHL is faster’ when they warmed in the carrier vans. Unsuspecting delivery men from competitors UPS, TNT and DPD all had to carry these awkwardly shaped boxes to particularly hard-to-reach locations, ensuring a lot of people saw the amusing message.

Although cleverly executed and highly amusing, something doesn’t quite feel right about using trickery to benefit the brand. But it did however get me thinking … what can brands do to harness the power of their customers to act as willing brand ambassadors? Not only do brand ambassadors promote the brand to their peer networks, which is becoming increasingly important in the social media era, but they are also the first to come to the brand’s defence.

Retailers harnessing people as ambassadors.

Uniqlo chose local brand ambassadors when launching into Austral- ia. Actress Sophie Lowe, young person award winner Jessica Watson, chef Andrew McConnell, artist Rone and blogger Sara Donaldson were appointed to deliver a multifaceted Australian face to the brand.

British retailer ASOS launched its Student Brand Ambassador project in Australia and will work with 20 students over the academic year, charging each with promoting the brand on campus and creating written and photographic content for an ASOS student web page. Fashion retailers Sportsgirl, Lorna Jane and Diva have also harnessed the power of brand ambassadors through technology using the Tweet Mirror. The kiosk uses touch screen technology to allow customers to take their own pictures with different products in the store and instantly share them via social media. The technology not only im- proved the customer store experience but allowed the respective com- munities to act as ambassadors by promoting products in real time and globally via viral marketing.

So how can we turn customers into brand advocates? We need to take them on a journey from considering the brand to

40 · Closing the Gap purchasing the brand to liking the brand to loving the brand.

To successfully transition customers through this journey, a brand needs to provide engaging and relevant experiences that most importantly, are consistent across all touch points and interactions. If a brand can do this, it will be rewarded with customers who not only love the brand but are willing to fight for the brand!

Are consumers seeing reality?

In the digital transformation era, the power is well and truly with the consumer. This power ranges from how they make their purchases, to their extensive evaluation criteria, to their ability to quickly and easily BLOG share their opinion. The demands on customer service would appear By Alex Johnston to be increasing as a result. For example, my local pub (I’m English, 16 / 03 / 2015 and expect to be recognised!) treats me like a long-lost friend, but BrandHook blog now I want that kind of service from my gas supplier – that recognition coupled with a personalised point of contact. When I don’t get that same service, my disapproval intensifies and I’m more than likely to voice that disapproval given the many channels available to me.

With the sheer volume of customer service horror stories floating around, it would be easy to assume that customer care and focus is declining. However with online transparency and the increasing ease with which to share your opinions, this may not actually be the case. Let’s face it, we all experience schadenfreude (pleasure from others’ misfortune) as we read a scathing review compared to a nice, safe ‘food was nice, staff were pleasant, might go again’ review. A survey in 2013 found that while 35% of participants used online review sites to complain when they’ve had a bad experience, only 23% used the sites to talk about a positive experience.

The issue is that consumers now expect all companies they use to be at the highest standard – this means that consumers are now harder to satisfy and are quicker to complain. As markets are becoming more and more consumer-led, businesses are being held accountable to consumers, rather than the other way around.

While customer service is an easily comparable factor, increasing

Closing the Gap · 41 consumer independence means that consumers are more confident in themselves to judge prices and value for money across different markets. The need to get a good deal has become more important and there has been a decline in brand loyalty as a result. The ever-expand- ing digital transformation also means that switching between brands and providers has never been easier, making the relationships between customer and brand easier to break and harder to build. The rise of the budget superstores, Aldi and Lidl, are perfect examples. Brand image has become less important than overall company image in terms of making sales.

To say customer standards are dropping is most likely wrong. In fact, as technology and society grows, customer standards will be growing alongside them. Moreover, customer expectations of customer standards are rising faster than the rate customer standards are, causing the gap between the two to grow. The opportunity for businesses, therefore, is to acknowledge the gap and adapt their ways to ensure that both, from perception and reality, are ahead of the game.

New Year's Resolutions - One Step At A T ime ...

Last week, I checked in on those New Year’s Resolutions that I had made with such great intention almost a month ago.…

BLOG Drink a smoothie every day – FAILED By Megan Ferguson Start a compost bin – FAILED 29 / 01 / 2016 Set up a budget and savings plan – FAILED BrandHook Blog Start doing yoga – FAILED Read a novel – FAILED Grow my own vegies – FAILED Own chickens – FAILED Send actual birthday cards to my friends – FAILED Ok, so not a great result …. absolutely nothing had been achieved. How depressing.

But there is good news! According to the many articles about ‘achieving goals’ and ‘getting organised’ that have entered my inbox this year, one of the key reasons we fail to achieve the goals we set is because we put too many things on the list. A long list is overwhelming. We don’t know where to start, so we don’t start anything at all. So the advice is to have a list of one. Choose just one thing to focus on, and when that

42 · Closing the Gap one thing has been achieved and we are happy that it is now part of our life, move onto the next thing.

I thought this was really good advice for New Year’s Marketing Resolutions too. At BrandHook, we know there are 7 key areas that businesses should focus on to truly understand how to better deliver what their customers need. We call this practice ‘Closing the Gap’. It includes: 1. Bring the customer voice to the decision making table 2. Understand the customer experience in the digital, complex & non-linear world 3. Make dealing with your brand an effortless and responsive experience 4. Tell your brand story and demonstrate what you stand for 5. Collaborate with key customer groups to fill NPD pipelines 6. Understand competitors 7. Measure marketing ROI within the customer experience But this list can be a bit overwhelming to work on all at once. So let’s pick one area of focus to start…and make it part of our day to day business:

Bring the customer voice to the decision making table – Start talking to your customers… often and regularly. In the store, online, in cafes, on the train… wherever they are. When you have a decision to make, run it past your customers and get them involved. Make this common practice. You will be filled with confidence that the direction you are heading in with any decision (be it big or small) is anchored in what you know your customers actually want. Because they have told you and you were there to listen.

Then, after knocking number 1 off the list, moving onto the next item will feel very natural and easy. When you are already regularly talking with your customers then the conversation about how they operate in the digital world will evolve naturally. Look at that … And we are at item 2 on the list already. One step at a time and anything is achieva- ble.

As for me and my personal goals … well, I started with the smoothies and after day 5, I realised I was throwing out an abundance of peels and cores, so I started a compost bin. Ah ha … I am at item number 2 of my list too. Success! Hopefully this little story helps you with your own New Year’s resolutions. How is your list looking so far?

Closing the Gap · 43 chapter 4: What a decrease in customer loyalty means for your brand with Carolyn Bendall, Head of Marketing, Australia Division at ANZ

CONSUMERS ARE LESS LOYAL

With information so easily available and barriers to switching brands softening, customer loyalty is in decline. In fact, there was a 4.3% decline in active memberships in US loyalty programs from 2010-2012 (1). Active participation in those loyalty programs has been on the decline since 2010, when it was pretty pathetic to begin with. Then, 54% of loyalty program members were inactive. Five years later, in 2015, 58% of program members are inactive – de- spite the fact that the number of memberships is on the rise at 29 per household.

Customers now have the luxury of being able to compare different products and brands, and this combined with the steady growth of the digital world, means that switching between providers can be effortless and can reap instant benefits. This in turn shows loyalty to providers is diminishing as consumers look to receive the best value for their money.

David Aaker, a famous and well-respected marketer, wrote the renowned blog post, ‘Why I bought a no-name computer from a components firm’. His wife’s computer had died and he needed a replacement. Naturally, as everyone does, they considered previous purchases and companies they had used and trusted, in this case, HP and Dell. ‘Minutes later, I decided to buy an ASUS computer even though I had never heard of it before,’ Aaker wrote.

The reasoning was that through his online research, he could quickly read about what experts

44(1) · ClosingThe the 2013Gap Loyalty Census Study, by Colloquy had to say and soon he discovered that the ASUS product was just as reliable and well-serviced as the well-known brands. But much cheaper, making the choice easy for him.

In this case, loyalty did nothing to keep him. We will see a lot more of this behaviour as consumers explore their own options.

A 2012 Deloitte study showed a sharp decline in loyalty to hotel chains with only 8% of survey respondents saying that they always stay at the same hotel brand. While there might be different factors that underline this trend, at least part of it is driven by consumers’ ability to use tools like price comparison sites, review sites and other sources to assess the absolute value to each hotel.

Simon Carter, Executive Director of Marketing, UK and Ireland at Fujitsu, says, ‘Over the last few years, the world has changed significantly for marketers – post-recession, customers are suddenly much more conscious of the price of goods, and their value also; Technology has moved on at such a pace, that customers can now make purchase decisions 24 hours a day, and can use a myriad of channels to do that; and culture has evolved such that comparison websites and crowdsourcing have to be taken seriously in the decision-making process for customers – all collectively eroding brand loyalty like never before’.

Closing the Gap · 45 About carolyn bendall

We interviewed Carolyn Bendall, the head of marketing, Australia division at ANZ for Chapter 4 of our podcast series.

Carolyn is an experienced marketing and communications executive with over 20 years experience in the banking and finance sector.

"It is important that marketing leaders have an 'evolution' mindset. we are always changing, there is no set- and - forget..."

46 · Closing the Gap Pip: Hi Carolyn. Thank you for joining us today.

Carolyn: Hi Pip, it’s a pleasure.

Pip: We have talked about consumer behaviour and how that has changed in the last two chapters. Today I want to discuss the idea that consumer loyalty is on the decline, particularly because of the new digital world we are living in. Some would say that it is really about habitual behaviour rather than loyalty. We can chat about that in a moment. I want to talk about something you and I talked about on Twitter over the last week. You liked a recent article of ours.

Carolyn: I did!

Pip: ‘It’s not about digital transformation, it’s more about marketing evolution’. I wanted to ask why you really liked that.

Carolyn: I did, Pip, as soon as I saw that I thought – bang – spot on! Cer- tainly in my experience running marketing for ANZ Australia I do not see our priority being digital transformation, it’s absolutely about a marketing evolution and that’s more than just digital. There is no doubt that digital is a leading role in all our lives and in every way we are consuming media and making decisions. But equally there are many forces at play and it is such a rapidly changing consumer landscape. We have to consider a much broader context than digital transformation and I think you would miss the mark if you saw it just as a program that you change from X to Y. I think it is an ongoing evolution of the marketing value chain and that is how I have tackled it. I gave a keynote speech a couple of weeks ago where I shared a view that the new world of marketing is more science than art, and I talked about four key pillars that I believe are driving that. The first pillar is about the rise of the consumer experience, the second pillar is around content and content management, the third one is around data and analytics and the fourth one around channels, especially multi-channels or omni-channel thinking.

Closing the Gap · 47 There is more than digital at play in that, and when I think about how we are evolving our marketing programs and strategies it’s not just about our digital transformation. A really good example of that is the way we run traditional advertising such as television and radio. These channels are still important in term of achieving reach, but they typically perform much better with digital channels also in the mix and driving conversion - so it is thinking about these channels as an integrated whole and not just about digital as something special or different.

It is important that marketing leaders have an ‘evolution’ mindset. I want to instill that in my marketers - we are always changing, there is no set-and- forget. We are always testing and learning, we have to be open to change, which can include organisational change and shifting budgets. People have to get their heads around the fact that just because you had a particular budget through a particular channel or exercise last year, you may not have it next year. I think the term ‘evolution’ hits the mark.

Pip: We studied marketing at Monash.

Carolyn: Yes, we did!

Pip: It’s interesting to reflect about the old days because we used the concept of the customer map when I was first in advertising and it was very linear. We put a 30 second ad on TV, we popped a fragrance sample in the magazine and inevitably someone would try it in the department store and then buy it. We’ve got this new map now that is chaotic and frightening but you must get on board with this world. Marketing has changed so much in 20 years – you just have to keep up to date with it.

Carolyn: Absolutely – a conference delegate told us this week that marketing has changed more in the last two years than it did in the previous 50 and I agree with that.

Pip: Yes, me too.

Carolyn: Maybe that’s an extreme perspective but I think that it’s roughly right. There are no linear marketing approaches any more and certainly the ‘paths to purchase’ and influences around brand and brand experiences cannot be as straightforward as they once were. It is a more sophisticated thing and it is back to my earlier point that I believe there is actually more science that needs to go into it than art these days.

Pip: Great, let’s talk a little bit about loyalty then. We are seeing a lot of smaller financial brands launching,

48 · Closing the Gap such as Nimble and Wallet Wizard. We are seeing them launch quickly and more able, I suppose, rather than the Big Four because we are living in a digital world where the barriers are probably lower. What is ANZ doing to prevent the erosion of market share from some of these smaller players?

Carolyn: Firstly, I acknowledge that there are lots of finance start-ups, particularly in the payments space. We are very aware of that but we still see a very high preference for the security and the backing of a major bank brand when it comes to entrusting someone with your money. So I guess the short answer to your question is about recognising what we are as a brand and understanding that when it comes to managing money the consumer needs traits like security, trust and reassurance. Major bank brands are the ones that can provide that to the greatest degree, so one part of my answer is that I believe we have great brand strength and we have to continue to invest in that. Equally, back to our evolution theory, we also need to learn from some of these smaller start-ups that continually look to improve the customer experience, making things more accessible, make things easier. It’s not just these smaller organisations that have to do this – we have to do that ourselves, we have to be willing to disrupt ourselves and our own processes and I think we are doing that. The third point is some of these smaller financial brands offer opportunities for us to partner. There are opportunities and some innovations that make great sense and we can look at doing things together. ANZ and the major bank brands have a competitive advantage in terms of what our brand stands for and we have to play to that, but not be complacent or still in making life easier for the customer.

Pip: And the agility of some of those brands is something for you to look at and work out how you can disrupt your own customer experience.

Carolyn: And learn from that. Obviously, it is not "The customer only in banking – it is in virtually every category I can think of. The customer expectations are getting higher expectations are and higher - ‘if it’s not easy, I don’t want to hear about getting higher and it’. So we need to take those lessons and do it.

higher - 'if it's not Pip: Well, for the real time aspect we always talk about easy, I don't want to Uber and how everyone expects their taxis to come in three minutes. hear about it'." Carolyn: Exactly, and to be able to track them and easily pay for them. It’s a great example.

Closing the Gap · 49 Pip: According to the World Retail Banking report earlier this year, banks all over the world are experiencing a decline in loyalty, and I suppose particularly with the youngest segment. I know we have done a bit of work on this together but is this something that you have noticed and what are you doing about it?

Carolyn: I know we are going to talk about habits shortly Pip, but it is an interesting point as our research and your numbers don’t show that younger customers are less satisfied or less likely to be advocates. In fact, they have a higher satisfaction and higher net promoter score compared to the broader base. Part of that is attributable to the fact that younger customers tend to have fewer products, so often it is only a transaction banking relationship without deep product extension to things such as home loans or business accounts. So you could argue they have less opportunities to be dissatisfied or look to move but equally I think it can be a bit of a misnomer that younger customers are less loyal. I think it does come back to the habit you were referring to before. What we see is that in the main, people are not consciously thinking about their bank brand to any great degree. So it is not so much a loyalty decision – it is far more about what is working for me and if it is working for me, this is a habit that is going to be the main driver. All that being said, it is younger customers that are more prone to switch. It’s not that they are more dissatisfied, but it is easier to switch a relationship that is not particularly complex and multi-product. They also have the highest amount of trigger moments when you would look at switching banks – a first job, a move interstate or internationally, saving for a home and therefore starting a discussion around home-lending. Our youngest segments are also quite entrepreneurial and are looking to do their garage start-ups and even some basic business banking requirements. Those are the things that trigger switching and the simpler the banking relationship the easier it is to do. What this means for us, is that we need to be there in that moment and respond to that need around first job or saving for a home or moving – brand appeal and relevance is very, very important. We are very conscious of that, it needs to be top of mind and we need to present ourselves as a relevant bank.

50 · Closing the Gap Pip: The latest campaign does a good job of that – it is the insight around the excitement of having their first job and being there for them, with them during that journey.

Carolyn: Yes, the ANZ job ready campaign has been a great example of that. It’s really a segmented everyday banking acquisition campaign, but presented in a relevant consumer context. We know the greatest acquisition opportunity in this category for us is the younger segment and one of the biggest triggers is getting that first job. So the 15-16 year-old first part-time job in many cases is the very first time they need a bank account to be paid into, and with it they absolutely love getting a bank debit card to put in that wallet – there’s a real emotional hook there.

Pip: Makes them feel special.

Carolyn: Yes, a real rite of passage. It could also be the first real, proper job as a university or school graduate where they seek to set themselves up independently from the banking their parents may have set up for them as a child. We have marketed this in very different ways. We produced an AV film that has not gone on to TV at all, but it’s done to the same production qualities and run through social and digital channels. We’ve also partnered with Twitter and Cody Simpson around a whole social activation. We have another young entertainer writing a new job song at the moment so it has been a good case study of going to marketing in a really relevant way for a young segment and effectively reaching them with the right proposition right in the moment.

Pip: It’s looking at that omni-channel approach, really.

Carolyn: Absolutely!

Pip: So what do you think about loyalty as a concept? We have talked about it, you have said that it is habitual as well. Because of the consumer’s opportunity to research we know people are more prone to taking up something that is a bit different or buying a brand they may never have considered before. David Aaker bought an ASUS computer recently. He is the master, the king of brands, and he said that he bought a ‘no-name computer from a components company’ and he did it because he had read online about how fantastic it was. So I guess my question is about the concept of loyalty and is that really dead?

Carolyn: I think I’d go back to the point I made earlier and go back to my own category here in banking and finance – that in general, people don’t really want to think about it all that much. They absolutely want a good and easy experience and will revert to and stay with brands that they trust wherever possible. So first and foremost, a brand’s salience and rel-

Closing the Gap · 51 evance is important, and important to each segment in which you want to be relevant. Obviously a big brand like ANZ puts you in an advanta- geous position as you have a large customer base and in the main they are going to stay with you while things are working. The most important thing is to be relevant and have solutions available and accessible in the relatively few times that they do need you and want to talk to you. I believe customers will remain loyal so long as you have the right solutions and don’t give them a reason to look any further.

Pip: We wrote a blog post recently about customer engagement as the more accurate measure of commitment to a brand rather than that idea of measuring loyalty or even NPS. People feel like they have a good experience with you, that you satisfy their needs and you actually deliver an effortless customer experience. That’s more likely to keep your customers.

Carolyn: Yes, good experiences will retain your customers and keep them coming back for future needs. I do agree with that. The difference is that the consumer expectations around that experience are increasingly getting higher and "Yes, good higher. So while you get that right, a larger brand has an ad- experiences will vantage through a larger customer base able to be retained, it also means that there are more opportunities to disappoint retain your or not deliver an experience that people are expecting. customers... The Pip: Can you think of any great examples of brands doing a difference is that really good job in this digital world? the consumer Carolyn: We just talked about Uber and that whole trans- expectations port thing. To me, Airbnb has probably the most exceptional around that story around how they have built a business and delivered to a consumer. They really created value out of excess capacity experience are in a completely different way. They are the brands that are increasingly setting a new expectation around experience. I think they are doing things very well and it raises the bar in terms of the getting higher experience consumers expect. I look at the airlines and even and higher." some of the retailers, right down to the supermarkets (who get a pretty hard time around the place and in the media). In terms of experience, they are engaging with their customers, using their data and analytics and investing in good customer relationship marketing. Through this they are creating relevant, timely reasons why you should keep coming back to the brand you are with. I think they are doing a good job.

Pip: There is a case study of DHL in Sweden where they ran a test, probably about 18 months ago now, when they were thinking about excess in space and capacity. They used real people

52 · Closing the Gap to deliver their products so you could log onto this app called “myways” as a potential deliv- erer. Then those who wanted their goods faster than DHL could deliver them would pop in there and ask, ‘Is anyone going past my house?’ If you were an approved everyday person you could say, ‘Yes, I am going past your house, I’ll pick up your parcel and deliver it to you.’ So they would get points or money and then the person who is receiving it pays a little bit more.

Carolyn: It’s amazing, isn’t it? I’ll counter that – I saw another great case study out of the UK in a similar way to Airbnb but this was about parking. An app and a whole system had been created around ‘find me my nearest car park’. This included people with driveways that were not going to be used during a certain period of time that could register the carpark in the driveway to be used.

Pip: I love that!

Carolyn: They said that someone earned six pounds in a few minutes because they had an hour that a car could come and park in their driveway. It’s great, isn’t it?

Pip: I love it! Well, I think we’ve run out of time, Carolyn, which is very sad so I just want to thank you very much for your time, and I want to thank everyone who is listening.

Next week we are going to talk to one of our thought leaders, Madeleine Morgan, who runs the Neil Perry restaurant Rockpool. She is going to talk about the first of our seven ways to Close the Gap. We are starting to introduce some of the ways that marketers can cope in this chaotic world. This first one is around what we call ‘Building a Consumer Practice’. We chose to talk to Madeleine because the hospitality industry is mostly consumer-focused as an ongoing practice. They deal with the customers face to face and they have to solve problems immediately.

Carolyn: Yes, and it is a fickle market.

Pip: Yes, so it will be interesting. Thank you very much.

Carolyn: It’s a pleasure, Pip.

Closing the Gap · 53 Are you loyal to loyalty programs?

A new global study has found loyalty programs are failing to engage digital consumers. Participation rates in loyalty programs are at an BLOG all-time low, while negative feedback continues to rise (up to 89% By Alex Johnston negative feedback on social media!). So why are they failing? 20 / 04 / 2015 BrandHook Blog As it turns out, lack of reward relevance without a rigid reward structure is one of the main reasons why consumers are pulling away from loyalty programs. Consumers do not believe that what they receive in terms of reward gives them anything of value. If they’re earning points purchasing one thing, why should they then get discounts on something else that they don’t want? So many companies’ loyalty programs belong to the purchase/point category that there are actually very few companies that earnestly reward consumers for engaging with their services or products. Surprisingly, it’s the hotels and airlines who are the leaders in terms of loyalty programs that engage consumers, and unsurprisingly, it’s the banks who are lagging behind (only 3% of banking companies actually reward customers for engaging with services/products).

Consumers are also pulling away due to overly complicated or poor customer service when trying to claim back these reward points. You can’t really blame consumers for being disenchanted with loyalty systems when businesses make them nigh on impossible to use. Compa- nies get the bonus of retaining and gaining customers with the promise of a flashy loyalty program, and then save bundles when none of the consumers actually use it.

However in the age of digital transformation, companies can no longer get away with this kind of practice, as it is too easy for consumers to switch providers. The use of loyalty programs now needs to be integrated into the whole consumer purchase path to be of any effect, otherwise it will become redundant in the long run. In fact, companies that have basic transactional rewards-only programs (with rewards based on purchases made) tend not to last very long at all. A study by Capgemini Consulting classified these programs as sub-op- timal and discovered that 77% fail within the first two years. There is a need to reward engagement with a brand rather than just a simple transaction. The best way to do this is by offering advanced levels of customisation. A quote from Mark Tayler, a global leader for custom-

54 · Closing the Gap er experience transformation at Capgemini Consulting, sums it up quite nicely ‘… these tailored experiences will enrich loyalty programs and further encourage customer engagement.’

The key for loyalty programs is consumer listening. There are so many ways for businesses to do this that there really aren’t many excuses left to us to use. Social media, for example, is a huge opportunity for businesses to learn about their target markets. Delivering personalised customer experience, conducting social listening to understand customer needs, and rewarding customers for social media engagement are great starting points. These kinds of moves will see consumers become more loyal as they interact and develop a relationship with not only the company, but the brand itself.

brand loyalty is dead - long live brand engagement

Where’s the brand loyalty gone?

Consumer research tells us that brand loyalty is diminishing at a BLOG rapid rate. 78% of western consumers no longer have loyalty to any By Dave Ansett, found- one brand in any category. Brands who a decade ago shared trusted er and chief creator of and valued relationships with their clients and consumers are finding brands those same relationships have become transactional. Once the ulti- 08 / 06 / 2015 Guest blog from Truly mate symbol of brand affinity, it seems even brand tattoos are losing Deeply their status.

Indian tattoo artist, Jason George, has 189 of his favourite brand marks inked onto his body. His tattoos include the brand marks of his favourite TV channel, social networking sites, mobile phone networks, fast food chains, auto and fashion brands. And as you can see, our man Jason is a reflection of the new brand consumer with shared allegiance to Nike, Puma, Adidas and Fila rather than a strong loyalty to just one of those competing brands.

Jason says, ‘I know it seems insane but these tattoos are my way of giving thanks to the brands that have made an impact on my life. All

Closing the Gap · 55 the logos that you will find on my body have a special place in my heart. They are related to my life in some way and I have memories and stories attached to these brands.’

With diminishing loyalty comes a demand for brands across every category to find new ways to create meaningful and valued relationships. As advertising continues to be relegated by consumers from primary brand loyalty driver to just another channel in the mix, brands must go back to the drawing board to create engagement, starting with understanding their purpose and how and why that will be truly meaningful to those people most critical to their success – their clients and customers.

56 · Closing the Gap PART 2: the seven ways to close the gap

The digital transformation is now a matter of business survival, not a luxury that businesses may choose to play in. It is also so intrinsically linked to the way that consumers have changed the way they behave with brands, that marketers need to take ownership of the problem and the solution.

The second part of this book focuses on what BrandHook has identified as means, ways and methods to close the gap between how consumers are behaving and what businesses are delivering.

These ideas include:

1. Building a consumer practice 2. Plotting the customers’ wanderings 3. The intuitive bond 4. Storydoing, not just storytelling 5. Iterative collaboration 6. Consumer dislocation 7. Market–a–bling

Closing the Gap · 57 chapter 5: The first way to close the gap - how to build a Consumer Practice with Madeleine Morgan from Rosetta (FORMERLY MANAGER OF ROCKPOOL)

BUILDING A CONSUMER PRACTICE

Ensuring that your consumer is front and centre of all your brand strategy and decision- making will assure your customer experience and innovation program is anchored in the insight and needs of the people who buy your brand.

According to the 2014 IBM study (the 17th of an on-going series of C-suite studies) only 30% of CMOs globally feel that they are reasonably prepared for the digital transformation. Only this third of CMOs say they are actively taking consumer insight and using it to adjust and run structural changes in their businesses.

Unfortunately there is still a lot of rhetoric and not a lot of practice when it comes to consumer centricity.

Here are some principles to think about: • Integrating behavioural data and consumer research. • ‘Big data’ is useless unless it is analysed in real time. • Build the marketing team’s consumer understanding skills – especially the identification of an insight. • Always look at the big picture and find out what management wants. • Use data visualisation to share the insights to disseminate information and bring the consumer to the forefront of the business.

58 · Closing the Gap About madeleine morgan

In this podcast we interview Madeleine Morgan, restaurant manager of Neil Perry’s Rosetta (formerly Manager of Rockpool) in Melbourne.

"It's their memories, their experience that becomes a story and so we need to ensure that this story is going to be important to them..."

Closing the Gap · 59 Pip: Hi Maddie. Thanks for being a part of this series. This is the first chapter where we are going to address the gap and start to give marketers some clues on how to close the gap between what businesses are offering and what consumers really want. The one thing I want to talk about today with you is how to really build, properly build, a consumer practice. We use the word practice on purpose. A lot of businesses say to us, ‘yes we are consumer-centric’ but really we don’t see the consumer as an integral part of the customer experience – which is why we believe that marketers really need to build a practice. Hospitali- ty has been doing this for years. In your experience, why do you think restaurants and restaurateurs are so good at delivering a really good customer experience?

Madeleine: Going back to basics, the word hospitality is what we do. We must be hospitable, that is the nature of what we do, caring for our guests. I think the people come to us for an experience and the memory is what they walk away with. They don’t walk away with something tangible, they don’t walk away with something they can try on, open, smell, touch or admire. It’s their memories, their experience that becomes a story and so we need to ensure that this story is going to be important to them and obviously, bodes well on their experience with us and our business.

Pip: Do you think it has changed? Do you think hospitality has become better at this or do you think you have always been good at this?

Madeleine: I think it’s positively changed. I believe that our diners are far more knowledgeable now. I do believe that we’ve upped the ante with our delivery and I see that as a really good thing. How we do things – has it changed? I think it has – perhaps with staff. Training staff is a really integral part of what we do to enhance that delivery. To reflect on that old school hospitality – to go to a restaurant where you have French waiters who have been doing it for 40 years, Italian waiters who can be as arrogant as they like and yet we deem that as extremely charming. Will that wash with someone who is 21? Positively not. So while there are definitely changes, the essence of what we do hasn’t changed. So it’s intrinsic, it’s innate, it’s

60 · Closing the Gap about being kind to people, so those elements haven’t changed. How we deliver and how mindful we have to be of people’s knowledge, that’s changed. That’s good, because I think it makes us more considerate and aware of people’s different demands.

Pip: I like that phrase – being kind to people. I had a drink with the CEO of one of our clients the other day. "So while there She said that when she first met her customers she had real sympathy for them and she wanted to help them. are definitely There is something in that – businesses need to learn changes, the from hospitality and adopt that sense of kindness. I think that’s something we all need to adopt. essence of what we do hasn't changed. Madeleine: Yes, I think that Neil Perry does have this wonderful philosophy and it is his care philosophy. it's intrinsic, it's Again, it’s just fundamental basics. It is about caring for innate, it's about our suppliers. So Neil has over 30 years experience with some of his suppliers – they obviously now are friends being kind to people, and family to him. They support one another, they’re- those elements proud, they’re loyal and it’s a really lovely connection that they have. This care also is extended to his staff, his haven't changed." management, the chefs, the team and then we are, as a result of that, kind to one another and we care for one another. A by-product of that is we simply care for our guests because it is culturally what we are about.

Pip: Oh, I think that’s really lovely. You talked about staff training being an integral part of your business, delivering a good consumer practice. You obviously have some formal programs?

Madeleine: We do. This year we have launched a certified training program in-house. We have Tom Sykes as a trainer and he’s based in Sydney. He also spends time in Melbourne and we have a Rockpool Bar and Grill over in Perth. So now we have this program where we have resident trainers in each restaurant and we have training every three weeks. So it’s really thorough – we cover beverages and food, and it can be humanitar- ian. This encourages staff and makes them feel invested in, it makes them have a sense of belonging, it gives them pride of place because they are empowered with all this knowledge they can share with the guest. Again, it’s about sharing. We can’t assume that a young person doesn’t know anything about champagne, for example. We don’t know what their experience has been – they may have grown up in France and drunk champagne for breakfast their entire life! We cannot assume. So the staff training is a really great way for us to continue to care for the guest.

Closing the Gap · 61 Pip: So how do you tell, get a feel for what the punters want? How do you keep in touch with what they want?

Madeleine: Meeting you for the first time, for example, I will consider your comfort level, your behaviour, the way you speak. I will detect what you are here for, whether it’s corporate, special occasion, solo dining, a bit of downtime, whatever the case may be and ideally peg where you should sit and provide you with what you like.

Pip: That’s incredibly tailored.

Madeleine: I don’t want to sound like I am fond of my skills here. That’s just in an ideal world. Certainly sometimes you miss it all together – this is a corporate deal, they want to be left alone, I need to be seen and not heard. That may not be the case – they may find me disengaging. So sometimes you may not ping it but I guess when you have been looking after guests for that many years you can play it pretty safe. If you are uncertain, you can just play a safe game.

Pip: But that’s interesting because a lot of what the consumers want is a very customised, individualised kind of service. What you have is face time that enables you to pick it up quickly and deliver what you think will meet their expectations. I suppose for the marketing teams that we deal with, it is much harder. That’s our job to bring the customer into their world. I suppose in some ways it’s a luxury being able to be with the customers every night.

Madeleine: It is definitely true. There are times when some of the staff will say they are really struggling with this person, trying to create the right rapport. Sometimes, there’s a bit of a roadblock. It’s really about ‘killing the customer with kindness’. That is what we have to remind ourselves of. You have to remain humble. Sometimes it is not easy but it’s essential.

Pip: So how do you help a staff member who says, ‘I’m really having a struggle with table 14.’

Madeleine: In that moment, I will just simply say, ‘Less is more, be pleasant, be warm, be agreeable, don’t break your cover.’ If there are moments, for example at Christmas time when a guest who is having a nice time but is perhaps being a little untoward, you can just have management presence. Be there, not necessarily removing that staff member. If they are very, very uncomfortable, of course you would but most often management presence will simply dilute that.

Pip: There are other categories that could learn from some of the things you guys do. You had a recent retail experience that you were very disappointed with. Do you want to give us the three minute version of that?

62 · Closing the Gap Madeleine: Yes, certainly so the three minute version – I purchased a pair of shoes. I believe there was a fault with the shoes. The company, who can remain nameless because I am very polite, disagreed with me and simply said it was wear and tear. I asked for them to define wear and tear. They gave me a very grey answer, they didn’t say worn 12 times, worn 20 times, owned for x number of months or anything. There was no black and white answer.

Pip: In fact, you had only worn them once.

Madeleine: Yes, this is a fact. You can see the tread, there’s no print of a foot inside, there’s no shape of my foot. They are like new shoes. So I drop the shoes off. Don’t hear back from the store. Six weeks later I make contact – don’t hear back. Three weeks later, I again make contact. Finally, I hear back with a response that it’s ‘wear and tear’. I simply express very politely that I think this is unacceptable. I am dissatisfied with this response, I need another response, I need some action to be taken. You are a quality brand. Globally recognised. I’m very happy and proud to support you but this is becoming an unenjoyable experience.

Pip: What would have been your advice to them, knowing how you build customer practices in your business? What would you have done?

Madeleine: Instant reply. Then look at the shoes and decide to send them off to the manufacturer to have them test- "instant reply... ed. Somebody should contact me that day ideally but the personalise it... following day is totally acceptable. Personalise it – thank you very much for dropping off the shoes, we are attending just keeping me to it immediately. It may not be a short process so please do in the loop. with bear with us. Just keeping me in the loop. And with that, I would have felt heard and it would have validated how I was that i would feeling. Instead it was a really appalling experience. I did not have felt heard feel valued or cared for. and it would Pip: That’s very interesting. The digital world, we’ve talked a have validated bit about in the past, Maddie. It has changed categories and, in fact, it has changed your category particularly, hasn’t it? how i was How many pictures of food places do we see up on Instagram? feeling." How do you feel about the digital world and restaurants?

Madeleine: I think it’s a wonderful thing. In the Rock- pool Group, for example, we have three people employed full-time to manage all social media. Neil Perry has been very much on the front foot for this. Many years ago he

Closing the Gap · 63 was tweeting, blogging, always encouraging all of us to be active with our own accounts. So I see it as a very positive thing. We are all online. We will read a review of a restaurant before we go there. We will look at a menu before we go there. That’s what we do. We will effortlessly research, will look at Instagram, will look to see what’s savvy, what’s happening. Our group post two blog posts per day. We have had Instagram for the last 18 months. This has been rampant, it’s a real go-to when it comes to social media for us. Twitter a little less so because it can be a bit contro- versial. Facebook is very active and obviously our website. It is key to make sure it is very easy, really easy to navigate so you can be six years old or whatever your age, whatever your capability, you can go and easily work your way around our website.

Pip: Have you changed on the floor, do you think as a result of social media?

Madeleine: To be honest, I applaud people who complain in the moment. If someone says your steak is not good enough, you have under-poured my wine, whatever the case may be, I will celebrate that moment. I will thank them and let them know so many people would not have the spine to say something, and would then leave, jump on social media and be mean. These people need to realise that their voice makes a massive difference, because we see a common thread that the steak isn’t great. We see a common thread, we can fix something, we can change the situation around, they will leave if we do our job well and they won’t remember the steak not being great or the wine being under-poured, they will think that guy was amazing. It becomes part of the story. Social media is really powerful and the digital world is imperative and it’s how we will grow, it’s what we are becoming.

Pip: I think we’ve run out of time, Madeleine, which is very sad so I just want to thank you very much for your time. It has been really amazing to talk about two things; the care you take with your customers and how that feeds down from Neil himself and is part of your culture. How it starts from a leader and filters through to the people and then down to the consumer – that is really interesting. The other thing that is really interesting is this constant need for real time. So not just for brands to respond in real time but also for the consumers to stand up in real time as well. I think they are two really powerful outcomes of our conversation.

Madeleine: Excellent!

Pip: So thank you and everyone who is listening – thank you for your insight. Thanks very much, Maddie. Really interesting getting some thought lead-

64 · Closing the Gap ers in here, not necessarily working in marketing departments, but in your industry where you are at the coalface.

Next week we have Andrew Baxter, the CEO of Publicis, talking about the change in consumer experience mapping and the chaos of the consumer wanderings as we call it. This is about the importance of plotting that you need to build your customer experience.

Thanks very much, Maddie.

Madeleine: Thanks, Pip.

Closing the Gap · 65 World Of Style - Personalising The World Of Customer Experience

Over the weekend I stumbled across the Porter Davis World of Style Showroom in Port Melbourne and was blown away by the flawless BLOG execution of a great customer experience; a customer experience that other brands can learn from. In its own words – the World of Style By Selma Mehmedovic 19 / 05 / 2015 experience isn’t about sitting down in a static showroom and making BrandHook Blog selections from photos. Instead, it is designed to engage your senses and excite you with a huge range of different possibilities, and the showroom certainly achieves this, by taking each different customer on a personalised journey of their very own.

A recent Infosys survey reported that 78% of consumers are more likely to be a repeat customer if a brand provides them with targeted, personalised offers. And this is something the consumer is willing to pay for, too. According to a RightNow Customer Impact Report, 86% of consumers are willing to pay up to 25% more for a better customer experience.

While personalised experiences have often been discussed in the context of retail, the World of Style Showroom demonstrates that the same principles can be applied across any category. At the entrance is a wooden station with iPads where you can complete a quiz that determines your interior design style. There are two parts to the quiz – the first determines your overarching style (contemporary, design- er, resort or classic), while the second narrows this down into four sub-styles inspired by famous international cities. After navigating through the quiz I was excited to find out that my style is contemporary, inspired by New York, Berlin, Bondi and London. I was then given a card for each of the sub-styles, outlining the key features that define it. This process was both educational and engaging, helping me navigate a category that I enjoy but have very little understanding of.

What impressed me the most about the World of Style showroom is that the customer is at the centre of the experience – every element is anchored in and personalised to each individual customer’s needs. So as the brick-and-mortar becomes less about price and product, and more about experiences, what can customer-facing brands learn from the World of Style Showroom when it comes to personalisation?

66 · Closing the Gap Let’s have a look:

1. Technology can be utilised to identify needs, as well as simplify and enhance the overall experience. 2. The path through the store is an often overlooked but crucial consideration, which can be manipulated to take customers on a more relevant journey. 3. Education and inspiration are a powerful way to strengthen a customer’s connection with the brand by creating an opportunity for more meaningful future interactions.

So with so many opportunities for personalisation (think communication, customer service, and store experience among others) what are you doing to understand and acknowledge your customers indi- vidually?

Let's Get Physical - Creating A Frictionless Experience For Consumers

“WE NEED TO BE MORE DIGITAL”…is the cry from many a boardroom chief across the land. Spoken with confidence and pa- nache, these words are generally enough to put fire up the behinds of BLOG many brand executives *cue agreement, some chatter and a flurry of By Greg Braun digital brand activity*. 27 / 11 / 2015 BrandHook Blog And they’re right of course. With the amount of time being spent online increasing as well as a surge in mobile ecommerce (not to mention VC investment) in 2015, this feels wholly intuitive.

But I would like us to stop and spare a thought for physical marketing because, let’s face it, this is (also) the world we live in. Physical is, and will always remain, an important antidote to online – and a combination of the two, cleverly executed, will surely win out. A recent independent study by Royal Mail in the UK demonstrated the (often overlooked) value of physical mail to the consumer – that lead to a number of commercial outcomes.

Havas Media are emerging as thought (and action) leaders in creat-

Closing the Gap · 67 ing content and experiences that are both seamless within and across physical / digital platforms. There are some great market examples:

• LEGO Fusion – Children use the physical LEGO bricks to create the car, house, castle they wish to play with. Using an accompanying app, they can scan and upload their creations into a digital game. • Scribble Stylus – By holding the stylus to an object, it can capture the exact colour and shade and transfer it into the digital world. Great for those wanting to match interior design sections or simply create more true to life images. • Porter – Ignoring the mantra “print is dead” Net-a-Porter launched a print magazine that now rivals fashion mag giant Vogue (UK). Their shopping app allows customers to scan products they like redirecting them to a purchase page. Simple but extremely effective. • More recently, gimmick factor notwithstanding, Domino’s continue to please their audiences with some simple but potentially highly effective tech innovation. The arrival of their new ‘’Easy order’ button literally allows you to order your favourite pizza “at the touch of a button”. (Also comes as an app for those not ‘lucky’ enough to be eligible for superfan status).

As time (and not money) becomes the new consumer currency, the emphasis is now on brands to provide maximum value and meaning whilst reducing the amount of time they need to invest to get it. Jay Baer talks about this at length in his book New York times best seller, ‘Youtility’.

Frictionless Experience as a concept is something brands will need to increasingly prioritise in order to warrant consumer consideration. At BrandHook, we’re constantly developing ways to understand the consumer mindset that help close the gap between the experience consumers want and the experience brands offer – however they chose to access it.

68 · Closing the Gap chapter 6: The second way to close the gap - understanding the Customer Journey with Andrew Baxter, CEO at Publicis Worldwide Australia

THE CONSUMERS' WANDERINGS

Customer experience mapping was de riguer in the late 90s. It is a much harder concept to map a customer journey today as their behaviour is more complex. But with the customer wanting delivery of their products and services in real time, brands must work through the myriad of channels to build a picture of how the consumer chooses your brand. The second way to Close the Gap is to truly understand the consumers’ wanderings.

Closing the Gap · 69 About andrew baxter

Our guest for chapter 6 was Andrew Baxter, the CEO of Publicis Worldwide Australia.

One of the largest communication agencies in the country, if not globally, they have agencies that cover advertising, loyalty, digital, strategy, production video and so on. In fact, all parts of the customer journey which is great because that’s what we are going to talk about today.

"surrounding yourself with change-makers is another great way of understanding this marketing evolution and embracing it."

70 · Closing the Gap Pip: Hi, Andrew.

Andrew: Hey.

Pip: This is the second chapter in which we are going to detail the seven ways marketers can close the gap between how consumers are behaving and what businesses are actually delivering. Last week we talked about delivering a Consumer Practice and this week we are going to talk about the Consumer Wanderings. Andrew, we learnt about consumer maps in marketing at Monash – yes, it wasn’t long ago. We used to have a consumer map on the walls in the marketing area with Virgin when I was there. You would map out how consumers are getting to you and what their experience was like with you. And that seems to have gone since the digital evolution and has caused chaos in marketing departments, which leads me to my first question. IBM did a study last year that said only 30% of CMOs globally feel prepared for this digital transformation, or as we like to call it, a marketing evolution. How do you feel about that stat?

Andrew: I’d agree with it. I think there are two parts to it. One is this whole CMO, CIO disconnect where the CMO and CIO are not always aligned within an organisation. Sometimes it is the CIO who is controlling the purse strings in that digital transformation and they are thinking from an operational point of view as opposed to a customer point of view. Now I think that IBM themselves did a separate study to this one that talked about that CMO/CIO disconnect. Obviously, the more successful companies that transformed were the ones where the CMO and CIO worked together or they were one and the same job. If you think about governance as an example, when they have set up websites it has all been about telling someone about something rather than servicing the customer. And there has been a big swing back in recent times to customer-centric websites. UK.gov is a really good example of that. You know, simply written, easy to

Closing the Gap · 71 understand, quick to navigate, unusual for a government website to focus on the customer. I think the reality is that the world is changing and a lot of marketers have been scared about that. We often talk about the fact that 75% of the revenue of an agency business eight years ago was probably around brand and 25% around customer. It is probably now the other way round, where agencies are earning their keep by really understanding customers as well as continuing to do brand work.

Pip: Do you think the CIOs have tried to take ownership of the customer? Is that why the CMO relationship has been tense?

"We often talk Andrew: I think they have tried to take over – someone said we need to build a website, we need to build about the fact that some digital assets for this and it has become more of a 75% of the revenue production or operational driven outcome as opposed to a customer-centric outcome. I think that is chang- of an agency ing – in the last few years we have seen a big swing business eight back the other way. It probably started because someone said, ‘Well, we are going to build a new website years ago was or a new app or a mobile something and the CIO has probably around said ... well, that’s my department, I’ll do that.’ So we didn’t have that CX UX thinking that is really pushing brand and 25% through at a rapid rate now. around customer. It Pip: Yes, so now onto the Customer Wanderings. The is probably now the new digital world has made it more difficult if not other way round..." impossible to map the path to purchase. We are seeing with our clients that there are fragments of that journey that people are able to measure and use in return for their investment in their conversations but very few people are able to track the whole experience. What kinds of things do your businesses recommend to clients to keep a handle on their Customer Wanderings?

Andrew: I agree with your point at the very start that customer journey wanderings is back as a huge trend. We did one recently for one of our major tourism clients and you have never seen so many post-it notes on a wall. We would have mapped these things out 20 years ago – there certainly weren’t as many iterations within tourism as a compli- cation of third parties who are selling tourism tours as well. So thinking through every possible step of a

72 · Closing the Gap customer journey is really important. As marketers, we are always trying to simplify things and we have a methodology here around the customer journey mapping which is around mapping it out, finding the gaps, and hacking the areas that are clearly broken that are causing customer dissatisfaction in a big way. Hacking or re-creating the experiences that are driving the most revenue and really trying to concentrate on those and tweak them and improve them and evolve them, and then tracking it. For us it is about map, gap, hack and track and again, we want to have simple language around that.

I think you have to understand everything about the customer. As marketers, one of the things we were always taught from right back at university days was that you need to understand the customer. Well, understanding the customer now is a lot more complex but it is still something that is imperative for us to do. There is a huge amount of data available today which is terrific but you have also got to drive insights out of that data, and insights out of those journey maps to deliver a great result at the other end.

Pip: It’s interesting about the data but getting to the heart of the issue and having those ongoing conversations that are almost qualitative as well as quantitative is difficult. If you added the wealth of that knowledge to that customer experience map it does become frightening for CMOs. It is why, I can understand, they are feeling a bit frightened and fearful.

Andrew: Yes, there is all that information but if you bring it back to the question of what are the biggest one, two or three things we can do. You know you can’t try and do everything at once. You start from the biggest downsides and the biggest upsides and then you work from there. That’s where it’s got to get to, otherwise you have got to change too much at once.

Pip: Yes, we are working with a client at the moment who wants to build an effortless customer experience. As you say, working out the biggest pain points and then trying to solve those has been an interesting process.

Closing the Gap · 73 Andrew: Although companies are now starting to do this quite well for their brand, one of my biggest bugbears is that when they launch a new product they forget to redo it and this is what we are finding in a big way. Someone might decide it is a good idea to launch product X and it might be an insurance company or a bank but they have forgotten to tell their frontline staff. They have forgotten to train their call centre properly. They forget to tell them until the night before. Or they’ve built pain points in that they don’t know about. They get so focused on getting it out to market, getting a beautiful product and a nice ad campaign to market it. They actually forget about some of the practicalities that are going to drive people mad. This can cause a slow uptake. That’s the place where I think agencies, in the future, can come in and help and provide that helicopter point of view and sometimes it is the bleeding obvious. You can get so caught up in launching a new product that you forget to again map out what is going to happen, or what potential things could happen.

Pip: One of our clients has just launched a new App but they hadn’t really covered all the benefits in the Android version of it, which is a classic looking-at-it-from-a-top view. Have you seen any clients map out the customer experience? Pop it up on the wall like we used to do in the old days?

Andrew: I think in the last few years there has been a big sway towards design thinking and ethnography – you guys do it. We have just created and tested the App for the 49ers new stadium and if you haven’t seen it, I can send it to you. You know if you want to find out where the shortest toilet queue is, it will tell you.

Pip: I love that!

Andrew: If you want to order a hot dog from your seat and get it delivered to your seat, you can or it tells you when it will be ready to pick up. It’s got your parking voucher on it, it’s got your tickets on it. Our team did a whole lot of ethnography with customers the season before they moved to the new stadium to find out what they were doing, when they were using it. Then they found really interesting things about video usage on mobile devices being higher and lower during a game and therefore what they need. Again it seems obvious and it’s not often done. I know we have fancy terms now about ethnography and that classic design thing, and I am seeing those that are doing it well are working in those spaces.

74 · Closing the Gap Pip: I love that. I wanted to invent the app on car-parking but apparently someone is already doing it where you can park in people’s driveways. I also still want to create a different kind of parking app - if you still have money in your meter when you leave your spot, you send a no- tification to the app and say there is half an hour for a park in Bourke Street, come and take it.

Andrew: Ah, that’s cool! I think I saw on the internet a device for your car. So in a multi- storey car park the device is going to tell you, via your phone, exactly where your car is.

Pip: Yes, I am quite excited about the new world! What categories or brands do you think were taken by surprise by the digital transformation?

Andrew: I think the packaged goods, FMCG Consumer Goods or whatever you want to call it, really struggle to find a way in the digital world.

Pip: When we left university, it was classic training was to try to go to Colgate, Unilever, you know one of the larger FMCG brands and you would be trained in brilliant marketing practice.

Andrew: So the ones that did do well, are brands such as Coca Cola who clearly use social media very well to continue to drive relevance and popularity of "someone told me their brand. Then you look at someone like Huggies, whose classic brand essence is – we want to under- there were only stand Mums more than anything else, we want to two pages of give Mums more time with their newborn. So therefore we are going to create products like nappies or Huggies out of a wipes that make their job quicker, easier so they can thousand in that get more quality time with their child. They extrapo- lated that out in Australia to Huggies.com.au which website. But that ended up being a thousand pages of information was all about them about being a Mum. If you type in – my baby is not sleeping – there is a whole lot of interesting stories, understanding articles, blogs, forums in there. I think at one point their customer someone told me there were only two pages of Hug- gies out of a thousand in that website. But that was [mums] and giving all about them understanding their customer and them something giving them something they need. I believe Nestle did a similar type of website in the they need." UK. Very clever but they found their reason for being. I think for some of the cooking products

Closing the Gap · 75 they were unable to do that because it was all about recipes but there are other products out there that are still in no man’s land.

Pip: It’s actually an interesting thing we talk a lot about – and we are talking about it next week – Story-Doing not just Story-Telling. FMCG brands are so restricted by their selling channel that I think good relevant stories can actually take themselves out of that and create value outside of the shelf and do that well.

Andrew: Very different marketing FMCG, it’s very different from 25 years ago.

Pip: Yes, it was easy then, right?

Andrew: Well, there was a formula to it.

Pip: Yes, there was. You put your 30 second ad on the TV, you go and compare two products at the shelf and then you would buy one. So my last question, Andrew, is – what advice would you give clients who really need to battle this evolution? What do you think people should be doing to get a handle on it and moving forward?

Andrew: I think there are two things. One, the best bits of advice I heard seven or eight years ago was just involve yourself in it. Try it yourself. Then do it, try it, use it and understand it because that is what everyone else out there is doing. I think nowadays everything is targeted digital campaigns. For example, you can try a $5,000 Facebook campaign and see what works and what doesn’t. You know AB testing is really simple to do and my easiest bit of advice is to dabble. The extremes of that were major global clients like Unile- ver or P&G coming out seven or eight years ago and saying, ‘Right we are going to shift 70% of our media spend into digital.’ They did it at an extreme level that forced the companies into change. Clearly there’s categories like automotive, where 70/80% plus people are doing seven or eight hours of research online before buying a car so there is a real role to play and they’ve got to be there. So I think the experimental side is critical. The other part is surround yourself or go and speak to

76 · Closing the Gap change-makers, entrepreneurs, accelerator businesses – go and have interesting conversations and be a great ideator. In fact, 500 years ago is one of my favourite things to talk about. You go back to the Medici family and they used to surround themselves with Michel- angelo and other interesting people around the table. As well as the leading bankers and financiers, have other interesting people, because the more you get that diverse thinking, the more likely you are to get to a great idea or a great solution. You see sports teams do that now. Coaches don’t surround themselves with people who think the same way as them. There’s no point in having four people tell you what you already want to hear, you want four people telling you four different things and then you make a call on what the right or best solution is going to be. I think surrounding yourself with those change-makers is another great way of understanding this marketing evolution and embracing it. I mean, that’s why I say to people – just embrace it!

Pip: Yes, winners have a crack at things. We have said just experiment, don’t spend a million bucks on something, spend ten thousand on something that can be interesting or can give you a flavour for the success and just have a go at it and track the results.

Andrew: Indeed – got to do that!

Pip: Well brilliant, thanks, Andrew. Thanks everyone for listening.

Talking about change-makers, next week we have Kristian Taylor-Wood who is a famous photographer and he is going to be talking to us about story-telling and about how he uses images to create stories. Thanks very much, Andrew.

Andrew: Thanks Pip.

Closing the Gap · 77 Not Plotting The Customer's Wanderings - A Eulogy For Blockbuster

As you may or may not be aware, Blockbuster used to be a pretty big household name. It was a name synonymous with family nights, date BLOG nights, weekend movie marathons and even lazy hungover Sundays (for those who were so inclined). Droves of teenagers, families, sen- By Alex Johnston iors and anyone else who was old enough to go to their local Block- 24 / 06 / 2015 buster would queue up any day of the week to rent the latest Adam BrandHook blog Sandler/Drew rom-com Barrymore (yes, they were dark, dark days). Fast forward to current times however, and the Millennials of this age consider Blockbuster a relic of the olden days (if they even know what it is at all). Much like Adam Sandler, Blockbuster has faded into obscurity.

‘So what happened?’ I hear you hear scream in confused and awed surprise. From having $6 billion in revenue in 2004, to going bank- rupt in 2010 and then continually struggling with re-launch, Block- buster’s decline was one of the most prolific (and surprising) business disaster stories of the era. Well, my excitable friends, wait no longer, I will tell you what happened. Among other things, the simple answer is they failed to plot their customers’ wanderings.

In 2000, Blockbuster laughed off offers to purchase Netflix for $50 million. You may have heard of this little company…? In 2015, it saw its customer base reach 57 million subscribers worldwide and its revenue just hit $1.48 billion, so I’m guessing you may have heard of it at some point. Needless to say, with the advent of the internet and Netflix, consumers were using new and different ways to watch their movies/TV shows and our old friends at Blockbuster failed to track these changes in consumer behaviour. Netflix (among other streaming sites) offered a cheaper, more effortless channel of giving consumers what they wanted. This wouldn’t have been possible without the digital transformation and just goes to show the power of technology and the power of the consumer. By 2016, Netflix is aiming to be available all over the globe and is currently considering options for breaking into China.

The biggest issue for Blockbuster is that it’s just not convenient anymore. Thanks to technological advances, what used to be considered an intuitive and handy service is now troublesome and inconvenient. Why take 30-40 minutes to pop out to a local store and browse for recent releases when you can sit at home, use either your TV, laptop,

78 · Closing the Gap tablet or phone, and take two minutes to decide what you want to watch (legally or illegally, we’re not here to open that can of morality worms). And much like the technological landscape surrounding it, the customer journey to purchase has completely changed as well. Now the only real pain-points are 1) being connected to the internet (not even an issue if you pre-download something) and 2) the cost of subscription to various services.

It took roughly six years for the demise of one of the largest brands in the world at the time. By being too ingrained and inflexible, (i.e. not tracking the consumer wanderings), Blockbuster died a horrible death. But from this death we can learn a valuable lesson. For any business in any market, it is crucial to keep your metaphorical ear to the ground, discover and track your consumers’ wanderings and then react accordingly.

Airlines: the world's worst innovators?

Long time readers of the BrandHook blog will appreciate that I have a history of sharing travelling experiences, so it should come as no surprise that after being awake on a plane for a very long time recent- BLOG ly, that this blog is once again about the travel industry. By Paul Dixon 30 / 10 / 2014 It was somewhere in the 13.5 hours between Abu Dhabi and Sydney BrandHook Blog that I had an epiphany in cattle class – airlines are terrible at innovation – and I know the reason why. Before giving the golden answer, here’s some of the thinking that led to my eureka moment.

On the way to London, I flew business class for the first time. I used points to upgrade and was able to work in comfort and privacy, eat with ample room to use the fancy cutlery and sleep in a proper-ish bed, with a proper pillow and proper duvet/doona. The experience

Closing the Gap · 79 was amazing, and while I was happy enough to return to economy for the second 6 hour flight, the adage that once you go business, you never go back, was ringing true. So what has my airline done about it? Nothing. The return leg I was back being the low life pleb in cattle class, the points may have appeared in my statement but there’s been no follow up on my experience, communications to keep me flying business or any temptation to lock me in again. This is a CRM opportunity that has simply gone missing.

So as I lamented on a missed opportunity, I started thinking what innovations the airline sector had implemented in the last 20 years, and I struggled to think of many. The fact that they had run out of meals when they got to me, the air con being broken and the 4 year old’s tantrum that lasted close to an hour probably didn’t help my frame of mind, but I struggled to identify anything lasting or what I thought was meaningful.

Premium Economy has been introduced, which address the need that sits between economy and business class, but with the exception of some airport lounges and Wi-Fi on the plane, what else new and exciting has been introduced? To me, it seems the sector has gone backwards – even a Melbourne to Sydney flight years ago seemed to be an hour – now it’s 1.5 hours.

Further investigation found a couple of ideas that have been launched recently – Thomson Airways is considering introducing new seating arrangements that at the back of the plane, would have kids and parents facing each other – in a booth type arrangement. The Guard- ian is reporting developments of the windowless plane. These may appear to be innovative in their design but are they good innovations? Thinking of the seating arrangements – who’s need is it addressing – the families or the non-families? How does it get executed – are all families in the same part of the plane? What happens with families of 3, 4 or 5?

The BrandHook approach to innovation is anchored around unmet needs. Ideas and innovations that aren’t built around addressing the unmet need, are just ideas. So our questions for the latest ideas would be – what is the need they are addressing and are you catering for the right audience with the innovations? Identifying unmet needs isn’t as easy as asking the question – someone isn’t going to be able to tell you what is not being met. You only uncover these by flying with people, spending time on their journey and understanding what’s important and needed within their travel experiences. So if any airlines would

80 · Closing the Gap like to fly with me in the next couple of months, I’m more than happy – but as a pre-warning, at the moment, it’s not going to be a pleasant experience.

So what should airlines be doing to improve the customer experience? Let us know your thoughts on Twitter.

Closing the Gap · 81 chapter 7 part 1 The third way to close the gap - Storydoing, not just StoryTelling. with Kristian Taylor-Wood, photographer and creative director

THE IMPORTANCE OF STORYDOING, NOT JUST STORYTELLING

Just shouting about your brand essence through your customer communications will not get the connection you need.

Consumers now want transparency and authenticity in their interactions with brands. Given the amount of information that is currently available to them, there really is nowhere to hide.

So what does transparency and authenticity mean?

Transparency is showing your consumers what you do and following through with what you believe in. There is no way brands can get away with saying one thing and doing another.

Authenticity means defining your brand story and being honest with ‘who’ you are. A great brand story is something that is lived, not made up. The starting point is to remind yourself where the brand began and anchor it in that heritage

Brand storytelling remains an important way to connect and remain fresh in your consumer’s mind. The Content Marketing Institute states that 70% of US consumers say content marketing (storytelling) makes them feel closer to that brand. But the extra step of storydoing is now vital to be seen as authentic and therefore worthy of their custom.

82 · Closing the Gap About kristian taylor-wood

Our interviewee for Chapter 7, Part 1 was Kristian Taylor-Wood. Kristian is an acclaimed photographer who started his career working in London’s infamous cult magazine ‘Dazed and Confused’.

His latest showing, High Scrollers, is a series of portraits of Australian social media identities.

"I think in brands and advertising we are having the biggest shift of how we ingest advertising since TV first came around."

Closing the Gap · 83 Pip: Hi, Kristian.

Kristian: Hello!

Pip: So we are going to talk about the first part of storytelling with you Kristian. To fill you in, the whole podcast series is about closing the gap between how consumers behave and what businesses are actually delivering. We have proposed seven ways that businesses can now employ to close that gap and one of them is around storytelling but with particular focus around storydoing, not just storytelling. I thought it would be really good to talk to you about storytelling and how you use pictures, visuals and images to tell great stories.

Kristian: So this is going to be part 1 or 4 because I talk so much that you are going to have to split it into four different chapters!

Pip: Totally – that’s fine.

Kristian: Because I’m a story-teller.

Pip: You are a storyteller! So we are going to talk about the storytelling part of it and get your view on how brands can tell great stories.

Kristian: Cool.

Pip: So I am going to ask some questions, are you ready?

Kristian: Ready – fire away.

Pip: Let’s start with you telling us about your latest collection of pictures.

Kristian: Okay. So my new series is called High Scrollers and High Scrollers is obviously a play on High Rollers and Scrollers. Basically, it’s a play on words about how much we scroll through images and how fast - it is just a technology that I am fascinated with. I think everyone is really fascinated with social media at the moment. I know I am. I remember sitting behind this kid, well, he was ear-

84 · Closing the Gap ly 20s, on the bus. I was watching him on Instagram and this guy was going like lightening. Brrrrrm, like flying through the photos, stop and comment. He would not stop for more than two seconds on one photo. I thought, my God, what does it all mean? And I know so many brands want to associate themselves with social media but how much do people really ... sitting behind this kid, take in? How permanent is one post on Instagram? well, he was early 20's, on the bus. I was watching I was looking at a post of a friend of mine, Lauren Windsor. Lauren Wind- him on Instagram and sor is a tattoo artist and she has a very this guy was going like particular style – it’s very cupcakes and print and Disney princesses, it’s cool and lightening. Brrrrrm, like edgy at the same time, almost like Punk flying through the photos, Princess, I think. She has got thousands of photos and she has a blog as well and stop and comment. she is getting flown all over the world, all He would not stop for more the time. Miley Cyrus flies her out to LA about four times a year to give her a tat- than two seconds on one too. Katy Perry came out to get a tattoo photo. I thought, my God, by her. She is super young and is doing so well and she really inspired me. what does it all mean?" Off the back of that, I’m always thinking – what can I photograph, what is my new series, my personal project, what is it going to be about, what is my inspiration? I am a portrait photographer so I try to link all the stories together somehow. I thought, wouldn’t it be cool to do a series of portraits about what this new fame means? It’s like we had the Hollywood stars and we were obsessed with them. We had our crushes, you didn’t really know much about them, just what you see in the limelight. Whereas social media stars, they are putting their lives out there on the line. You see everything. Obviously, they are trying to project their best selves and so I just thought that would be really interesting to shoot them and see what they do and how they project themselves. I can take an element of what they do and shoot them in a Hollywood glam book with a modern twist on it and do my own take of basically what they look like so that is how I came up with this portrait series. It is a very stylised creative portrait series, I guess.

Pip: So the story, tell me if I am right or wrong, you are trying to tell through those images is almost the irony of it, that you are taking them out of their comfort zone and how they want to be projected and your version of it?

Closing the Gap · 85 Kristian: Yes, and how I see them. Pip: So how do you plan your stories? You obviously got inspiration from one of your friends, who is a tattoo artist. How do you normally get inspiration to tell stories, where do they come from?

Kristian: Different things inspire me. Usually I find it quite difficult to be inspired in Austral- ia. Sorry, Australia, but I always get really inspired when I go overseas.

Pip: Is it because we are a bit boring?

Kristian: Wow, it’s like definitely the risk-taking factor is way down there.

Pip: Yeah.

Kristian: I was really surprised when I went to Singapore. I always stop over there on my way to England. I really like Singapore. I just remember being so wowed by the advertising they would have up, the posters. I’m into photography but these days, where do we look at still photography? Advertising and magazine covers is where we see it the most. In Singapore they were doing some really cool stuff. There were beautiful artworks. They were exploring photography, utilising it and making stand-out images. I think probably what makes England so great when it comes to sculptures, the best music and art, is that it comes out of hardship. My ex- brother-in-law is Jay Joplin, who owns the White Cube Gallery with Tracy Emin and Damian Hirst, and he said to my sister and I that he envied our tricky upbringing – our dark past. He didn’t have that, he went to Eton and he would love to be an artist but he didn’t come from that dark place. There was no creative kind of buzz. I guess it came out of us – my sister and I are very creative, because we came from some tricky stuff.

Pip: So, on the back of that what would you say to brands about building stories? We talk to our clients about how you have to go into your heritage, or you have got to find something out of your history that is your reason for being and in that nugget there will be something fascinating for you to work with.

Kristian: I think in brands and advertising we are having the biggest shift of how we ingest advertising since TV first came around. We have social media now and that is taking over everything. People are not really paying attention to TV anymore. Peo- ple are all watching stuff on their laptops. With social media there are new ways of story-telling and attacking things and doing things a lot differently. You just need to

86 · Closing the Gap be very aware of things that are happening, aware of things that surround you, where customers are, because customers are changing now. Think bigger, like the bigger commerce companies seem to be dwindling a bit and smaller companies can now get so successful by utilising social media and using different avenues of doing things. There are a couple of companies which stand out to me for being able to do this. Red Bull is one – they are just like a giant octopus, reaching out to every avenue and promoting greatness, creativity and adventure. And they do it, they are huge on social media, have their own channel. Another one is Adidas, everything they do is really cool.

Pip: They are both brands that are single-minded about the message they want to communicate.

Kristian: Yes, that is their structure, they know their brand, they know what it is so they find the people they want to go for. Adidas is hilarious, it’s like when Run DMC wanted to do their own Adidas shoes because they obviously wore the track suit with the shoes all the time. Adidas said no, we don’t want to be associated with hip- hop culture – they wanted to be a sports brand. Then the brand become really popular with street culture so Adidas thought, ‘Oh well, maybe we will hook into this.’ Everyone has said, ‘Yes, that’s what we wanted to you to do in the first place.’ It is always great to associate a brand with something, be strong in what you do. Red Bull does it with extreme sports stars, details their stories and backgrounds when they promote them. Young, up and coming people. Adidas does the same, the street culture. They know what they are about and so they cater to that market.

Pip: So your advice would be – understand who you are, know your consumer and take some risks?

Kristian: Yeah, absolutely and through that, take risks absolutely. If you are just doing KFC type of commercials on TV… well we don’t even know who pays attention to that stuff. Bucket of chicken upside down on your head, I mean, seriously. So just be creative and make people stop and say, ‘What the f..k?’

Pip: I worked in advertising for a long time, with your sister, and we would always hear from our "So just be clients – ‘Can you make our logo bigger?’ or ‘Our creative and brand colours are blue.’ I know that the creative directors I worked with were very frustrated by that make people experience. Most were trying to push the bound- stop and say aries. They would say to clients, ‘Here is a story, that’s obviously communicating the benefit of the 'What the f**k?'." brand but in a visually different and exciting way.’

Closing the Gap · 87 Kristian: Does no one watch Mad Men? Look at the Cadbury gorilla. There is no chocolate bar in that gorilla and yet everyone knows it, remembers it. There is brand love, brand loyalty.

Pip: But how do you convince clients to do that, though?

Kristian: I wish I knew – it would be great.

Pip: I think one thing we have found out during this podcast series is that a lot of marketers feel very frightened about this new digital transformation and I think when people are fearful they don’t take risks. I don’t think they really understand how the consumer is behaving. In the old days, we would put an ad on the telly and you would go in to a shop to look at the products, compare and then you’d buy them. But these days it’s chaotic and I think that frightens a lot of marketers. So just to finish, you talked about a couple of brands that told good stories like Adidas and Red Bull. Are there any other places that you think brands could go to for inspiration or any other products that you think are really amazing that can help marketers understand this idea of storytelling?

Kristian: Well, I don’t know. Like I said, we are social. It’s great there are advertising companies that are really attacking that one avenue and again like Adidas, they are coming up with great narrative stories, finding people to marry to their brand. In terms of finding out what’s good, look at the directors, go to Smuggler.com. Just find stuff that you love, find out who made it and go down the rabbit hole.

Pip: Do you think it’s very different from your ‘Dazed and Confused’ days? Where we are today?

Kristian: Well, I was at ‘Dazed and Confused’ in very similar years when they didn’t have any money, we were doing very dodgy stuff to get paid. All the computers in the office had said property of the LCP on the side of them because Rankin stole them all from the college. We had to lock them up at night in case the bailiff came. I think it’s probably a bit more legit than that. People just had a passion back then. You had ‘Face’ magazine and ‘Dazed and Confused’ and I guess there weren’t too many outlets like that at the time.

Pip: You were pushing boundaries from the very beginning.

88 · Closing the Gap Kristian: Yes, I mean there is not even a magazine like that these days. There are some cool magazines coming out with a cool angle but there is definitely not a mainstream thing that is smashing down trees and rocking it hard. People say there is no money in magazines any more which is weird because the front cover of a magazine is the number one advertising space. More people pass the cover of a magazine than anywhere else. I think it comes back to that we are becoming this sort of beige world where no one is pushing envelopes. And like I said, the creatives that came out of London came out of dark times. Some of the best music came out of Thatcher’s Britain. So maybe we just need some ‘shitty’ times.

Pip: Maybe we need a depression.

Kristian: We need a depression or a war.

Pip: Oh Kristian, on that note – thank you and everyone for listening. Thanks, Kristian!

Closing the Gap · 89 chapter 7 part 2 The third way to close the gap - StoryDoing, not just StoryTelling, with Dan Gregory, CEO, The Impossible Institute

90 · Closing the Gap About dan gregory

Our guest for Chapter 7, Part 2, was Dan Gregory CEO of The Impossible Institute. Dan is a regular on the Gruen Transfer, a C-Suite advisor and a creator of cultural change. This way to close the gap is about storydoing, not just storytelling.

"I think that in terms of human connections, businesses have been probably too reticent to use the power of stories in their communications."

Closing the Gap · 91 Pip: Welcome Dan. Let’s get straight into it. How important is it that brands have strong stories?

Dan: I think it’s incredibly important. I think that if you think of the way human culture has evolved over the past 65 million years, the way we encapsulate our values in the shortest, the most convenient, the most easily shareable and even understandable way is through stories. If you think about every culture that exists on the planet, we are all the sum of our stories, whether they be reli- gious stories or philosophical stories or historical stories – that is what builds us as a culture. I think that in terms of human connections, businesses have been probably too reticent to use the power of stories in their communications.

Pip: What does stories do for brands? You said that it gives them a reason for being and it gives them some authenticity. What else do stories do?

Dan: Well, I think it allows you, in a very credible way, to package your values up. Because if you walk into any boardroom in the country you will see a mission and vision statement up on the wall and perhaps a collection of values. But if I walk onto the factory floor and ask any of the employees if they can tell me what the values, vision and mission are, I doubt they can. However, if there is a story that brings those to life in a visceral way and that story is understood by the staff, that’s the sort of thing they can recite back. I think that is what is really critical in the power of stories, it allows information to be condensed in a very memorable, sticky way.

Pip: So when you are in this situation and are talking to the CEOs, how do you help them unearth their stories, how do you search for that story?

Dan: I think what you want to do is to build stories around experiences. Because

92 · Closing the Gap those are the things we remember. Typically stories are not built out of – well, the brand "...what is really said this, so I pass it around on their be- half. Whereas an example of an experience critical in the power is – well, every year I buy my goddaughter of stories, it allows Darcy a charm for her charm bracelet, that reflects the year we spent together. This information to be year I took her to Tiffany and she had the condensed in a very experience of how they treated her – not as a seven year-old looking for a charm but memorable, more like a twenty-seven year-old, looking sticky way." for an engagement ring, which she will be one day. Essentially that was a far greater story in terms of the experience we had with just a customer service staff member than anything they could have said to me in their advertising.

Pip: We suggest to our clients to look for their stories in their history and in that history there will be a nugget. Brands were born out of a reason to be and often you forget that it is a hundred year-old brand and to go back to its story. Why did the founder create this business in the beginning? Then it’s time to work with that nugget to build on the story.

Dan: I think you can almost invent some of that. As part of our business, we work with entrepreneurs. We were working with an entrepreneur the other day, a tree arborist, who makes sure that the tree that gets cut down does not get wasted. For the other part of his business, he turns the tree that gets cut down into furniture.

Pip: Oh, wow!

Dan: One of the ideas that we talked about with this arborist was that as they take the tree that has been cut down into furniture, to etch or to carve the story of that tree into the furniture.

Pip: Beautiful.

Dan: So it is just not a bench in the backyard or a coffee table in the lounge room, it is a story piece that people get to tell every time someone asks them about that piece of furniture. ‘Well, actually the story is carved into it so let me tell you about it.’

Pip: I love that – that’s brilliant! At BrandHook we believe in storydoing, so one of the things we think is great is to have

Closing the Gap · 93 a story but to demonstrate that within the customer experience. One of the brands we talk about is Twillory, which is the men’s shirt brand you can buy online. When you buy your shirt and they deliver it to you – you get another package which is where you can put your old shirts in, send it back to them and they will launder it and send it onto their career change charity. You know what I love about that – they could say we’d give 10% of our money to the homeless and that’s great but they’ve gone that extra step to say, we really believe in this, this our philosophy, we are going to make this a part of our customer experience.

Dan: Well, they are walking their talk. Look, another great example of that is TOMS Shoes. You know it actually doesn’t exist in Australia except for online. Their story is every time you buy a pair of TOMS shoes, a pair of shoes gets given to a person in the third world who has no shoes. I bought my reading glasses from TOMS and when you buy a pair of glasses from TOMS they pay for eye check-ups in the third world. So again there is a congruence between the product that you buy from them and the experience and the story that goes behind it. Twillory’s is exactly the same. It’s not like they’ve backed a charity that’s completely disconnected from their core competency. While providing clothing for people, they’ve actually linked their corporate social responsibility with the core of what their brand is so it seems less ‘put on’ or less of a token gesture.

Pip: Yes, it seems more authentic. Do you struggle with the employees wanting to adopt this sort of a story? Do you see resistance when you start to explore stories with brands?

Dan: Yes, but I think part of the reason we see resistance is we don’t give people the tools to make it happen. So my business partner Kieran and I were recently buying some office furniture in Ikea. I mean, usually I hate Ikea. You go in looking for a bookcase and they bring out a flat pack box and say, ‘Here you are, go and put that together yourself.’ So I like to rip out a $50 note and say, ‘Here you are, put that together yourself.’ But we walked into Ikea, we were just after some office furniture. It was pouring down with rain outside, we walked into the foyer and there was a chalkboard sandwich board in the foyer with a handwritten note – it’s raining outside so we have cut the price of our umbrellas in half.

Pip: Great!

94 · Closing the Gap Dan: And so we went to speak to the manager because whenever we see something extraordinary, ok who did that? We want to "we need to meet the employee so we did that and we found that that is a sign they always have in create the tools their storeroom and they train their staff to for our people wheel that out when it is raining. So one of the things we do with customer service staff to generate is we say – be customer friendly, greet them those stories with your eyes first, smile from the inside. So we give them generic advice as opposed in customer to something that’s behavioural, that is service." story worthy. I think we need to create the tools for our people to generate those stories in customer service.

Pip: Yes, I interviewed one of the managers at Rockpool, Neil Perry’s restaurant, earlier in the series and she talked about care and how they are able to be so consumer focused. She said it’s because it comes from Neil’s care of the food suppliers and the wine suppliers and then that filters through to the people on the floor that he cares about and then that just naturally goes through to the patrons. That idea of care is lovely for business to take on board – not just to think about your segments or your tribes but to think about the people that buy your product and really care for them.

Dan: I think it’s about congruence of behaviour too. I think the other thing that is interesting in that model is Neil, who I interviewed for my first book. Neil treats his staff like his first customers. He sells to them and he sells through them and I think that there’s a congruence in his behaviour and it always comes back to what your Nan told you. Treat people how you expect them to treat others and them to treat you. I mean, it sounds trite but we don’t do that a lot in business and I think that’s a very human experience.

Pip: The brands with good storytelling and storydoing we talked about are fundamentally non-Australian. Are there any good Australian brands that you think are telling good stories or doing good stories?

Dan: Look, it’s an interesting question. Yes, there are and I think the people who do it well are people, for instance, in the food and resource production. People in the winery business tell good stories and anywhere where there is a good providence story. Even in South Australia, their entire positioning as a state is built around their territory. You know, the richness of the earth, all that kind of stuff. I think there are certain

Closing the Gap · 95 meat suppliers, like Lilydale Free Range Chicken, that tell the story of why they do what they do and I think there are a few brands that do that particularly well. However, I do think it over indexes in terms of raw food suppliers. We tend to be generally more interested in that.

Pip: Do you get much inspiration from overseas versus here? Do you find you get more inspiration and you are able to bring these experiences back here?

Dan: Yes and no. To be honest, I find that the work that we do with entrepreneurs teaches us more than the work we do with the corporate world.

Pip: Oh, really.

Dan: Only because they are more experimental. They should be more risk-ad- verse because it is their whole life but they are not. But yes, Kieran and I probably spend four-five months in the US every year. We have clients in the US and that exposes us to a broader world. I think generally a lot of the clients we work with here have an appetite for looking overseas as well. One of the interesting things about Australians is we are very laidback or supposedly laidback culturally but incredibly conservative commercially.

Pip: Yes, amazing.

Dan: We could be far more innovative than we are and it’s funny that American culture on the whole is more conservative culturally but more innovative in a commercial sense and I think we are a little bit the opposite.

Pip: Totally. I was talking to Kristian about this in last week’s series. He’s English and we were talking about how Australians are quite adventurous. When we go to another country we get up at nine in the morning and we tramp the streets until we can explore every corner. Yet commercially, we take no risks whatsoever.

Dan: Yeah, well compare us to the Kiwis and you know as much as it’s awful to ever say anything nice about the Kiwis but they are far more adventurous. We did a lot of work with brands in NZ over the course of the years and there’s an appetite for new. I think one of the problems in Australia is we have had it very, very good for a very long period of time and our attitude in politics and business is – don’t rock the boat, it could all go horribly wrong.

96 · Closing the Gap Pip: Yes, we said this yesterday – amazing things come from dark places. And we haven’t had very many dark places, really have we?

Dan: Well, in my early 30s, I travelled the world working as a stand- up comedian and almost no-one who is a stand-up comedian had a really smooth life. You were either from an ethnic minority, you were disabled, you had heartbreak or you were the fat kid at school, something bad happened in order for you to become funny. I think in some ways there is a malaise and an inherent laziness, not in terms of work ethic, but a laziness in terms of thought process, in Australians.

Pip: I agree. So now that we are living in this digital evolution, what can brands do to communicate and connect their story in this world?

Dan: I think what you want to do is to allow yourself to be responsive, in the moment, but you also want to design experiences for stories. I think you need to do both. We have spent a lot of time doing strategic work for clients that is far more about behaviour design rather than communications strategy.

Pip: What does that mean?

Dan: Essentially, we look at the environment, we look at the design environment, we’ll look at the kind of language that the staff use, we look at the kind of interface of the experience in the digital space such that the brand shows up in the behaviour of the staff, or the behaviour of the website, or whatever digital interface you are using. This needs to be done in a way that it typically isn’t. And then in terms of responsiveness, I had a problem with a brand the other day and I tweeted about it. I said – look someone from complaints had better get in touch with me or I am calling the ombudsman. I got a tweet back from the site saying – this is a corporate site, you will need to tweet to our customer service. I was like, seriously why would you say that publicly? Compare that to Morton’s restaurant in the US. It is a terrific story and I am sure a lot of people have heard it. Pe- ter Shankton was on a two hour flight to Newark airport in the United States and he was hungry so he tweeted Morton’s which is a steak restaurant in the US. ‘Hey Morton’s I am hungry, meet me in Newark with a steak?’ Now in the two hours he was in the air on the flight, a staff member at Morton’s saw the tweet, called head office and got permission for that idea. Then called the nearest Morton’s restaurant, 23 miles away from Newark Airport and got them to send a guy in a tuxedo to the airport to find out

Closing the Gap · 97 what flight Peter was on, go to the gate and wait there with a bag with some steak, mashed potato and garlic bread. Now, this is no way to run a business, you are not going to make money that way but how amazing is that in terms of story potential. All of a sudden your perception of Morton’s and your expectation of Morton’s is different and it is based on one story, one thing that happened once – and that’s the power of stories. A story allows you to redefine what a brand can mean, and what an experience expectation might be to close that gap – one story more than $10 million dollars worth of advertising could have done.

Pip: Oh beautiful – thanks, Dan. Thanks for your time.

Dan: It’s an absolute pleasure, Pip!

Pip: Thanks to all the listeners. Next week we’ve got John Broome, the CMO of Kelloggs, talking about the importance of the Intuitive Bond and how building an intuitive customer experience actually keeps that engagement with your customers. Yes, that was brilliant and we all agree that great stories do create great brand experiences and I think we will be telling this story, Dan, of sitting in a cafe and recording some good podcasts.

Dan: I hope it gets shared.

Pip: It will get shared. Thank you!

98 · Closing the Gap Woolworths #Freshinourmemories Anzac Misfire: How To Enrage A Nation

Once again a social media faux pas has hit the headlines. This time it’s an attempt by one of Australia’s largest supermarket chains, Wool- worths, to show support to the upcoming 100th anniversary of the BLOG ANZAC Gallipoli landings. Spectacularly blowing up in their faces, By Chris Binney this campaign didn’t even last 24 hours. 17 / 04 / 2015 BrandHook Blog For those unaware, Woolworths, with help from their ‘experiential agency’ partner Carrspace, added a meme generator to their Face- book page. In their minds at least, this would allow people to create their own profile or cover pictures using images of those ‘affected or lost to war’ so that their memory could live on. The problem: that Woolworths’ branding and less than subtle references to their ‘fresh’ brand positioning was included in the meme itself. While Wool- worths deny that it was a marketing ploy, you can’t help but think their hope was for this to go to the masses with their brand plastered over as many Facebook pages as possible. Viral marketing at its best really. Unfortunately for them however, it failed miserably.

Again, I’m sure this campaign, like all the others that have been found guilty in trial by Twitter, started off as a really amazing idea that was brainstormed by Carrspace and Woolies. But once again I hear myself (and a lot of others) shouting, ‘Why didn’t you think of testing this with someone first?’

I know research isn’t as edgy or as cool as viral and social media marketing, and I’m sure these guys think they’ve got their finger on the pulse and their ear to the ground, but you’re going to save yourself a lot of heartache stepping back from a campaign (that you’re obviously very close to) and letting just a few of your intended target audience have their say first. This doesn’t mean taking a straw poll around the office either, sorry. Avoid the car crash that has seen a heck of a lot of equity lost in the brand by flagging any issues first and if necessary, pull the campaign before launching to the masses.

Concepts are launched with the confidence of a marketing and creative team that have spent the last however many months ‘perfecting’ their campaign. But too often, they’ve lost the perspective of the end consumer along the way. That’s where independent research is critical to validate and test the messaging, the look and feel of the content and (most importantly) to help get a feel for what the intended behaviour

Closing the Gap · 99 will be as a result of viewing the campaign.

There could have been a lot of blushes spared by just a quick read in an online community, a few focus groups or some quantitative concept testing. Research is a relatively inexpensive means of ensuring that you are not going to be the next brand up on the guillotine, pros- ecuted by the Twittersphere.

May the #freshinourmemories campaign, be forever fresh in our memories.

Somewhere Over The 'In Rainbows'

Several years ago, a little-known band named Radiohead released a little-known album called In Rainbows that was set to revolutionise BLOG the music industry. The release was touted as the next step in musical evolution and had every mouth in the business ‘a-talkin’. But it wasn’t By Daniel Joseph the content of the album itself that was creating the furore (although McIntyre let’s face it, it was pretty amazing), rather, it was the way the album 04 / 03 / 2015 was being released. BrandHook Blog In a bold and some would say ridiculous move, Radiohead decided to eschew the traditional model of releasing an LP and instead opted for a ‘pay-whatever you want’ honesty-box system. Feel like paying one cent? Pay one cent! Feel like paying 100 cents? Why not? Go crazy! They earned it!

In an age where bands like corporate metal giants Metallica were suing their fans millions of dollars for illegally downloading an old album from the 80’s, Radiohead’s pay what you feel model was a breath of fresh, and aurally brilliant, air (check out tracks five and seven if you need convincing). Supporters acclaimed it as a way of shaking up and invigorating an old dinosaur of an industry, whilst naysayers denounced it as gimmicky and that it would suffocate the small and upcoming artists that didn’t have the built-in fan base of a major act.

Although not a lot changed in terms of an industry revolution at that time, the release was still vitally important for one reason. The band showed the importance of evolution and innovation in the face of adversity. They adapted as opposed to stubbornly clinging to outdated

100 · Closing the Gap modes and ways of thinking. Yes, people did exploit the system and it was pirated a lot, but the digital sales from In Rainbows eclipsed the sales from their entire combined back catalogue and merchandising sales for the accompanying tour increased significantly. The band didn’t make music worthless by making it (almost) free, they just increased their brand value.

The release may not have revolutionised the music world like people expected, but it did set a precedent, and helped to act as the precursor for many future changes that we see today. The music world is vastly different now than it was five or 10 years ago. Spotify, Pandora, Soundcloud and even Amanda Palmer’s 1.2 million dollar crowd-funding project have shown that to keep moving forward… you have to keep moving forward.

To paraphrase a much smarter man: it is the responsibility of the industry (or organisation) to keep up with the consumer. ‘If you can’t innovate and evolve with the times, they’ll go elsewhere, they’ll find other ways to get what they want, and you will be left behind.’ This sentiment applies not just to the music industry, but also to the industry of market research as well, and indeed any other industry worth its salt. In a previous blog we spoke about the traditional structures of marketing being dead. If you’re having trouble dealing with this, download In Rainbows and start thinking about ways you could change for the better.

#happyTOHELP

While many retailers are struggling to meet customer service expectations, those who are on top of their game are now moving towards BLOG delivering exactly what customers want even if it’s above and beyond what the brand sells or the service it provides. By Selma Mehmedovic 18 / 11 / 2014 BrandHook Blog Internet shopping site Zappos has introduced a new service that helps customers track down any fashion item even if the company doesn’t sell it. Called Ask Zappos, the service provides a digital personal assistant who takes requests in the form of images and finds the exact item, while also providing links to some alternatives. With Ask Zap- pos, shoppers can send images through different channels, including

Closing the Gap · 101 posting to Instagram with the #AskZappos hashtag, or emailing and text messaging. KLM has also taken customer levels to new heights with its #Happy- ToHelp campaign in October. A dedicated team scanned social media during five days for passengers facing travel woes throughout the world, and responded with a creative and relevant #HappytoHelp answer produced and personalised for the passenger in real-time – even if they were not travelling with KLM. Selected problems were solved in a variety of ways, ranging from actual physical intervention to providing one-to-one advice or information through social media. For example, KLM staff helped someone retrieve a forgotten passport, provided a tailored weather report to a traveller who was unsure what to pack for that last minute trip to Ibiza, and recorded a video with personalized Spanish language lessons to a traveller flying to Mexico.

The goal of the #HappyToHelp campaign was to improve the perception of KLM’s customer service and to increase the overall KLM brand awareness. The #HappyToHelp name and logo will be used in communications on KLM’s customer service in the future, highlight- ing the importance of high quality service.

From these examples it is evident that customer service is shifting to a new level and changing customer expectations once again. This new era of customer service is based on looking ahead by keeping the brand top of mind rather than the focus being on the short-term objective of making a sale. So instead of asking, ‘Do you need help with anything?’ brands need to be more proactive with their customer service by providing inspiration beyond just the products they sell.

Moved To Tears - The Power Of Emotional Engagement In Marketing

I’m a bloke and I have something to confess that may challenge your BLOG view on traditional masculinity:

By Tim Biddlecombe I cry at the movies. 08 / 01 / 2016 BrandHook Blog Be it via sadness, elation, release – I have sniffled at any number of films, from Toy Story to Terminator – you name it and I’ve probably

102 · Closing the Gap sobbed to it.

And, while we’re on the subject of embarrassing confessions, I’ll proudly admit that I’m not opposed to an occasional sniffle at a moving TV ad or social media campaign too. And the one TV advertise- ment that is guaranteed to make me tear up every time is the peren- nial ANZAC Day McDonald’s spot where the aged digger is offered a top-up coffee by the server, free of charge. He says “thanks” and she earnestly replies, “no, thank you”. Quick pass me the Kleenex…

During a recent Digital Marketing course, we explored a 2013 WestJet social media campaign where the Christmas gift wishes of travellers were delivered to the luggage carousel on their arrival. Brilliant stuff, beautifully directed and shot. I howled like a baby. Well done them.

But the thing is – because of this deep engagement with the Maccas ad and the Canadian airline WestJet spot (and they don’t even fly here!), I find I am a stronger advocate of their respective brands. I tell everyone. Like I’m telling you.

I also feel that I am more likely to forgive (or overlook) the sins of these brands. It makes me more bonded; more resilient. Almost like being in a family.

So, engagement is king. No news there. As an industry we typically measure this by counting ‘likes’ or re-Tweets – i.e. the behavioural consequences of engagement. But my emotional involvement with these campaigns is highly likely to be different to yours – I cry, mean- while you may feel something much less powerful.

We need to have a better measure that really identifies the intensity and nature of the emotion felt for the brand by the individual. Yes, there are many observed biometric measures available, but these are somewhat unreliable. The answer may lie with an accurate Limbic system oriented measure that we can ask people – a semiotic, self-cal- ibrated scale that reflects how each individual uniquely experiences emotions from brand communication.

While that kind of measure of emotional engagement in marketing may be a science-fiction-esque work in progress for the not-too-dis- tant future –for now, at least we have the Kleenex Quotient…

Closing the Gap · 103 chapter 8 The fourth way to close the gap - building an Intuitive Bond with John Broome, vice president marketing anz at Unilever

THE IMPORTANCE OF THE INTUITIVE BOND

Almost half of what we do every day is the same. In the 2012 BrandHook study, Consumers buy on autopilot, what does this mean for your brand – we identified that 46% of people’s daily lives are based on habit and 56% of people told us they form habits to make their lives easier. Habits emerge because the brain is constantly looking for ways to save effort. This results in a more ‘efficient’ brain, which stops us thinking about basic behaviour and allows focus on the more important things. If we let it, the brain will make any routine or ritual a habit.

Other research has shown that habitual buying reduces consumers’ consideration of alternative products – they are, in effect, in auto-pilot and remain ‘cognitively locked in’(1). This is an asset if you are, or can become, consumers’ habitual choice. However, it’s a major obstacle if you’re trying to ‘break in’ to an existing habit. Your product may be more rewarding and superior on paper, but the cue-response link means that people will tend to revert to their habit, regardless of rewards.

Due to the habitual nature of consumers, brands need to develop an intuitive bond with their consumers. This is the fifth way that we are addressing the closing the gap issue with the importance of building an intuitive bond.

104(1) · ClosingMurray the Gap & Häubl, Journal of Consumer Research 34 (1), 2007 About john broome

Our guest for Chapter 8 is John Broome, Vice President Marketing ANZ at Unilever and the former marketing director at Kellogg company.

"brand purpose ... a great way of unlocking emotional affinity between your brand and a consumer."

Closing the Gap · 105 Pip: Hi, John.

John: Hello, good to be here, Pip.

Pip: Thanks, John. Tell me how an FMCG company like Kelloggs can really develop meaning to their consumers in this digital world?

John: Yes, Pip, I think I would use the phrase brand purpose. I know there has been a lot spoken around brand purpose recently but I think it is really a great way of unlocking emotional affinity between your brand and a consumer, very much on a one-to-one relationship basis. It feels to the consumer that they have that direct relationship with the brand and I think it is a tough task. You cannot necessarily do it on every brand but certainly on the ones that drive your business. I think it is very, very important to do. We do it particularly, for example, on Nutri-Grain and Special K as two of our biggest brands.

Pip: The Special K stuff has been around for a long time, hasn’t it, and has that connection?

John: It has, and we are in the process of transforming the purpose of Special K away from the diet food perception that it has today which is based on how it used to engage with consumers over the past two or three decades. The woman in the red dress, for example, was an iconic point of distinctiveness for the brand. We’re moving more towards supporting women’s inner strength through positive nutrition. Now that’s a journey and we’ve just started that journey last year and it will take some time but you have to be absolutely focused on it and consistent with it.

Pip: Do you think with a brand like Special K, the way that you are talking to these women has changed over the last five years because of this evolution we are in?

John: Yes, absolutely. Basically women today want to celebrate who they are as

106 · Closing the Gap individuals and the old world of putting a picture in front of them of what they should be can be extremely alienating for women. So brands need to show much, much greater empathy with women today.

Pip: And the digital world is really good at that, it’s a great channel for empathy.

John: It gives you great scope. But we can’t forget that we are in the business of mass marketing – we literally do have to sell millions and millions of packs and we have to sell constantly. We don’t have cycles we go through, we don’t have batches and we can’t stop at a certain point. Basically our messaging has to be constant so digital enables you to do that. Let’s put it that way, and it’s also about tailoring messaging to put variety into our messaging too.

Pip: How do you deal with habitual behaviour as a mass market brand when you need to drive that kind of volume?

John: We obviously know roughly how often our consumers buy a pack of cereal. We can review that by brand so there is a purchase cycle concept. We also know that consumers see cereals as a repertoire category, people don’t typically have one brand in the cupboard. They generally have three or four. So this is why, for example, you have brands that may have penetration of say 15-20-25% but market share of only 5-6% and that’s because the box is in the cupboard but it’s not being replenished as frequently. We can also never predict precisely when that next purchase is going to be. So therefore we have to always reinforce our points of distinctiveness, driving that mental ability in people’s minds constantly so that when that box of Special K, or Nutri-Grain or Sultana Bran runs out and they typically just write cereal on the shopping list. Then they go into the store and we then have that point of interruption in the store – just simply our pack in a mental availability combined with a physical availability and as a result we get the purchase.

Pip: You just want them to grab it. "Pre-existing John: Yes, consumers don’t think a lot about it to memory be honest. Pre-existing memory structures really structures work well to drive that habitual purchase. really work Pip: It is interesting that you talk about repertoire shopping as well to we do quite a bit of work in retail. One of the bits of work we did with a department store was we were able to measure them and drive that their competitors in different categories, women’s wear, chil- habitual dren’s wear and where they sat in the repertoire. Our big thing was don’t necessarily worry about being number one, let’s just purchase."

Closing the Gap · 107 worry about being in the repertoire. Because that is how you will grow your market share in the first instance, and then obviously you want to be one and two. But you want to get in that cycle.

John: Absolutely, certainly in FMCG the greater penetration that you have, the slightly greater frequency of purchase you also have so the two go together equally. Lower penetration brands tend to have slightly lower frequency of purchase. So you are right, once you are in, great, but then you have to climb that ladder.

Pip: The Amazon and their Dash Button is interesting. I’m not sure if you’ve seen it but if you are an Amazon premium member in the States then you will get a button.

John: I think you pay five dollars for them.

Pip: It’s called Amazon Dash and it’s so far for all sorts of things. I think Gillette are doing it, the laundry detergents are doing it. You put the button next to the product and when you need to replenish you press the button. Just in case your kids have pressed it by mistake, an alert is sent to your phone – did you really order this? And you say, yes and then 24 hours later your laundry detergent has been delivered to your door.

John: Love the idea.

Pip: Love it – isn’t that fantastic?

John: Fantastic, wouldn’t it be fantastic if it was available in Australia?

Pip: Yes, I reckon you would be the first ones to do it.

John: Absolutely, we’d jump on board.

Pip: So John, reducing the complexity and building a powerful customer experience is extremely important in building an intuitive bond with your consumers. You’ve touched on it a bit with building that connection but how do you build that bond with your consumer, knowing that you don’t own that space that you’re in?

John: So I think it is driving distinctiveness with your brand, so that you embed yourself in the memory structures of your consumer. My advice is that you obviously have a choice between functional attributes and emotional

108 · Closing the Gap benefits. I think the strongest way to do it and the most "Driving sustaining and enduring way is to lean more towards the emotional. Functional things like I’ve got more of this than distinctiveness that, or competitor B, or whatever it happens to be don’t with your brand tend to be remembered by consumers, certainly not in the grocery FMCG space, and of course, they are very easily ... I think the copied. When it comes to establishing emotional affinity strongest way there is a lot more uniqueness that you can bring into play here and you can drive a stronger level of distinctiveness to do it and the through mental availability. A good example for us would most sustaining be the recent activation on Nutri-Grain, we wanted to translate our new brand purpose –fuelling unstoppabili- and enduring way ty - into reality. We did that by inspiring teens with true is to lean more life stories of guys who have overcome incredible adversity to achieve their dreams. We shared stories of blind surfer towards the Derek Rabelo from Brazil and Nathan Charles, the Wal- emotional." labies Rugby player for Australia, who quietly overcame cystic fibrosis to play for his country. These are amazing, inspiring stories and what it does is inspire teen boys where the brand has a role to play within that inspiration – we can provide fuel to become unstoppable.

Pip: You said that in the past mothers worried about their teenage boys.

John: Yes, we teamed up with Reachout.com and did some research with teens but also with mums. Mum in her role as provider is always concerned that her teen boy as he grows up could potentially go off the rails. Or she wishes he would simply get off the couch and stop playing video games or that he would stop procrastinating. Seeing boys that are motivated by inspiring stories is great for mums too. And what we have subsequently found was when we engaged with teens in such a way that teen boys are asking mum, make sure Nutri-Grain is in the house and that translates into purchase.

Pip: I have an eight year-old boy and a nine year-old boy who are doing the same thing. I wonder if they have seen it on the computer though, but I wouldn’t be surprised as they are ferreting around at different things. One of them will watch football for hours online.

John: This is where programmatic advertising comes into play in a big way. We firmly believe that online video, which is the real battleground now for eyeballs, particularly with teen boys. It is essentially a paid game so you are seeding content in content. The content itself has to be great to truly engage but to get it in front of the eyeballs initially, it is not about sharing, certainly not in the mass scale that we need. It is about paid advertising and we use programmatic planning to unlock that opportunity.

Closing the Gap · 109 Pip: About 18 years ago, I worked at one of the London agencies and P&G were our big client. A.G. Lafley was there the first time and he wanted the business to shift from promoting the brand’s functional benefits to emotional advertising. It does sometimes surprise me that we still have these conversations about the importance of an emotional connection and brands.

John: Look, you still need to have your boots firmly on the ground because what I am looking for is emotional affinity that drives your brand’s distinctiveness. If your brand is distinctive it is driving what we call ‘a mental availability’ and that in turn, coupled with physical availability, will drive business growth with penetration so you will attract more light and lapsed users to your brand, which is how our brands basically grow. Of course, we want to keep all heavy users happy but just keeping them happy is not good enough. Yes, I need to re-recruit them but I also need to bring new people into my brand. The strongest way to do this is to drive emotional affinity driving distinctiveness.

Pip: Yes, I love that and regarding the heavy users we would talk about the triggers used to encourage the habit.

John: There’s more habitual happiness, almost like safe predictability, like for a heavy user around your brand so long as you are not disap- pointing them.

Pip: Not disrupting the habit.

John: Yes, not eroding anything that is positively working for them, whether it is taste, memory structures, the fact that it is available at their local store, or whatever it happens to be. As long as you are maintaining that, then you can put your focus on – how do I bring along new users? Or – how do I bring more lapsed users back into my brand?

Pip: And the intuitive bond is there with those heavy users and it is creating that with them. We are nearly done, I suppose, what I am interested in now is which brands do you think do that intuitive brand well? That real connection – out of category?

John: I’m very, very impressed with what BMW have done with the Mini brand – it’s a long story now. They basically took what was a very clear proposition in the car industry. Clear brand identify but it was grounded in the 70s and obviously the old British company that owned Mini discontinued

110 · Closing the Gap the mark. But BMW have essentially taken all that was great, all the positives from it, from again that emotional affinity with the brand plus all the kind of functional quirks of the brand and contemporised it for the 20th century, now 21st century. So the fact that Mini in my mind really does deliver on excitement when it comes to individuality in buying cars, it is fantastic. Yes, ok they have put more luxury fittings into it, it has a bigger chassis, it probably goes faster. Yes, you can order whatever colour you like, different designs, bit of customisation, exactly, which is a big build from where it was in the 70s.

Pip: And made a new movie.

John: Absolutely, absolutely, but I think it is a great example of re-engaging a random emotional connection with a car.

Pip: So I suppose to wrap up the intuitive bond, the discussions we have had around the office is about the effortless experience and mapping out the customer experience but really what you are saying is that it’s the added touch of the emotional bit, the engagement, the emotional codes and the distinctiveness that you can deliver really is what creates that intuitive bond.

John: Yes, absolutely. I think the opportunity for brands in the FMCG space is exactly that and it doesn’t have to be done in the old way. You don’t necessarily have to pile into 30 second TV copy and big TV campaigns to do it. There are many, many small man- ufacturers that are doing it very differently and succeeding along exactly the same model. Whether you are a big FMCG player or a small FMCG player you can play to the same rules.

Pip: Great, thank you, John.

John: Pleasure.

Pip: And thanks to everyone listening. I think the Intuitive Bond is an interesting topic and we’ll keep talking about that.

Closing the Gap · 111 Amazon Revolutionises Intuitive Shopping With Dash Buttons

Amazon, you read my mind!

BLOG Not to sound like a total Luddite or anything, but I am fairly new to By Megan Ferguson the world of online grocery shopping. In the short time that I have 17 / 06 / 2015 been clicking, paying for, and receiving groceries straight to my kitch- BrandHook Blog en, my life has changed. It has drastically reduced the need to fran- tically race out to the supermarket every other night because I have forgotten to buy something. I feel organised and calm.

My system for ordering is simple. I keep a list during the week and jot down things I need to buy. I then add to this list when I see we are running out of something. Usually the list is pretty accurate, but it’s not 100% airtight. There are times when I think of an item we need, but just forget to write it down (there’s a lot distractions between me and that list on the fridge). ‘Oh well’, I think to myself in a defeatist slump, ‘that just means we wait another week’ – either that or I slip in the usual quick, frantic trip to the supermarket.

So, on a Tuesday night, I sit at my kitchen bench with a laptop, a glass of wine, a shopping list (if I can find it) and an open pantry door. From the comfort of my own home I order everything we need. Noth- ing could be simpler…. or could it?

When I stop to think about the point in time that I realise we need to buy something, it is when I am actually using it. Right there in the act. For example, it’s when the last bottle of wine is grabbed from the top of the cupboard that I think… ‘Ooh, must get more wine.’ I realise we need washing powder when I am in the laundry putting on a load. The trigger that we need toothpaste is when I’m in the bathroom optimistically trying to squeeze out that last little bit from the bottom of the tube. The important need for more toilet paper happens when …. well you get the drift.

Intuitively, it is when I am using something that I am thinking about it. Amazon gets this. ‘So what have they gone and done?’ you ask. Well, they’ve only gone and introduced dash buttons. Branded, wi-fi connected buttons that you place exactly where you use or store your grocery items. So when you need something, you push the button. It’s all set up with the size and brand you use. A confirmed order message is sent to your phone… and your grocery item arrives at your house.

112 · Closing the Gap Magic!

The idea is not without some questions, however. I wonder exactly how many of these little branded buttons I could stick around my home before it would start to resemble my childhood bedroom wall – picture a multitude of stickers randomly slapped on the walls, peeling over time.

But I do love how cleverly Amazon is continuing to get to know their customers. Not just what they need, but when they think about need- ing it. They are not segregating themselves to only being part of their customers’ shopping rituals, but actually being there for their customers when they need them, becoming part of their daily lives. This is in addition to how easily they are locking in total loyalty to their brands.

BrandHook’s 2012 study ‘Consumers buy on autopilot, what does that mean for your brand?’ revealed that 46% of what we do everyday is the same, which means we buy the same products and use the same services for almost half of our day. So Amazon is just making it easier to be there at the point of time that the brand enters our minds – and seizing this opportunity before something else enters our minds and distracts us.

For brands to cement themselves as part of this habitual cycle, the interaction between customer and brand must be an easy experience – seamlessly natural, intuitive. Brands need to understand how to reduce the complexity of their brand experience and build a simple, responsive one instead. Doing this will strengthen their relationship with their customers and build an intuitive bond. Amazon’s dash button aims right at the heart of this bond.

So the challenge for brands is not only to know what your customers are thinking about you, but also when they are thinking about you. Because then you can be there for them, first….at the push of a button.

Closing the Gap · 113 I'm Sorry Black Cabs, I Cheated On You...

I had an affair during my last stay in London. I didn’t expect to, it wasn’t planned, but it happened and I can honestly say that I don’t BLOG regret it for a second. By Paul Dixon 05 / 05 / 2015 During my many years of living in London over the past two decades, BrandHook Blog I’ve always been in love with the Black Cab. The vehicles, the drivers, the whole concept of ‘the knowledge’; it gave me a connection to the Black Cab. As a Melbournian, not having to direct the cab driver or even ask them to turn on the dormant Sat Nav was a thrill (sorry, Melbourne cabbies)! It was a proper relationship – they were there when I needed them, they knew when I wanted to talk and when I needed time to myself, and they took me to the places I wanted to go.

So on this trip back, I was looking forward to rekindling the romance and after landing, I did – a Paddington to Old Street journey that delivered on all fronts (as usual). Yet as the fog lifted on a brisk London winter, so did temptation. This temptation’s name you ask? Tempta- tion’s name was Uber.

There’s been much written previously about the Uber approach and how the company has built itself from the ground up. But from a brand perspective, there are some interesting local insights:

1. Awareness of the Uber offering in London was a slow burner until the London cabbies protested on the streets back in the summer of 2014. The protest wasn’t actually against Uber – they were taking aim at TFL (Transport For London). But rather than raise awareness of their issue, they actually bought Uber into the public consciousness. From a brand perspective, London cabbies hand- ed over a marketing manager’s dream budget in terms of PR and sign-ups – an estimated 850% rise! 2. It’s not so much the rise of Uber, but it’s more so about the changing nature of consumers living in a landscape of digital transformation. When I first moved to London in 2002, the ‘London A to Z’ was your sole bible. Now, all you need is a phone that essentially translates to the transportation industry as a GPS. The compelling selling point of ‘the knowledge’ holds less weight now – even my first cabbie moaned about the frequent hotel name changes which meant he couldn’t recall the hotel that I was stay- ing at. While the taxi industry have been adopting apps such as Hailo and Maaxi, the ability to navigate by technology and not by

114 · Closing the Gap ‘knowledge’ didn’t happen overnight. 3. Credit where credit is due. I’ve always paid cash in Black Cabs – I think you can pay card but my perception is that there’s a huge surcharge. I’ve never paid cash in an Uber. The payment process within an Uber is brilliant: a fare estimate, a receipt straight after- wards delivered via email – it makes business travel a reality and a much cheaper reality at that.

So with this all in mind and the word of pub (end of night at pub conversations often included ‘I’ll just get an Uber’), I cheated on my beloved Black Cabs. The Uber App recognised my details from Australia and before you know it, I was in a clean car, sitting next to a driver with GPS, being delivered to the destination I wanted and all at a cheaper rate than what a Black Cab would ever offer. It felt good, so I did it again and to be honest, I’m going to continue to do so.

Not that I would ever claim to be representative of the London population, but I’m the problem Black Cabs, and in particular, Addison Lee, have in London. The old saying that Black Cabs are for tourists and mini-cabs for locals may apply, but the lines are being blurred. From a branding perspective, what does the Black Cab stand for these days? Because since Uber’s arrival, it’s simply a more expensive means of transport. I also can’t see Uber going backwards – they have the GPS that will protect them against this. So now, Black Cabs needs to quickly establish itself back in the minds and pockets of its core target – whoever that is?

Closing the Gap · 115 chapter 9 The fifth way to close the gap - Iterative Collaboration with Sandra Arango, Head of Marketing, Heinz Australia

ITERATIVE CONSUMER COLLABORATION

According to Professor Richard Foster from Yale University, the average lifespan of a company listed in the S&P 500 index of leading US companies has decreased by more than 50 years in the last century, from 67 years in the 1920s to just 15 years today.

As the consumer moves faster, business must be more agile to compete... or they die. For this reason, it is now commonplace rhetoric to believe in the importance of innovation for business health. Understanding what makes your customers tick, what drives them, what do they expect from you, what is missing from their lives and what are the current painpoints with your brand experience is all key to provide innovation that is meaningful and relevant.

Anchored in The Wisdom of the Crowd philosophy and starting with the consumer insight, co-creation is a powerful way of involving your customers and your people in driving brand growth.

116 · Closing the Gap As the barriers fall away between brands and consumers, causing those two entities to become so intimately fused, we encourage our clients to commit to a co-creation program. An iterative and continuous learning loop to build product and service concepts with your community.

Building your brand and your brand experience with your consumers means that you are:

1. Building products and services your consumers want because you anchor them in insight. 2. Filling your NPD pipeline with ideas that rate highly with your consumers because they created them with you. 3. Creating brand advocates: 70% of the consumers in our bank innovation project thought differently about that brand.

Closing the Gap · 117 About sandra arango

In this Podcast we spoke with Sandra Arango, who is the Head of Marketing at Heinz Australia. Sandra has a proven record as a global FMCG marketer and innovator and, prior to her role at Heinz, worked for 17 years at Procter & Gamble.

"Experimenting in my view is an essential part of innovation."

118 · Closing the Gap Pip: Hi, Sandra.

Sandra: Hello, how are you?

Pip: Good, thank you. Today I want to talk about the fifth way to close the gap between business and consumers. We think at BrandHook that it is important to work with your consumers to build your brand experience and when we think about collaboration, we think particularly around that wisdom of the crowd philosophy where we go out to the masses to develop a great idea rather than asking a few particular experts. So we want to talk a bit about that today but firstly, having worked overseas for such a long time, where do you think Australia sits when thinking about coping with the digital revolution?

Sandra: Well, I think the digital revolution is a pretty broad subject and includes many parts, when I am thinking about digital revolution there are two pieces – all the mobile progress and all the internet evolution. If I look at the different countries I would say that honestly North America is well advanced on the internet, just because the main companies are there at the forefront - Google, Facebook, Twitter - everybody trying to compete and trying to create and innovate. They have really, really pushed the boundaries, and consumers in North America are very reactive. They are responding very well to innovation and to trying new things, which obviously helps North America to lead significantly and that is why entrepreneurship there is so, so powerful. I think that North America is probably ahead of the pack. Now on mobile, a couple of countries have done different things with mobile. South Korea is one of the countries that is advanced where mobile penetration is huge because again consumers are very responsive - technology is part of their lives. Then in Africa, mobile is used completely differently in Nigeria, they use digital as a way to almost

Closing the Gap · 119 replace banks because mobile penetration is much higher than even banking in the country. So it is a different type or level of evolution and a different use of the technology. So I will say that for those reasons, between digital and mobile, those countries are different and ahead in different areas. I would say that Australia is following and since I arrived I have seen a lot of companies trying to catch up and try to jump more onto the bandwagon and trying to start using it more. Of course, the more we start using it and embracing it and playing with it, the more it is going to develop and work better.

Pip: I love that idea of playing and having a go. We talk a lot to our clients about – let’s just try it, let’s reserve a little bit of budget to try it and test it and work out whether it is going to work. I don’t feel like a lot of companies do that, though.

Sandra: I think that it is sometimes hard as budgets are always tight. You normally tend to go with things you know and are proven. However, I think that communication and marketing innovation have changed so much that the good thing about trying is that it is very easy to try now with limited budgets. Experimenting in my view is an essential part of innovation. Be- cause sometimes test a little, see the market, see how it does and then based on that experience you learn a lot and learning is so important these days, that sometimes investing a little bit of money makes a huge difference.

Pip: I think it’s interesting the idea about which comes first. You talked about consumers in North America really grab technology. I know that it has to be created by a business for the consumer to have it available to them but I am always intrigued by which comes first. The kind of business innovation or the consumer really pushing for it?

Sandra: I think that it is quite a chicken and egg kind of dilemma. This is probably very true for most of the innovation. I believe that technology that solves a need for the consumer really works. In this way, I think that companies can push it but there is a limit where consumers need to feel the need and understand what’s the role of that service or innovation in their lives. I think that sometimes with innovation we concluded it was ahead of the time, it meant consumers were not ready for it or quite honestly they didn’t need it at the moment. But then the same innovation happens to be relevant some years later. Because consumers are more prepared for that. So I think that, in general, I would always believe that consumers come first but it is entirely the need of the consumers because sometimes we overestimate how much consumers know or what they want to have and sometimes they do not know that they need it.

120 · Closing the Gap And that’s where companies can really push the envelope and they can push the frontiers of how much innovation they can provide to consumers which at the end of the day are either going to be successful or a great learning experience.

Pip: Let’s talk about the consumer co-creation process and that’s something you guys have been really progressive at this year. We have been working together on that. You talked about starting with the insight, would you say that’s the most important part?

Sandra: Absolutely, it’s so hard to know when you have a good insight and it’s so hard because I think insight is some- "...That's the thing that is overused these days. Sometimes people refer part where to insights as facts or points of data but sometimes insights need to be those hard moments for consumers. Sometimes marketing it’s probably very, very hard to get and I recall that in P&G becomes really we used to have a lot of employees spending time with consumers. They spent every single moment going out to listen arty, where to our customers and some of them said – well, sometimes it is just a we went and we didn’t find anything. There may not have been anything there that was a stand out there but we got feeling about closer to them and after seeing the consumer a few times we something a were able to start connecting the dots. You think – ah, there is an opportunity here – and that’s how the insights start to consumer said." become a kind of the truth. But definitely you need to be very close to consumers and listen carefully.

Pip: I’ll say to the guys in the office, sometimes you just feel something about a consumer and their lives – all of this information is coming at you and sometimes you just feel like there is a really interesting space in an area. You may not have finessed it yet, but in that space there will be something interesting.

Sandra: I absolutely agree with that. That’s the part where marketing becomes really arty, where it is just a feeling about something a consumer said. If everybody is so keen for this type of product or solution probably there is something there that has not been tried that makes sense for them.

Pip: So, there are two parts to the process we have been working on – the insights part, that intuitive feeling that this is an interesting space and then it’s also the iterative bit where you go back to the consumer and say – we heard what you are asking, we have come up with some ideas, what do you think of these? Just checking in with them to get them to refine those ideas. How important is that part to the process as well?

Closing the Gap · 121 Sandra: I think that iterating with consumers is extremely important. I think that when there are certain products, like our food products, it is probably appropriate getting feedback from consumers. It’s very helpful because it helps us decide our product, which is more preferred by them. Obviously there is a lot to food in terms of the senso- rial, the taste, the flavour, the colours, how it appears. So there is a lot in the holistic design of the product where consumers can really help us to push the boundaries and really take it to a level where it is truly delightful. I don’t think anybody wanted an iPhone until the iPhone was there. Now we all love the iPhone and we would love to have our say about the product but when they came for the first time I don’t think they needed anybody – I don’t think that anybody even thought that that was possible. And I think that it was technology, probably not the best technology when they launched it but it was so fascinating, beautiful, and helpful that we all embraced it.

Pip: I think the intuitiveness of the Apple products has come later, I think it was the design, the style of it, that got us hooked in the beginning.

Sandra: Yes, I think that probably was one of those best in class stories where the guy was brilliant, pushing the boundaries responding to simplicity, intuitiveness. Quite honestly, I still remember my iPod. I started with the iPod and now I cannot live without my iPhone. Just because desire was what got us there but then the phone was brilliant. I think that Blackberry created something unique which again was an opportunity for a particular situation for a point in time which I appreciate now being on this side of the world. I was in North America for a while. People in North America are super time-conscious, therefore Blackberry trying to solve their down moments for people outside of the office so that you have your mail with you. That was what the big innovation of Blackberry was but then all these digital phones came along and the poor Blackberry had to really reconcile and I think they are still in the process of trying to sort it out, how to continue moving.

Pip: We lost Nokia, the biggest phone brand in the world, didn’t we, as a result? I had an mp3 player, you know, those Sony mp3s. I don’t think they made it to Australia, I was living in the UK, and it had those mini discs, and you put your mini disc in. When I came back for a wedding, maybe in 1998, I was really proud of my Sony mp3. No one had them here and then next thing I knew, everyone had an iPod. It was like I missed the initial phase of the iPod. You talked about Procter & Gamble. Do you feel like they really are the leader in consumer insight and innovation?

122 · Closing the Gap Sandra: I think that when Lafley was there, that was brilliant. He started with ‘consumer is boss’ and that is the mantra of the organisation. Because the consumer is boss we really need to get closer to our customers and I think that as an organisation they tried very hard for all of us to get in and understand consumers and customers needs. In that sense, I think the company invested proportionally in this area. I have now experienced a different company so I can say that definitely P&G is a company investing, listening in close and quite honestly investing in innovation. It is a huge priority so the budget we had in P&G was much more significant than in most other companies by industry standards. So clearly for P&G the connection between understanding the inside consumer needs, being on the forefront, especially on the core categories, the lead categories is paramount.

Pip: So what do you think the future is for FMCG companies in this digital world? It’s hard in some ways, isn’t it?

Sandra: Well, I think that it is exciting at the same time, because I think there are opportunities. I believe that what digital does in a way probably make "Listen to the us all equal, because everybody has access to the consumer now, which was something that was in a consumers, way a little bit restricted in the past. So now digital which was is probably the best way of socialisation of a media because it is relatively easy for people to access it. For probably the companies, the big challenge with digital is how something that to really embrace it, how to really master it in a way, and evolve with it. Because what is fascinating about in the past was digital is that it is not always the same thing. I think harder and that we are used to many years of TV and radio and it was in a way, a little bit predictable. So even the probably way we did marketing was pretty standard because expensive and we knew that there was a certain reach that we could reach in a year. And understanding the consumer difficult. Now demands when you are in that hype. Also it didn’t it is pretty matter if you launched something in that country you need something different in the other, but it didn’t accessible." matter because Country B would never know what was happening in Country A. But now I think that because everybody is so connected people are much more educated and informed. This puts a lot of pres- sure on us to always try to keep ourselves honest and true to what’s the best for our consumers but at the same time to use the media to try stay at the forefront of innovation and communication. It is not only broad communication but also how do we communi-

Closing the Gap · 123 cate and connect with consumers much better? Listen to the consumers which was probably something that in the past was harder and probably expensive and difficult. Now it is pretty accessible.

Pip: How do you build your skill base as a marketer, to have that knowledge? Do you have to go on courses or do you just live it?

Sandra: That’s the part that is very interesting because I think that probably we have now the feeling that we know it all. I think every single day changes. I was in training at a seminar and somebody said we need to keep learning every day because the reality is the entire world is changing and what is true today, is probably not that way tomorrow and we need to prepare for that. So I think that there are different kinds of learning and there is one learning that is trying to keep up with what is going on and trying to learn from conferences, seminars, which I think they do here especially well. It’s very active. To try to keep everybody up to speed, but at the same time I think there is another issue which is just ‘give it a go’. Not a lot of companies support and encourage new systems out there and I think that is foolish – just give a chance to some of those to see the results and see what ones we want to embrace in our day- to-day business.

Pip: I think that is one of the discussions that has been had with CMOs. One of the things they are worried about is if they are not feeling really prepared for this new world then how can they make sure they are doing what they can to become most knowledgeable about it.

Sandra: Something that is very true is CEOs are very important in setting the tone of what they expect their organisations to do and I think that the CMOs are encouraging the use of the digital, encouraging experimentation of the digital. I am super grateful that my CEO loves it and sometimes we get it right and sometimes we get it wrong. I always remember what one of my bosses in my previous company said, ‘You are ok to make a mistake once, that’s ok, but please don’t make the same mistake twice.’ I try to live by that mantra and try to learn as much as we can because in reality there are so many things we have never tried and never known and I wouldn’t know if we are missing out a lot because of that.

124 · Closing the Gap Pip: Brilliant, thank you, Sandra. That was a very interesting chat and I think we both agree that collaboration is very important for innovation and to keep ahead for business – it is something that they do need to invest in.

Sandra: Absolutely!

Pip: Thank you, Sandra – and thank you to everyone who is listening. If you haven’t had a chance to listen to all of the chapters to date we are on iTunes so if you google BrandHook on iTunes you’ll find us.

Next week we are going to spend some time talking about consumer disruption, or as we like to call it, Consumer Dislocation.

Closing the Gap · 125 Build It Yourself: How Customisation Is Revolutionising Retail Experiences

Take a trip back to the play room when you were seven years old, tinkering with a Lego set to build the next harbour bridge or giant BLOG space ship. Remember the joy and excitement associated with con- By Paul Dixon structing the figments of your imagination? Were you eager to show 05 / 06 / 2014 your creation off to anyone that would watch and listen? BrandHook Blog Whether you spent more time building an aesthetically perfect min- imal structure a-la Rem Koolhaas or dislodging Lego pieces from under your feet, it’s no secret – people love to build things. The act of building is a great way to express our creativity and give meaning to our thoughts. ‘Making’ is the proposition that has made Lego such a uniquely successful brand.

It is precisely the empowering nature of Lego that consumers are beg- ging for with other products. Advances in digital and manufacturing technology are shaking up retail – for the first time retailers can offer mass customisation in a feasible manner. The customisation trend makes customer-generated products possible on a massive scale and is helping companies to redefine how they deliver consumers what they want.

From a consumer perspective, the ability to customise a product to suit your needs is empowering, it is driven by the desire for expression and the joy and pride associated with doing or designing it yourself. Furthermore, the one of a kind factor reduces the fear that after purchasing a product they will see it everywhere. Great examples of retailers offering a customised product include Aussie furniture retailer Evolvex, where customers can use a digital interface to design their own furniture that is then sold at affordable prices. Internationally, retailers are empowering customers by allowing them to make their own computer, tailor the perfect suit and build their very own bike.

If not allowing customers to build the product themselves, companies are allowing consumers to stamp them with their own identity – think of Nike ID sneakers with your name on them or the Stan Smith logo with an individualised imprint of the customer’s face.

Last month, Selfridges London took experiential customisation to the next level by taking customers on an immersive journey to create their own perfume in the store’s fragrance lab – on show for all to

126 · Closing the Gap see in the storefront window. Customers were challenged to ‘bottle a memory’ based on their favourite aromas. Upon entering the lab, shoppers completed a set of tasks that engaged the senses and measured their preferences, based on their behaviour they left the building with their own signature fragrance for £65.

The trend has significant implications on manufacturing and distribution. Will it become the norm for customers to assemble their products in store, aided by well-trained in-store brand ambassadors? Time will tell. Either way, this is a new era of retail where the democ- ratisation of design can provide a new level of connection to a brand. If executed correctly, customisation has the power to delight and excite shoppers far above delivering them a simple out-of-the-box solution. Indeed, shoppers will never forget how you make them feel. How might you make your brand experience more personal?

When Crowdsourcing Gets It Right

At BrandHook, we’re continually listening to the real people – just this week we’ve spoken about shampoo, wine, bras and much more. We do a lot of this listening with the people, rummaging through BLOG their houses, drinking wine with them or via The Grapevine, our By Paul Dixon online community platform. 23 / 07 / 2015 BrandHook Blog The Grapevine was built around a number of needs but saw the power of crowdsourcing and wanted to go one step further – actually understand the crowd.

We do love crowdsourcing and stumbled across this quite brilliant community consultation example in our home town of Melbourne.

As part of the Flinders Street Design Competition, six designs have been shortlisted and the people have been asked to vote via a People’s Choice Award. And whereas crowdsourcing often forgets the basic principles of research (asking the right questions), criteria is based on four criteria including design merit, transport function, cultural heritage and urban design. Check out the website and Melbournians, do vote for your favourite.

Closing the Gap · 127 We so often hear that customers don’t get a chance to have their say – so here is a perfect and innovative means to do so.

As an aside, there is the myth that when Mumbai (then Bombay) and the current Flinders Street Station designs were made in the UK, they were shipped at the same time and labelled incorrectly – meaning Melbourne got the Mumbai design and vice versa. Will make you look at Flinders Street slightly differently the next time you’re waiting for the train.

128 · Closing the Gap chapter 10 The sixth way to close the gap - Consumer Dislocation with Christophe Eymery, Head of Digital & Media at L’Oreal ANZ

BRAND GROWTH THROUGH CONSUMER DISLOCATION

As well as strengthening your connection to your consumers through storydoing and the intuitive bond, there is also a need to disrupt others who are currently buying your competitor brands.

For those products that are bought on high rotation we see autopilot behaviour as a way of reducing effort and stream-lining the decision-making process. On top of that, not only do we buy these products subconsciously, we also think they are better choices than the alternatives.

Brand owners need to look for the opportunities to break into someone’s purchase journey and awaken them out of their autopilot behaviour. Lifestage transitions are a good opportunity to break a current habit as people review their current preferences. Motherhood and baby food, the older family and health insurance, and university students and their bank choices are all opportunities we have explored over the last two years where consumer dislocation can provide brand growth.

Closing the Gap · 129 About christophe Eymery

In our penultimate podcast we spoke to Christophe Eymery, Head of Digital & Media at L’Oreal Australia and New Zealand.

Christophe has over 10 years experience in marketing and media, working for ZenithOptimedia Australia and Re- nault. His industry experience spans across FMCG, Fi- nance, Automotive, Education and Recruitment.

"We needed to create a better way for women to navigate the complexity of the beauty offering."

130 · Closing the Gap Pip: Bonjour, Christophe! I did say to the girls in the office I was going to speak French to you and they told me not to – so that will be it!

Christophe: You are doing really well so far!

Pip: Ha! So today we are talking about the sixth way to close the gap in this series of podcasts and it is the second last podcast of the series. So thanks very much for your time.

Christophe: My pleasure.

Pip: The sixth way to close the gap is really looking for what we call the opportunities to disrupt the consumers’ purchase journey. In previous chapters we have talked a lot about how people are quite habitual about how they purchase products so what you need to do is look for those disruptions or as we call it, the Consumer Disloca- tion. We think it is a very important part of business growth because you need to stop people in their autopilot behaviour. How’s L’Oreal going with driving growth through disruption?

Christophe: At L’Oreal, we are committed to helping women around the world define their own beauty and then provide them with the right products to achieve this goal. Given the variety of beauty needs, we end up with a very broad range of products to offer to consumers. In Aus- tralia, it is more than 4,500 products across our 25 brands. As a result, the ambition of delivering beauty for all can become counter produc- tive: all the products might be there but it is becoming very complex for the consumer to find which one is the relevant one for themselves. Also the other risk is for consumers to always refer back to the same product by fear of diving into all the other options. This is particularly true in makeup. We needed to create a better way for women to navigate the complexity of the beauty offering. Historically the only way to try on makeup has been to visit a department store, meet a beauty advisor and go through a journey of discovery to help define what is the right

Closing the Gap · 131 lipstick or mascara for you. You can’t necessarily replicate this in mass distribution when you are in Priceline, or Coles, or Target or Wool- worths. You don’t necessarily have the capacity to have beauty advisors available across all those points of sales so we are currently leveraging technology to create new tools that will enable women to virtually try makeup on using augmented reality. Using a mobile application called Makeup Genius, a consumer can try new products without the risk of making a mistake in purchasing. It’s trying to get you outside your normal comfort zone, trying maybe a different type of mascara from the L’Oreal Paris range of products. You might never have tried for real before but now can do it virtually - easy to give it a go. There is absolutely no risk and an opportunity to purchase when you discover the look that actually suits you.

Pip: That’s fantastic. So it’s called Makeup Genius, has it been launched?

Christophe: Yes, it has been launched in March 2015 in Aus- tralia and New Zealand. We are reaching close to 650,000 downloads just in Australia so we are very pleased to see that Australian consumers are actually embracing these kinds of new beauty education tools. The next phase for us is to bring new looks and products to the platform that can be discovered, virtually tried and purchased through Priceline from February 2016 onwards.

Pip: Fantastic!

Christophe: And then you really close the loop and it becomes a form of platform to discover, try, learn how to and then purchase products.

Pip: So what about the subscription models as well? Because even though I am exploring and trying new things, I do have a repertoire of make-up. Is there an ability to say I want that foundation that I know works for me delivered to me every two months?

Christophe: So that is something we are more likely working on for the future. At this stage our e-commerce focus is really about partnering with our direct clients who purchase products from us – our primary brick and mortars clients who also have an online business for purchasing, such as the likes of Priceline, Target or Coles. So the focus for us at the moment is to create a good user experience in the beauty section of those websites and

132 · Closing the Gap provide beauty education in that environment. So traditionally our focus – if I go back two years "I found that ago – was to create brand experiences on our own website. Now we try to externalise this expertise Australia is very into the retail environment of our customers. advanced from Pip: The other thing I noticed you were doing in a consumer the US was launching a brand called True Match perspective. and it says that there are 33 different shades. The reason it’s quite disruptive is it can cater to so The challenge is many different types of skin types. Why is that more in terms of such a disruptive idea?

infrastructure Christophe: So, in humankind in general there are and how business more than 200 different skin types and when it comes to foundation for women it is very impor- is delivering on tant to define what is exactly the right foundation the expectations for them. Because if it’s a different shade it could look dramatically different and your foundation of consumers." covers most of your face. That’s probably the most important element of your look in makeup. Again with makeup, it is difficult to try in the mass retail environment so what we have tried to do is to offer tools in stores where you can assess what is the right foundation for you and offer a very wide selection of products that answer any form of needs.

Pip: Ok, so that’s doing well as a product?

Christophe: Yes, it has been quite successful, we have been in the market for more than nine months now with this new product and the response locally has been pretty good so we are quite happy. We came on board with key bloggers we’ve been trialling the product with and talking about it on the various destinations so the on- board process has been key for us. We also had a big campaign led by Megan Gale as a goodwill ambassador and we tried to give it a very strong look or flavour to maximise it and resonate in the local market place.

Pip: OK, thinking about that Australian market, do you think Australia as a country is very innovative or disruptive? Or do you think you are grabbing ideas from elsewhere?

Closing the Gap · 133 Christophe: I found that Australia is very advanced from a consumer perspective. The challenge is more in terms of infrastructure and how business is delivering on the expectations of consumers. That’s probably linked to the scale of the markets. Obviously when you have a pool of 24 million customers, even if the buying power here is relatively very high you don’t necessarily have the same means for marketing and technology in comparison to markets like the US. So you might see lots of innovation coming out of Australia into Australia but what is very interesting is that the take-up of those new ideas and technologies is very high. If I go back to our in-house example with Makeup Genius, when we launched back in March, the application has been launched across 30 different countries around the world and per cap- ita we are the number one in terms of use and downloads so it is a good indication of how consumers in this country respond to innovation. It’s very exciting because Australians love new technologies and it’s also public knowledge that one of the versions of the iPhone was launched in Australia first. So it’s not just for L’Oreal but I would say for the industry in general, Australia has this unique position as it’s not the biggest market in terms of population but it’s a market where you have a high purchasing power and at the same time a very high uptake of new technologies.

Pip: That is one of the reasons why we started this podcast series. We noticed the gap between the way consumers are behaving and what businesses "... Australia has this are actually delivering. You know yourself when you play around with certain things you say, ‘Oh I unique position as wish this brand would do this or I wish they would it's not the biggest deliver me that.’ So it’s interesting to hear you think Australians are more technologically thinking. market in terms of population but it's Christophe: Yes, we are thinking of asking a question around – how can we deliver a service for a market where you consumers to be able to receive every two months have a high their preferred foundation, with their mascara? So we are looking at different scenarios and looking to purchasing power be very transparent. The biggest challenge for us at and at the same time this stage is the cost of the supply chain. The delivery of products in Australia is very expensive so a very high up take of you need to look at a large scale and when you have new technologies." a large scale you face the challenge of the scale of the country, the geography. Even if Australia is very concentrated in capital cities you still have a very big country to cover and distribution costs are very high. In our business we see e-commerce taking off very, very fast in China, for example, where the costs of distribution are very low and that’s the primary reason why it’s going that fast. It’s also because they have an infrastructure with a player like Tmall which is very similar to Amazon. They have created a marketplace for

134 · Closing the Gap consumers to go to and shop across multiple brands. In Australia, we are yet to see the emergence of such a player – we have a local version of eBay but we don’t have a local version of Amazon. We have the local retailers who are ramping up their e-commerce capacity quickly but it is still probably the beginning of that e-commerce journey.

Pip: Are there any other innovations you think L’Oreal have got around the world that are quite disruptive?

Christophe: We will make an announcement regarding foundation maybe later in the year.

Pip: You don’t want to make it now?

Christophe: I would love to but it will be quite interesting and a new way for consumers to basically select their foundation products. We are also looking at new technologies around hair and that’s also a category where there’s a big need in mass envi- ronments to select the right shampoo and product manufactur- ers. Not just L’Oreal but the whole industry has evolved over the past year so you now have so many options of shampoos: for dry hair, for normal hair, for damaged hair, etc, and we will continue on delivering more and more products in that category. But it makes the decision-making process more difficult for consumers so we are trialling new beauty services that will help that process, similar to what we did in makeup with Makeup Genius.

Pip: I agree with personalisation, which is what we know people want. Does that mean then you’re hit with choice, so much choice? I look at the wine category, for example, where you go into a big wine retailer and there is so much to choose from yet the consumer has demanded that choice. I think you are right, it is in the delivery of those products that has to be different.

Christophe: And half the expertise and knowledge to know actually which one is the most suitable for them.

Pip: Yes, which one suits me, I know I have asked for this but I am now lost so how can you navigate me through this experience? Which other brands do you think are doing disruption well?

Closing the Gap · 135 Christophe: There is a great example for us that we are now thinking of drawing parallels with for our business. It’s very innovative in a different category, it’s really changing the way everyone is using local transportation. Uber has created tensions in the industry by challenging the established taxi companies to a point that was almost revolutionising their own business. That’s quite healthy to see disruption because it forces the whole market to evolve and improve. Now you also need to think about what impact it will have on the future of how we will use taxis. One of our key clients are the hairdressers for the salon division, and so for us that could be a good opportunity to see how we could partner with a player like Uber. We would know exactly the journey of consumers on a daily basis, to provide them with incentives that would drive customers into the salons, at the most relevant times, with the most relevant offers. Conceptually, it is quite interesting, but we are yet to work out the right type of test to create an equal position for customers and at the same time added value for users of Uber. It is a form of win-win situation that we need to define but very exciting at the same time.

Pip: Getting your hair done is a big decision. It is very time-consuming so you have to really dedicate time to it and block out that out. It’s interesting because the shopping centres are doing a similar thing with phones and beacons, keeping track of how people are moving around. We interviewed Genevieve Elliott earlier in the series and she talked a lot about navigating people through the shopping centre environment and not only seeing their traffic as you would with Uber but also directing them into the different places.

Christophe: Tracking the consumer path.

Pip: You don’t quite know how people are coming to you any more though. It was very linear before. Are you doing any work to start to filter through the now chaotic customer experience?

Christophe: Yes, definitely, we’ve just mi- grated all our customer data platforms to "... for us that Salesforce back in February and Salesforce could be a good has our data now across 25 brands across the whole business both in Australia and NZ. opportunity, to see Now that the data is there we are creating this how we could consumer journey mapping. So it’s great to understand – how do you go from opening partner with a an EDM to visiting a website, and eventually player like Uber." purchasing a product when dealing with our B2C brands like Lancôme. The requirement first is to have the right technology platform

136 · Closing the Gap and we believe that we have it now with Salesforce. Now the focus is on defining those customer journeys using that platform.

Pip: That sounds brilliant – I think our time’s up. That was great, thank you, Christophe.

Christophe: Pleasure.

Pip: So thank you very much to Christophe for being here, and thanks to all the listeners. Next week is our last chapter which is very sad for us but it has been a fantastic series. We have had a lot of interest in the series so if you haven’t listened to any of the other podcasts, go back into either the CMO Magazine or iTunes (just google BrandHook).

Closing the Gap · 137 "Bet I can drive slower than you."

Not a statement that you often hear between friends, but the launch of AAMI’s new Safe Driving App has drivers pitting themselves against BLOG each other in a bid to be the safest driver. By Chris Binney 05 / 03 / 2015 The brilliance of course is not in the fact that drivers are rewarded BrandHook Blog for their ‘skills’ as safe drivers, but in what AAMI as a company get out of this initiative themselves. Hiding behind “game-ification” of an everyday experience such as driving to work (earning 50 points for your efforts) is the attempt to change the driving behaviour via a ‘fun’ experience.

Insurance is a pretty dry business but the overall objective is to strike a balance (in the insurers favour of course) between premiums that come in to be insured, and payments that get made out to everyday folk as claims. Doing whatever they can to tip the balance in their favour is the goal of an insurer. Making someone drive more safely and thereby reducing their chance of an accident, and in turn making a claim is a genius step. Everybody wins.

Innovating beyond the traditional lines of price and cover, AAMI has been able to create awareness in their brand, differentiate themselves as the fun one in the bleak insurance business and help their bottom line in the process. With over 22,000 downloads and counting, AAMI might very well be onto something.

138 · Closing the Gap Creating New Habits: Is 'Tiny' The Magic Word?

The BrandHook team has started an exciting new journey this month: we all signed up for the challenge ‘Mindful in May’. For those unaware of Mindful in May, it’s about creating a new habit of mindful- BLOG ness in your daily life. The May challenge is to meditate 10 minutes a day for 31 days. On top of all that, the challenge aims to raise funds By Anouk Möller 12 / 05 / 2015 for clean water projects across the world (www.mindfulinmay.org). BrandHook Blog

Let’s start with an embarrassing confession (just in case you might think we are a well-oiled machine of mindfulness here at Brand- Hook). I fell asleep during a meditation a couple of days ago and was suddenly (and rudely) awakened by the sound of my own snoring… very relaxing indeed, but I’m not sure it was the intended state of mind required for actual meditation. It turns out the challenge was much harder than expected. Devoting 10 minutes a day to meditation is surprisingly difficult and somehow I always feel ‘too busy’. Quite a scary thought considering it’s only 10 minutes out of the 1,440 minutes that exist in a day, and it also shows just how difficult it is to introduce new habits into your life and keep them.

The Mindful in May program also offers various interviews with global experts. The other day I watched an interesting interview about the ‘secret to create new habits’ with BJ Fogg, the director of the behaviour change lab at Stanford University. His ideas are simple, helpful and can be used by just about anyone. His ideas are even pertinent to brands and businesses that wish to enthuse their target consumer/audience and get them to add a new habit, or even change an old one…

Fogg emphasises the well-known fact that creating new habits is easier said than done. The main obstacle being that people (and brands) most often aim for big, overambitious changes. As a result, “these shoot for the stars…” types are almost always bound for failure, according to Fogg. In order to increase the chance of success, you need to think ‘tiny’ instead.

In summary, Fogg’s model goes like this: First of all, a habit needs to help people do things they WANT to do. Think ‘save money’, ‘live a healthier life’ or ‘help save the environment’, and so on. He continues by explaining that it’s all about taking that thing that you want to do and: 1. Make it small! Make it a really TINY behaviour (like flossing,

Closing the Gap · 139 because you want to take better care of yourself). 2. ANCHOR it to something that fits naturally in your day (a habit you already have, like brushing your teeth) 3. CELEBRATE it by firing off a positive emotion inside yourself right away (“yes! good on me! – awesome, I did it!” etc.).

It should be a playful design process of trial and error and revision (e.g. trying different anchor points, using other locations, etc.), in order to nurture the small new behaviour into a ‘full-grown’ rooted habit.

Instead of taking giant steps, brands can also opt to focus on these tiny new habits; something that hooks onto what people want to do and something that can be anchored in the habits people already have.

It sounds simple, but in order to pull this off as a brand or company, you need to know the target through and through. This is where research can be such a great support (we cannot emphasise its importance enough).

Make sure you know what’s important to your target, what they want, what motivates them, what they aspire to, etc. From there you can start (co-)creating ideas on how your brand can help them achieve these things, and which tiny habits will have the biggest potential to resonate. Subsequently, knowing and understanding their current behaviour will help you to find possible anchor points as well.

I also took the liberty of adding another point to Fogg’s steps: incor- porate ways to stimulate repetition (no new habit can begin without repetition).

Some examples of brands that come to mind, doing it ‘the tiny way’:

• Medibank’s recent health campaign (based on the desire of people wanting to live healthier), encouraging small steps for better health; more walking, taking the stairs, buying fresh veggies and fruit. They combined it with a device called fitbit (it tracks every part of your day to help you “find your fit”, stay motivated, and see how small steps can make a big impact), which motivated repetition because it was fun and inspiring to see that taking the stairs actually does make a difference. • Yakult (also based on the desire of people wanting to live healthier) also comes to mind. Their introduction dates back to the 90’s, but what I like is that they literally translated it into a tiny pack (so

140 · Closing the Gap it’s just a few quick sips a day), pushed repetition (you buy them in multi-packs) and offered anchor points in their advertising (in the Netherlands it was anchored in the morning, the first thing to do before breakfast).

So should brands embrace ‘tiny’ in order to change their target’s habits? What do you think? If you can’t reach us in May to let us know, you know ‘where’ we are. We’ll be back in 10 minutes…

Closing the Gap · 141 chapter 11 The final way to close the gap - Market-a-Bling - with Darryn Wallace, Marketing Director at The Daily Drinks Company

MEASURING YOUR MARKETING ROI OR MARKET-A-BLING

It is important that we get the consumer to the top table to ensure that they are considered during the strategic decision-making process – and not just driven by the numbers.

The only way to get them there is through the marketers – the people who know the consumer and talk to them regularly.

Unfortunately, marketing departments are seen as cost centres by the accountants who run most businesses and until we can prove marketing delivers a Return On Investment (ROI), then the top table remains elusive.

We must look for ways to prove that the marketing activity we are investing in is directly affecting sales. Today it is still too hard to quantify the whole customer experience. But there are parts that we can measure, and through trial and error we can build up systems to prove that marketing is driving brand growth.

There are some companies who are doing it well and have started making inroads in getting the CMOs into the boardroom.

142 · Closing the Gap About Darryn wallace

Our final podcast is with Darryn Wallace, Marketing Director at The Daily Drinks Company. An experienced senior marketing & commercial director, Darryn is pas- sionate about growing business with a particular focus on developing brands, partnerships and teams.

"the ability for a marketing leader or marketing team to articulate what it is they are trying to achieve is incredibly vital ..."

Closing the Gap · 143 Pip: Hi, Darryn.

Darryn: Hi Pip, and thank you for having me here with you today.

Pip: Great! Darryn has spent 18 years at Cadbury Schweppes, five years as the Mar- keting Strategy Director of Asahi Beverages and now the Marketing Director at The Daily Drinks Company. Darryn, can I say that you are Mr FMCG?

Darryn: Definitely, grown up in the FMCG world and seen lots of change over a long period of time, so yes, you can!

Pip: We are at our last chapter of Closing the Gap. To recap on what Closing the Gap is all about it – we saw over the last eight months that consumer behaviour has changed so dramatically with only 30% of CMOs globally feel like they are ready for this digital transformation. We find that quite astounding as we believe we are in it, and halfway through it, if you had to put a time cap on it – we are way and truly into the digital world. So the last way to close the gap is our topic today, we call Market- a-Bling, which is really your return on investment philosophy. We are seeing a shift with marketers getting to the top table and being CEOs but it’s a relatively new trend. We think the best way to prove your worth at the top table is to understand what your marketing is doing in regard to return on investment so we are going to talk about that, Darryn.

Darryn: Looking forward to it!

Pip: So, tell me first, what is your interpreta- tion of Market-a-Bling and return on investment, and why do you think it is important?

Darryn: To answer your second question first, it is incredibly important. I think it is important because, particularly from a FMCG background, budgets and marketing budgets in particular

144 · Closing the Gap are being scrutinised more and more to levels of detail that wasn’t happening three, five or 10 years ago. There’s this real sense of – what is the money being spent on? Why is it being spent there? Why are you doing it? And what results are you expecting? The ability for a marketing leader or marketing team to articulate what it is they are trying to achieve is incredibly vital if they want to at the very least retain their existing budgets, or optimistically even, grow them over time to build their brands and businesses. So that’s why it is important – but what does it mean? That’s the challenge as it can mean a lot of things to different people. When you look at it, it can be calculated in different ways as well. What timeframes do you use, do you assess your return over one month, three months, six months or even potentially the median term of one to two years. Do you think about elements of a campaign or are you assessing the whole campaign in its entirety? Do you look at the campaign in its entirety or are you looking at the entire marketing mix and what you are attempting to spend money on. So it can mean a lot of different things to different people. And the approach I’ve tended to take is really making sure what you are trying to achieve as a marketing team is aligned to your corporate goals and ambitions. If you are able to talk to the CEO and executive team about your marketing strategy and the marketing activities and initiatives you want to invest in, and how they relate to how you want to grow and develop the business or- ganisationally - I have found it’s a lot easier to have those conversations around the board table. That means making sure that your activities are aligned to the corporate goals and activities.

Pip: I was a client for a bit and I worked at Virgin in the UK. My marketing director was a sales guy so he was really focused that every activity we had to present to him had some kind of return on investment. Is this something that you are taught growing up as a marketing graduate in a big company or is it just the luck of the draw on who is your boss?

Darryn: It could be a little of both. I think in large multi-national organisations the discipline is very strong and there is a lot of effort that goes into the diag- nostics that support all your activities and being able to demonstrate how that would return against your consumer metrics. The challenge is – how do you translate those consumer metrics, whether it is the conversion of your consumer through their brand funnel from general awareness to a repeat loyalty? How are you discussing concepts like the reach or frequency you might be achieving in

Closing the Gap · 145 campaigns or nowadays in digital, the impression served or likes? How are they linking back to how the business wants to grow and perform? So I think there is a balance of – yes, big organisations definitely teach you about the result you are achieving on your specific marketing technical aspect. How is that delivering growth for the organisation in improving the business? That is where you need to be very commercial in your approach.

Pip: We talked before about whether things should be strategic growth or tactical growth. That’s the hard bit to convince the board that we may not see return in the next six months but they have their own KPIs – they want to see quick wins, but it is about convincing them that sometimes that longer term return on investment is going to be much more powerful.

Darryn: That, Pip, is a real tension, particularly in consumer goods. People are chasing the sales by day and measuring it by day and essentially everyone is on an annual performance return or incentive. So when you have large customers that are able to make commitments around revenue in any given week or month, that becomes really enticing about how a business might want to focus their efforts. That’s important, absolutely important, but a marketer’s role is to build brands for the long term and to ensure the vitality of the organisation for the longer term. So it’s how you ensure you’re adapting your brand to be relevant, contemporary and modern, not only for today but for the next generation in many respects. That takes that balanced approach of yes, supporting your revenue goals and profit goals of the week or the month or the quarter but being able to strategically develop the business so that it is viable in the next two to five years.

Pip: So, do you have two pots of measurement in a sense? Would you have a day- to-day tactical delivery plan, like I am going to stick it on a gondola end and I am going to drive 100,000 sales out of that? And then here’s another pot of money and I’m going to invest it into some innovation and pipeline work?

Darryn: Yes, I think that’s a really good build because it’s the discipline of a marketer about how they manage their budget. You do need to demonstrate your understanding of the customer and how you support those immediacy programs and how you demonstrate that with

146 · Closing the Gap the business. I am delivering the weekly and quarterly results but you do need to protect your longer term investment funds. That’s "So it's how you where you might involve existing trademarks ensure you're into new areas, or developing new brands and work out how you protect that money and adapting your ensure you are able to spend it creating longer brand to be term value for the business. Because there are many FMCG businesses that are waking up relevant, that have got legacy brands, legacy manufac- contemporary and turing and are in declining segments because they haven’t been able to adapt over time. modern, not only They have, I guess, been drawn into chasing for today but for the short-term revenue at the expense of the long-term business development and find the next generation themselves challenged now, where so much in many respects. " of their revenue is dependent on very mature established mainstream brands that are in very low growth segments and they are struggling with them. How do they evolve their business model to adapt to the current trends?

Pip: I wonder too, as marketers we are supposed to be great storytellers. I wonder if you tell those stories to the board – can you then bring them on a journey with you?

Darryn: I think that there’s a balance of the dryness that numbers bring but with that brings the credibility that works at the executive table where people can understand that. I guess it is a consistent language but I completely agree with you – it is how you bring those external and outside influences into the business and have them understand. As the marketer, you are telling a story yourself or equally successful, is bringing consumers and customers directly in and having them talk about their experiences. I’ve found that really successful in terms of developing new brands. It is one thing hearing about it from the marketing team but there’s a completely other side hearing from customers as they’re assessing your new innovation and talking about how it could help their business or from consumers in terms of the needs it’s meeting and the problems it may be solving for them. It’s incredibly powerful to have those testimonials presented directly to a management team. Rather than being able to debate with the marketer directly about the pros and cons, you’ve got close to the source – genuine consumers or customers endorsing this thinking and that’s really powerful in its own right.

Closing the Gap · 147 Pip: One of the first ways to close the gap, which you have probably listened to, was Building a Consumer Practice. When we say practice, it’s not just popping in to do odd focus groups behind a mirror. We are talking about properly building insights, gleaning longitudinal insight from your customers. And part of that, for what we did for one of the supermarket retailers, was bringing 20 customers into their boardroom with all the GMs. These women were fantastic fun and they told this group of people – this is what I need, this is what I like. Hearing the customers’ own language was, for the GMs, quite fascinating.

Darryn: And it is so hard to refute. You can get caught up as a business in what might feel right for you and you are looking at the consumer or the customer through your own business model. But then to step back and have a consumer without any understanding of how you see business just talk to you about what they want to achieve, and why they might love certain products and why that is powerful for them has a real impact.

Pip: We talked to Sandra Arango from Heinz about innovation. We talked about it being iterative and looked at the pain points of what hasn’t worked and what frustrates a customer and the needs that are not being met. In those moments you’ll find those really fabulous disruptive ideas where you can create a great product or simplify a great service idea but you only know that if you spend time in their world.

Darryn: That’s right. It’s fighting that tension of – do "Rather than having you need to get things 100% right or are you brave one big bet, can you enough to have go? Particularly in large multi-national organisations with big brands, they do tend to have two or three say – well, how do we get things perfect? It’s fighting smaller initiatives with that tension, saying you know what – we can take things to our consumers and we can learn and explore that might grow through that and become more nimble and become organically and quicker, and by default for the business, more exciting. Rather than having one big bet, can you have two or evolve intuitively three smaller initiatives that might grow organically with what the and evolve intuitively with what the consumer is seeking. And before you know it you have the next gener- consumer is ation of brands or opportunities for the organisation seeking." without necessarily having to stake the whole organisation on that one activity where everyone is holding their breath for the perfect result!

Pip: And it’s like a disaster if it doesn’t work! We said earlier that, historically, marketing directors haven’t really been able to get into the CEO roles. But we have seen a big shift in that recently, particularly in the States and a little bit

148 · Closing the Gap more in the UK, as well. Do you think Australia is heading that way and why should they?

Darryn: I’d like to think so and I would be a big advocate for it. Well-run businesses have a big magnet that sits within their organisation and that magnet sort of sucks everyone into a standard operating practice. It’s there for a purpose, and that’s to ensure the business is run efficiently and effectively. But I think in -par ticular what we see in Australia over the past five to six years is that’s been the emphasis. Everyone has wanted to make sure they can run as leanly and efficiently and effectively as possible. There’s been pricing pressures and cost increases and growth decline – how do we sweat what we’ve got and do it in the most effective way? To break that magnet and to think differently and to explore new opportunities and have a business development mindset – that’s what marketers can bring to the executive table and the capacity of CEO. It’s really exciting because if they can see where the consumer and the customer wants to go, they have the ability to visualise how that could come about in terms of business initiatives for their organisation and then inspire the organisation to follow that path and to invest accordingly. That’s where you open up markets again and Australia has become lean and efficient. Equally, I hope there is a sense of adventure as well that gets into boardroom tables now. They all want to get more topline growth so how do they think differently and behave differently to achieve that topline growth?

Pip: We go through peaks and troughs culturally and we have obviously been through a time of quite conservative behaviour. Particularly with business, very few companies are taking risks. I do feel maybe in the next 12 months we are going to see a little bit more risk-taking behaviour because businesses have had to pull it together, they have had to crunch numbers, margins have had to be really tight. But for some reason I have this feeling – and maybe it is because we are spending time with the consumer, because they are a bit more ahead of us in some ways – that there is, not a flamboyance, but certainly a sense of ‘I want something more than what is being delivered to me at the moment’. And I think there is going to be a shift, and I think that is going to be fantastic for marketers because we are those people that historically have made those changes and taken those risks and that’s what we were taught at Monash University a million years ago.

Closing the Gap · 149 Darryn: I think there’s a real appetite by consumers for something new. If you went back 10 years ago in confection- "I think there's a ery or beverages there was a really tight real appetite by repertoire. Consumers operated between one, two or three brands but you know consumers for the world has got smaller, they know something new... what’s happening around different continents and different places in the world. they know what's They can import things, they can learn happening around things really quickly and really easily so their appetite or hunger for what is best different continents for me now and how can I actually get and different that is large. That immediacy that’s driving culture and that impatience in some places in the world. respects I agree with you, consumers They can import will pull businesses into line. Businesses can no longer be complacent, they can’t things, they can assume what has always worked will al- learn things really ways work in future. All companies that I have engaged with really understand quickly and really that. If they are challenged in any space easily so their it is – well, how do I move forward? How do I break the legacy models and appetite or hunger practices we have to really explore these for what is best for new frontiers? I think over the next five years there will be a big swing in terms me now is large." of businesses innovating, exploring new opportunities, exciting consumers with exciting new products and offers and trying to stimulate that growth again, that we all want in the market.

Pip: Yes, and to add to that, Darryn, the consumer needs to be right at the centre of that piece of work. Brilliant, thank you so much!

Darryn: You’re welcome!

Pip: Nice to finish on a discipline, a combination of getting your numbers right, so you are taken seriously at the top table, but also having the thought leadership and the creativity to see beyond the tactical campaigns and look for the business growth. As you say, consumers are after some new stuff so the brands that we are working with are mindful of that now. Thanks for your time, Darryn.

150 · Closing the Gap Darryn: No problem, Pip. My last thought would be – it’s far easier to communicate a return on investment when you are getting strong growth, so everyone out there listening really try to invest for great long-term growth.

Pip: Brilliant, great last thought! So thanks to everyone for listening to the Closing the Gap series. This is our last chapter and we have had great feedback. We are planning a second series so stay tuned! Au revoir.

Closing the Gap · 151 Big Data Is Useless Unless Used In Real Time

Late last year I sent an online query to Harvey Norman regarding some chairs I wanted to buy. I sent my query at 10.30am. At 11.30am, BLOG when I hadn’t heard back from them, I went on to buy $1000 worth of chairs from another website. At 6:00pm I received an email from By Pip Stocks 17 / 06 / 2015 Harvey Norman telling me that a store manager would contact me in Article in Marketing 48 hours. Magazine - marketing- mag.com.au Too late, Mr Norman.

In today’s world, this is unacceptable. Not only because there is no shortage of information available for any brand to tap into to work out what their customers are doing but more importantly, people expect businesses and brands to deal with their queries and meet their needs with speed.

The digital world we now live in has changed the way we behave.

Consumers have the opportunity to buy what they want, from where they want, at any time they want. People have access to unlimited information and therefore can make the most informed decision on what to purchase. If you don’t answer their tweet or respond to an email in a reasonable amount of time, they will go to the next brand that will.

Don’t get me wrong. Speed doesn’t mean superficial. Marketers must still understand their consumers in a deep and meaningful way but what is the point of all this big data if that same brand cannot deliver to their consumers’ needs.

We are now living in real time.

Some companies are doing this well. Best Buy in the US created Twelpforce, an initiative where Best Buy employees answer customer queries on twitter in real time. Cleverly they are utilising the ‘down’ time in the physical store environment as well as satisfying customer needs.

Coca-Cola has realised the importance of real time. Having set up a task force of specialised marketers during the FIFA World Cup, this Brazilian team was able to respond in real time to consumer com-

152 · Closing the Gap ments and won a Gold Effie for their effort.

Disney World launched their MagicBands last year as a way of helping their customers navigate the park, book into restaurants, jump the long queues and plan their trip. Imagine all this data and what Disney can learn about how their customers navigate their park. Even better, how great is it that they can even guide people through quieter rides as they respond in real time?

Closing the Gap · 153