Playing it Safe is Too Dangerous

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There are two choices businesses have when it comes to sales and marketing that every CEO, Owner, or executive must make.  The choices are not mutually exclusive from each other, however; the decision must be made.  That choice is to try to sell more to existing customers or to secure new customers.  Best in class businesses will do both in varying proportions.  Apple will sell more products to their loyal users while also introducing new users to their portfolio of products.

Three recent examples of other retailers highlight how difficult this decision can be for some companies.  JC Penney made a strategic decision to do away with their long-tenured practice of providing coupons and deep discounts periodically on their products.  At the same time, they also modified their product selection, store layout, and technological infrastructure within the stores to allow for mobile checkout.  However, the press, existing customers, and even employees could not get past the change in pricing and the implications it had on the positioning of the company.  In response, the company seemed to take a moderate position of offering a few coupons and discounts (at which point, the CEO was fired when results for this “half-pregnant” approach failed to show results).  The company has now brought back the former CEO to try to get the company back on track – and among his first moves are to reverse much of what the previous CEO had done.  JC Penney is not clear on the target customer and what s/he seeks.  Is it the loyal customer of theirs that “grew up” on coupons and discounts (even knowing that the non-discounted price was inflated to begin with)?  Or, is it the customer of a more recent vintage who wanted the “bottomline” pricing without the faux promotions or discounts?  In fact, they got neither!

Kmart has become topical again.

Kmart has become topical again.

Kmart, a retailer that was seen as being all but irrelevant to many has been praised by some lately for being edgy in their marketing and advertising and using double entendres and puns to attract attention and develop “buzz” on social media.  While the revenue performance has not caught up to the chatter about the chain just yet, there is some hope that it will happen and that it is just a bit too early to see results.  By breaking from conventional wisdom about advertising that would maintain that you do not want to risk offending prospective shoppers, Kmart has at least been on the radar screen of shoppers that previously ignored it.  By stepping out and targeting the shopper with a “sense of humor” (even if it is potty humor), Kmart has worked to become a store that would be in the consideration set for some shoppers that would have ignored them previously.

Contrast that with Abercrombie & Fitch which chose to announce very publically that it did NOT want certain shoppers in their stores (in a quote that is now 7 years old! – Just shows that internet reported information does not die easily!).  The backlash has been loud, but the chain has not suffered any substantial drop-off in revenue.  The customers who were inclined to shop there continue to shop there regardless (maybe even, because) of the store’s positioning.

So, what is the lesson to be learned?  The lesson is that by trying to avoid alienating anyone – you please very few.  Businesses have to stand for “something” and have to be seen as representing the shopper in ways that go beyond just providing product.  By staying middle of the road and doing a little of this and a little of that, a business will more likely be seen as unable to much of anything.

 

David Zahn

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