At C-Level

It's in the Bags at Southwest

Is anyone else as completely impressed as I am over Southwest Airlines latest campaign about baggage flying free?  If you've been watching sports on TV lately you can't miss them--burly Southwest baggage workers taking pride (with tongues in cheeks) about not making your bags pay for the lousy seats in the cargo hold, or getting all teary-eyed about their special relationship to your bags?

Much of Southwest's historical success can be traced to staying with its low-price strategy.  So when the other major airlines saw an easy profit opportunity by charging $20 to check a bag, SWA swallowed hard and said "No."  But the brilliant part was making this a symbol of Southwest's value commitment vs. its competition.  This is a creative departure from the longstanding advertising approach of value with whimsy and a price point.

The campaign is absolutely on strategy, 100% in character and powerfully leverages a principled strategic decision the company had the guts to make, even in challenging financial times.  And who would have thought an airline could have built an ongoing campaign around baggage?  But obviously it's working because they've been running these for some time.  Very cool!

Here's an Idea

Here's an innovative idea I've been thinking about for a long time.  In fact, ten years ago my company filed a patent on it, but then, due to budget constraints, never followed up.  It falls under the category of cool business ideas that I've decided I'll never do.

The concept is simple--make emails effective advertising vehicles.  Yes I know that sometimes advertising is now being embedded at the end of emails, but it's really pretty worthless.  What would make it better?  If the advertising was effectively an endorsement from the sender.  Here's how it would work:

1. You subscribe to the service because it's cool, and because a portion of the revenue goes to a charity you select.

2. You select a product or brand from a large group of participating advertisers.  Naturally, you're likely to select one that you personally endorse--maybe Harley Davidson, Patagonia, American Eagle, MTV, Dancing with the Stars, the latest movie, Tater Tots, Gold's Gym, etc.  The possibilities are endless.  And you can change whenever you want.

4. The ads would be simple.  A logo and a tagline.  However, you can customize your "ad" with a specific endorsement, such as: "Toyota Prius: This is my car (hyperlink).  I'm getting 52 MPG!"    It would also include a brief acknowledgement of the chosen charity.

5. Companies could pay by click, or possibly for every email sent (if that could be tracked or verified, at some point). 

Email users would like this because, like Facebook, it's personal and revealing.  Email recipients wouldn't be offended for the same reason, and because they know a charity benefits.  And advertisers would love it because it is not just a paid ad, but an endorsement from someone the recipient actually knows (and presumably shares at least some common interests).  And the ads would be clicked at a higher rate than anything out there. 

That's the idea.  Would it work? 

Turning on the Jets

I was intrigued by an email I just received from Jet Blue, my favorite domestic airline to fly.  For $599 I can fly anywhere on their system, as often as I'd like, for one month--from Sept. 8 to Oct. 8.  My mind immediately began racing.  Do I need to go to the East Coast during that period?  Well, maybe, but probably the first week in September.  Any other needs?  Because wouldn't it be fun to zip down to Atlanta to see a friend, then maybe a weekend for some diving in Aruba?

Alas, it probably isn't going to work for me.  But the deal definitely got my attention.  And I suppose for JetBlue it isn't as risky as it may sound.  (They do reserve the right to stop the promotion if need be.)  It's a low travel time, meaning a good portion of their trips will be incremental, and they have the capacity on the flights.  And it's a great way to get a quick revenue lift.  The only "catch" is you have to register for their frequent flyer program.  That's easy for consumers.  And good for Jet Blue.

Creative and aggressive pricing.  It's what's called for in this economy.  It makes me feel all the better about Jet Blue.  And I can't stop thinking about the sandy beaches of Aruba.

Back to Basics

Since the economic collapse virtually every business has been taking quick and dramatic action to survive the drop in consumer spending and the tight capital markets.  What have they been doing?  Of course, businesses across the board are cutting costs--eliminating all wasteful and unnecessary spending and going without many of the perks and indulgences they had become accustomed to.  Frivolous advertising and sponsorships have been axed.  Cushy retainer relationships are canceled. 

What else?  Well, everyone is concerned with giving customers the best value, resulting in lower-prices and value-oriented promotions.  New products that delivered more sizzle than steak have all but disappeared.  Meaningless line extensions that were little more than marketing filler aren't being funded.  Only real innovations with game-changing potential are still capturing the excitement and imagination of retailers and consumers.

More?  Casual dining and upscale restaurants--a category hit as hard as any--are all talking about customer service.  And I just read that new Toyota CEO Akio Toyoda emphasized that the one of the keys to the company's turnaround will be the ability to refocus on the needs of the customer.

And it strikes me that all of this is pretty basic stuff--time-honored principles for success that have been around for centuries.  Maybe we need a recession every now and then to remind us of these principles of how best to conduct our business, or perhaps to reinforce their importance. 

KFC, OOS, DOA

Ninety-nine percent of restaurant promotions are derivative.   So it shouldn't surprise anyone that the wildly successful Denny's Free Grand Slam deal would be quickly copied by someone.  And while imitation may be the sincerest form of flattery, it is not necessarily the best prescription for marketing success.  Just ask KFC.

The Denny's formula was brilliant: Give away a meal.  Replace a major media campaign with a single high-profile announcement (for them, the Super Bowl) and rely on blogs, Twitter, email and word-of-mouth to spread the word.  Then make sure you can execute.  Denny's did this by limiting the offer to dine-in customers only, so the table turns became the governor that saved the kitchens from imploding.  The result, as reported in this blog a few months ago, was a resounding success, strategically, tactically and financially.

This did not go unnoticed at KFC, which surely prides itself on having smarter marketing folks than Denny's.  In the midst of a strategically brilliant and well-executed launch of Kentucky Grilled Chicken, they smelled an opportunity more aromatic than its 11 herbs and spices.  Take the Denny's formula, but instead of the costly Super Bowl ads, launch it on Oprah (the Walter Cronkite of our generation).  Then let the bloggers, Twitterers and email-mongers take over.  A free Kentucky Grilled Chicken meal has got to be as big a draw as a Denny's Grand Slam breakfast, right?

Well actually, it was bigger, fueled by Oprah's imprimatur and the apparent ease of dropping by a conveniently located KFC outlet for a chicken dinner to go.  Unfortunately, as has been widely reported in the press, things did not go smoothly.  There were millions of problems downloading the coupon from Oprah.com (including mine, which I could never successfully print) and massive chicken Out-Of-Stocks in KFC's around the country.  As a result, the company resorted to offering customers rain checks that had to be mailed in.  To make amends, KFC gave the disappointed customers the rather modest and overwhelmingly unsatisfactory compensation of a free Pepsi for their troubles.   The result?  Grumpily hungry customers.  Negative PR.  And a disastrous promotion, even if it did generate massive trial of the new grilled chicken.

So what can we take away from this experience?  Mostly what KFC should have already known.  But just in case, here are a few lessons:

1. Simple is good.  Complicated is bad.  In an attempt to police double-dipping and control demand, the KFC promotion required you to print a coupon with unique bar codes from Oprah's website.  I'm sure this was a major factor in getting Oprah in on the deal.  But as previously mentioned, the bar code technology was a major problem, causing frustration, customer support issues, etc.  Contrast this to Denny's--Come on by and we'll give you a free breakfast, no strings attached.  Every marketer should heed the advice of Will Rogers: "Nothing you can't spell will ever work."

2. Operations first, marketing second.  This is an age-old problem in fast food.  It's what nearly killed McDonald's in the '80's and '90's.  The customer experience is the best way to build--and the fastest way to lose--brand equity.  Denny's recognized that their worst case scenario was long lines around the building (which is pretty good advertising, by the way).  If people didn't like the look of the line, they could turn around and go home.  At KFC, on the other hand, you had a steady stream of angry customers marching up to counters and wondering why there was no chicken, leading to explanations, excuses and confrontations that could not be worse for business.  I could write a book on this, but the Cliff Notes version is as follows: Big Marketing Ideas cause unnatural demand spikes that are operationally difficult to manage, causing long-term damage to the customer base while Marketing is off celebrating their short-term victory. 

3. If your franchisees aren't committed, don't do it.  This is a hard lesson and what makes a franchise system so very difficult to run.  Believe me, there is no person more capable of leading a group of franchisees than YUM Brands' CEO David Novak.  I've known David for years and seen him in action.  I'd follow him up Pork Chop Hill no questions asked.  So if his persuasive leadership didn't convince the franchisees to pony up on their food orders then this promotion was Dead On Arrival.

Naturally, KFC is spinning this as a terrific success, with five million coupons redeemed.  But sometimes success can hurt you worse than failure.  I bet it left a nasty aftertaste with Oprah, too.

Animal Branding

Brad McLaws, co-founder and managing partner of SagePoint Consulting and one of the best branding guys I've ever met, made an observation the other day about the Mozilla branding.  (Full disclosure, I am a co-founder and partner in SagePoint also, but that's really beside the point!)  He sent me a screen capture from the Mozilla home page and asked: "What's up with all the animal branding?"  I took a look and laughed.  Now I love Firefox--both how it works and what the Mozilla   organization stands for.  But looking at this menagerie does leave me scratching my head (I hope it isn't fleas!).  We have the fox, and the thunderbird, and in the trees there is a racoon and a squirrel and more birds.  (Aren't these typically dining fare for foxes?)  And of course at the bottom, the Mozilla dinosaur, a nasty looking carnivorous creature that looks like he could swallow up all the critters on the screen before breakfast.

And we won't even begin to discuss what the hot air balloons are doing in this picture, or why the tree looks like a Sanskrit org chart, or the symbolism behind the heart and the clock and all the rest.  Or, for that matter, just what planet the fox is looking at?  I don't mean to pick on Mozilla, because this type of thing is not all that unusual.  Far too many companies have allowed their brands to suffer from incrementalism, patchwork additions and changes that over time muddle up the communication of something that could and should be singularly powerful with meaningful clarity.

OK, so Mozilla doesn't spend a lot of money on branding.  Maybe that's a good thing, given its charter.  But the organization could clearly benefit from some good thinking in this area as it continues its drive to take market share from the rich and distribute it to the masses.  Further, given its non-profit status, I bet some good consulting firm would work on it pro bono.

Microsoftens

Is anyone else blown away by the great work that new agency Crispin, Porter + Bogusky is doing for Microsoft?  OK, many of us hated those cheesy initial ads with Bill Gates and Jerry Seinfeld.  But the "I'm a PC" campaign is really working for me, and seems to have completely neutralized Apple's "PC Guy" attack ads. 

The latest Crispin Porter offering rightfully leverages the #1 benefit of PC's over Macs: PRICE.  And what's better than a price message in today's economy?  Well, nothing.  The set-up is that a real person is given the task of finding the laptop she wants (including a 17" screen) for under $1000.  She can't find one at a Mac retail store and ends up buying an HP somewhere else.   

Despite going after Mac head-on, the PC buyer ends up being very likeable, very practical and what marketing people like to refer to as "aspirational."  There's one line in particular that is slipped in that I love.  Frustrated that she can't find what she wants under $1000 at the Apple store, she says:  "I'm just not cool enough to be a Mac person."  Wow!  What a brilliantly  understated zinger!  Because she's obviously not uncool.  Rather, she's sincere and funny and someone we want to hang out with.  The real underlying message is that the PC buyer is not rich, not pretentious and can't afford to waste money on image that doesn't provide real value.  Look around--she's like the rest of us.

It's a gutsy ad with a spot-on strategy and engaging and trendy production values.  And, unlike 80% of what we see on television, it represents well-spent advertising dollars.  Kudos again to Crispin Porter, and to Microsoft for having the good sense to hire them.

Captain D the Bold

These days every marketing department is scampering around trying to figure out what to do in this economy. 

Image advertising?  Hard to show a return.

Price promotions?  Need a lot of media (which we can't afford) to drive the traffic necessary to make money.  And the competition for traffic is tougher and tougher in this environment.

So what do we get?  A lot of namby-pamby promotions and small product ideas that are doomed to failure.

There are solutions, but they generally require brave new thinking (see Denny's Free Grand Slam).  Here's another one I think is pretty brilliant.  Captain D's, the 580-unit seafood chain, decided to compare itself to the significantly higher-price casual dining leader in seafood, Red Lobster.  And importantly, the folks at D's really took off the gloves, with a 30-second ad filmed right next to a Red Lobster restaurant and featuring actual RL customers.

Full disclosure--I used to run strategic planning and concept development for Darden's Red Lobster.  I'll always have a soft place in my heart for the company.  But I have to admire the aggressive and powerfully strategic move by Captain D's.  In fact, I love it.  Why?

1. It elevates the quality perceptions of the Captain D's brand.  Compare fast food to casual dining?  If you can get away with it, absolutely.  (Carl's Jr. has been doing this for years with the Famous $6 burger, which costs about $4-5.)

2. It delivers a strong value message without discounting, which is a huge and sustainable win in this economy.  Save $30?  Save $45?  Well, of course I want to.  That's big money.

3. It tells me something I didn't know.  Did you say Seared Tilapia and Wild Alaskan Salmon?  I didn't know they had that!  Wild salmon?  At Captain D's?!!!

But perhaps even better, the ad generated controversy , which Captain D's leveraged with an ad on its website when RL's parent Darden Restaurants threatened legal action.   The Captain D's response is funny and perfectly positions them as the underdog with a relevant story to tell, even though it only ran on their website.  And you know that everyone outside of Darden's Orlando headquarters would rather see the spunky David prevail over the Big Red Goliath.

Props to the folks at Captain D's for innovative thinking and bold action.  There are ideas like this available for every business--ideas right for our economy and strategically on target.  But companies need some imagination to find them.  And then, of course, the resolve to take action.

Denny's Scores Big

It was better than expected.  A huge success.  Gutsy and brilliant.  Denny's Grand Slam Breakfast giveaway on Tuesday had to exceed every expectation the company had going in.  Sales were huge.  Publicity has been extraordinary.  And customer feedback consistently positive. I was particularly surprised by expressions of heartfelt thanks by many customers.  In these hard times, the promotion was often seen as a charitable act of compassion and generosity.  Score.

As promised, I stopped by my local Denny's yesterday while breakfast was in full swing.  Consistent with most of the reports I read, there were a lot of young people standing in the 20-30-minute line.  That's spot-on strategy for Denny's, which has been trying to build credibility with this demographic, particularly with their Allnighter campaign, which includes tie-ins with up and coming rock bands. Score.

Operations were tight at the restaurant.  The kitchen was an assembly line of pancakes, eggs, bacon and sausage.  As expected, the critical path was dining room seating (the promotion wasn't for carryout orders).  But because the promotion was only active during breakfast and lunch--both generally time-constrained--tables turned pretty quickly.   And no one that I talked to complained about the wait.  They expected it.  Score.

Employees were excited, enthusiastic and proud to be part of something great.  As expected, tips were very generous.   Perhaps the promotion did as much to reposition Denny's with employees as with the public, saying we're a pretty happening place.  Big score.

While most businesses are hunkering down and pulling back media dollars, Denny's charged into the face of the economy, giving away six-dollar breakfasts with NO STRINGS ATTACHED and advertising (with one spot!) on the Super Bowl.   It was a brilliant strategic move, aggressive and daring and generally very well-executed.   Score.

Denny's management took a big swing at the fence, and scored big.  Like Virgil said a few thousand years ago: "Fortune favors the bold."

Casual Dining is Reeling

Few industries have been hit harder by the economic crisis than Casual Dining.  My alma mater, Darden Restaurants (DRI) is trading below $17, from $40 a year ago.  Brinker (EAT) has gone from $25 a year ago to $6.70 today.  Similarly, Cheesecake Factory (CAKE) is down about 75% vs. year-ago. While perhaps the market is overreacting, the dramatic trends should not be surprising.  Some recent research shows that 71% of Americans are reducing their dining expenses.  The  market has concluded that the casual dining heyday is over: Traffic is declining quickly and won't bounce back for a long while.

Good restaurateurs understand that the answer cannot be higher prices and lower portions.  That's a death spiral waiting to happen. 

If I was running a casual dining chain, I'd build my strategy on the premise that people are eating out less, so they want a really special experience when they visit a restaurant.  Consider these:

1. Shift the mix to premium quality and higher-priced items that generate more penny-profit, even if it means discounting them or reducing prices.  

2. If you don't take reservations, now would be a good time to start.  I bet long lines aren't your problem these days, even on Saturday nights.

3. Take service to a brave new level.  Get your service manager on the floor during all business hours, greeting every customer at least once, comping a dessert, leaving business cards, learning names, getting emails, etc.  Make each of these guest feel very special.

 
4. Advertise like each visit will be an extraordinary experience, even if you're not Ruth's Chris.  (For some reason, I'm reminded of the Austin Powers provocative but unpretentious trailer back in 2000: "If you're going to see one movie this summer, see Star Wars. But if you're going to see two, see Austin Powers.")

5. Mine your database.  Invite old customers back for something special.  Better yet, call them.  (Yeah, I know that sounds crazy, but you can bet the story will be told.

6. Stick to the basics.  Unless you've got a killer product idea, you're better off promoting what you're famous for and good at.  It's not worth advertising marginal product news, as you'll be disappointed in the returns.

7. Try to make the place look full.  Close off the view of empty rooms and sections.  If need be, close part of the restaurant for remodeling.  Attract large groups (meetings/businesses/gatherings/etc.) on weeknights with generous offers, even if it's at breakeven economics.

8. And of course, need I say, QSC?  Don't cut labor if it leads to slow service, dirty bathrooms and littered sidewalks.

9. Corporately, it's time to close your lowest-performing stores that are showing losses, or worse yet, burning cash.  In the same quarter, add the severance packages from the home office people you choose to let go. Wall Street will give you some credit for these actions, and it's doubtful the stock will get hit much worse from a single drunken sailor story about your awful quarter.

10. And then hang on.  If you've been doing this awhile, you know the good times will return, eventually.