In the classical business model, we all say we want a win-win relationship. But is there such thing as a true win-win relationship? Isn’t there always an ending where one party feels that he/she could have gotten more?But traditional marketers and operators as well finance team in organizations reject the concept of lose-win immediately. Recently, when I was helping a few restaurant chains find the next big local store marketing idea, I suggested a series of micro-ideas. One of the micro ideas I proposed was:A SIMPLE LOSE-WIN IDEAInstead of approaching the high school athletic director and signing the school up for fund raising, why not target for individual students. Every high school student will arrive at the age when they are able to get their driver’s license. That means if we have two high schools in a trade-area, and each high school has a class of 150, then every year the restaurant has opportunity to “touch the lives of “ nearly 300 students in a very special way. So what was the recommended in store promotion? A student gets to eat for free with two friends on the week they get their first driver’s license. WHY THE IDEA IS BRILLIANT (my personal opinion, of course)This is a simple idea that needed no media dollars to promote. Successful implementation in the store is what one needs to spread this viral message.Now why with friends? We all know that teens today move in herds, and there are hardly any occasions in which a teen goes and eats alone. Only giving the teen with a new driver’s license the free meal, and not their friends too, would fall in the win-win category and not lose-win, as the teen who eats free will be bringing business to the store as their accompanying friends have to pay. Teens will see through it and realize that this is another marketing gimmick, where, in other words, the store is promoting a much used buy one and get one free offer. That discovery completely takes away from the teen-connectivity to the offer.Instead, an unconditional eat free with two friends offer is slightly bizarre in today's world, and the teens will be trying to figure out  the catch. There are no catches, and the no-catch part will make this deal an emotional connection for the brand. So now that we have a teen with their two best friends enjoying a free meal at the store, the experience will be etched in the memory of the teen forever as “one of the cherished firsts in my life.” And in that cherished first memory, the brand gets planted in a unique favorable positioning.REACTIONSMARKETING GUY: How can I do this without capturing the information from teens? The promotion fails as students will come and take advantage of the offer. Effectively we will be feeding every school in the high school three times.Marperations Response: Teens today build relationship on their very own terms. Instead of looking at the lost opportunity to collect teen information, this promotion is capturing a lifetime moment in the teen’s mind. The teen will think, “the day I got my first driver’s license, I ate free with my two best friends at restaurant xxx.” Isn’t that priceless?OPERATIONS GUY: Can we do it at off-peak times only? I do not want more stress of ‘comping’ (meaning free food) during times when operations is stressed. Can't we do the new driver eats free IF a friend pays full price? And, what if 40 teens come the same week? That will really hurt that week’s sales.Marperations Response: A celebration cannot have limitations. Offering this only at off-peak is very transparent, and teens will see that they are offered the special when the restaurant has surplus food. And the idea of friends paying full price is another way of doing BOGO (buy one get one free) offer and that is already there. That cannot be the gift for a special moment. And now about the unlikely event of 40 teens getting their license the same time, isn’t that a jackpot for the brand? The synergy of the positive energy will be more than individual teens coming on different days. FINANCE GUY: This would result in a $15 loss or write-off per occasion. On an average we would feed every student in the high school nearly twice a year and that makes it nearly a $6000 loss. What is the ROI of the $6000 spending on LSM? Marperations Response: Yes, ROI can be calculated very easily. All one needs to do is to calculate the lifetime $ that the teen will spend at different similar restaurants and then estimate how much this “special moment” will make the teen choose the restaurant. If this makes the teen spend $20 for just one month at the restaurant and assuming there were 200 students in the high school, every year this has the potential to generate $4000. And of course that is for one year. Hence the lifetime ROI of this well over break-even....

In one of my early projects in the corporate world, I built a team member satisfaction measuring tool for the company I was working for. As I built the questionnaire, I covered all areas from hiring to training, from on the job satisfaction to the role of the supervisor and compensation.  Once the data was collected and broken down by region, I tried to correlate it to sales for each region but to my amazement, there was very low correlation. That seemed quite strange. Certain Senior Management members started questioning the need for the survey as it was not connected to the top-line key performance indicators of the brand. The reports generated on the project made their rounds among different regional VPs and then got put in their designated folders. I was quite bummed for not being able to provide the company with actionable data, or making the company feel that they can act based on the data.Six months later, when I was between projects, I decided to run the correlations again. But this time I used current sales and compared it to team member satisfaction data collected six months back.  The results were simply astounding. The relationship was strong. Then I enhanced the model by putting monthly sales changes for the last six months and soon realized that the team member satisfaction data was a crystal ball, as it was the leading indicator of future sales. I could not believe I missed this one. This was right in front of my eyes and I failed to see it. I remember growing up in India; my mother was a great cook. But on days she was upset, the food was not the same.  Of course my brother and I never complained, not because we did not want to complain, but complaints got us a few smacks on the head. In short, my mom, a great cook, could not cook to her full potential on days she was unhappy. So in order to get a great meal, our job was to make sure mom was happy, at least when she cooked.That same lesson now was in front of me, on a bigger scale. I realized that only happy team members can make customers happy. Empowered by the new information, the team member satisfaction data found a new life in the corporation. As most of you can imagine, in the corporate world we judge today on yesterday’s sales, a trailing indicator. In that scenario, to be able to provide a system-wide and regional level leading indicator for sales is very valuable.At the same I came across another piece of information. In most experience industries, nearly 70% of the reason for revisit (repeat sales) was the customer’s experience. The remaining 30% was marketing, branding, message and other factors.  And who controls the customer’s experience? The front line team members. Wow!  I realized we had information that would allow us to favorably influence the guest experience.The next few months, I traveled to present the data to each region and would also do focus groups with team members to understand the drivers of the data.  Here are my top three big learnings:1.   It is better not to ask what is wrong, than to ask and not do anything about it.  Asking sets an expectation, and not doing anything creates an unfulfilled promise.  It is just like a relationship where earlier your spouse accused you of not asking him/her of how the day was.  Now that you asked and he/she is talking, you are accused of not listening (and not caring) as you were doing something else at the time.Solution:  Within three months of collecting team member satisfaction data, all team members should receive the following:a)      Top-line summary data so they feel includedb)      List of actions that will be taken2.   Compensation is not the number #1 driver of satisfaction.Of course fair compensation is necessary, and fair is defined by: a)      comparable industry salariesb)      salaries within the company c)       incentives that reward performanceBut what was more important on a day to day level was work place situations and interactions.3.   Finally, team members worked for a person, not a company.The data always has a strong correlation with how a supervisor treats a team member.  Hence when a team member decides to leave a company driven by dissatisfaction, the primary source of dissatisfaction is “how my boss treats me on a day to day basis.”...

Let us take a stroll back in time to see how America has bought toys during the holidays in years past. In the 1990s, Toy R Us was the category leader. The holiday toy sales started the weekend of Thanksgiving, with Toys R Us newspaper insert, in which America learned about the coolest toys of the year. Also in the newspaper insert was coupons for the hottest priced toys of the season. America used to wait in anticipation for the insert and then rush to Toys R Us. Toys for holidays was synonymous with Toys R Us. They were the information leader, the price leader and the “place to go” for toys.In 1998 the toy industry had its first major shakeup. Internet was becoming more mainstream and America did not need Toys R Us to know what were the coolest toys of the year. Americans also did not need to wait till Thanksgiving to learn about the coolest toys of the year. And WalMart did the unthinkable.WalMart realized that if toys can become a commodity, then the price leader will be the category leader. WalMart also realized the 80-20 rule, where 80% of the sales comes from 20% of the toys. In 1998, WalMart decided to extend its toy selection to carry top selling toys and discounted them right after Halloween, nearly four weeks before Toys R Us started their thanksgiving promotion. And when Thanksgiving 1998 came, a sizable part of the population had already purchased their toys. Toys R Us was ambushed.At the same time, in order to grow the category, Toys R Us had launched Kids R Us and Babies R Us. Kids R Us eventually went out of business. Babies R Us still exists. But instead of trying to create three brands, Toys R Us should have focused on answering the question “Why Toys R Us?”- Do you get toys that are exclusive to Toys R Us?- Do you get toys released at Toys R Us before they are available anywhere else?- Is the toy buying experience totally out of the world that kid must go there and no where else?If it is none of the above, then a toy is a toy and buyers had no hesitation to go to the closest and cheapest retailer of toys. And WalMart had everything to gain as buyers went this direction. Another gainer from this has been the online retailers. For toy occasions that do not need an instant gratification, they started to become the best option.In 2008, the toy war has gone to the next level. WalMart Announced in October its 100 Toys For Just $10 sales. Based on WalMart’s internal research, “70 percent of consumers report planning to start their holiday toy shopping before Halloween, and 2 out of 10 will have finished by that time,” (WalMartStores.com)  Toys R Us responded by “setting up 350 temporary stores and toy boutiques that will stay open during the holiday season, in many cases taking over shuttered retail space in shopping malls” (Wall Street Journal).  But what does this strategy mean? Is Toys R Us conceding the price war to the buying power of WalMart? Is Toys R Us trying to outplay WalMart by being the most conveniently located toy retailer? Even Toys R Us succeeds in becoming the most conveniently located toy retailer, they have to watch their marginal returns, taking into account the costs for the new 350 temporary locations. They also have to worry about branding. Will these new temporary locations be branded the same way as their regular stores or look like nameless pre-halloween retailers who pop up every year. If Toys R Us takes their eye of the branding, five to ten years from now, we will be telling our next generation about the magical toys store, with a cute giraffe as their icon, a magic land that simply became extinct....

While having coffee with one of my colleagues one afternoon, I asked for his views of the future of luxury brands and Baby Boomers. “Luxury brands are dead,” he said, pointedly. I was taken aback by this cryptic pronouncement. Probing further I asked him to reconsider such a pessimistic position. Entire companies and industries depend on middle- and upper-middle class Baby Boomers pursuing occasional luxury splurges, whether diamond earrings or day-spa packages at a Mobil Five-Star hotel. He nevertheless remained resolute. An unprecedented economic recession had swept a pall of fear and frugality across the nation, and for this generation, it was here to stay. In an Adweek article entitled, “Boomers Caught in Squeeze Play,” which assessed Boomer consumerism in difficult economic times, the future does indeed appear bleaker. Eric Almquist, a Bain & Co. partner, observed that a very large group of pre-retirement Boomers are entering a life stage of traditional economic parsimony. The current Boomer mindset revolves around a nearly universal question: “Can I live off my savings and social security for the rest of my life?” This gnawing question leads to greater risk aversion, obsessive price shopping, and an urge to preserve equilibrium in the current life situation. Ben Kline with the Leo Burnett agency in Chicago believes that consumers were not just cutting back on spending; they’re reassessing what is important. Also commenting for Adweek, Kline said, “We’re seeing shift from a trade-up culture to a trade-off culture.” Kline believes that Boomers view discretionary purchases from a newly emerging framework. They are seeking more than value, where a product’s bundle of tangible and intangible attributes reach an optimum balance with price. According to Kline, consumers are undertaking something akin to brand triage, where they assess discretionary purchases as either indispensable or dispensable, based on more deeply held core values. David Wolfe, co-author of Ageless Marketing and Firms of Endearment, insists this behavior is being driven by more than distressed economic times. In an email to me and a few colleagues, David wrote: “The spirit of materialism wells up in youthhood to incline behavior toward outwardly visible messages to others. It takes different forms in different cultures, from body markings and piercings to outlandish clothing and other eye-popping possessions acquired with the intention of increasing one's influence, power and wealth.” Wolfe insists that thriftiness in middle-age is not just a byproduct of lifestage; rather, middle-aged adults seek new priorities, driven at the root by fundamentals of human development. “For most, the onset of midlife is accompanied by an ebbing of narcissism and materialistic appetites because the social and vocational aspirations have typically become trimmed. Now, people begin talking about ‘simplifying’ their lives and putting their lives in balance. All in all these shifts are less rooted in volition than in our genes which anticipate the milestones of personality development. The zeitgeist (reflects) a shift away from narcissistic and materialistic values.” There you have it. Today’s luxury industries are confronting convergence of two forceful trends: Boomers entering a lifestage when traditional materialistic values become less important, plus a recessionary economy that for many has decimated idealism around retirement. So I return to the question I asked my colleague, “What is the future for luxury products?” I believe well-run companies producing products of true quality and uniqueness will not confront inevitable dissolution. Badly run companies will tumble in an unforgiving economy. However, the rules for marketing luxury products must change, and those failing to adapt branding and advertising strategies will suffer grave consequences. In a recent interview with Women’s Wear Daily concerning the future of discounting, I provided reporter Valerie Seckler with a hopeful analogy using my recent purchase of a luxury white button-down dress shirt at Nordstrom’s. First, I shopped for a white shirt, as opposed to some other color or stripe, because a difficult economic climate has been influencing men to return to white shirts as an outward statement of prudence and pure business focus. This trend was recently covered by CBS newsmagazine, 60 Minutes. Second, I knew I could walk across the mall to Macy’s and find white dress shirts on sale for more than half the price of the Nordstrom’s product. But I justified paying double, not because I’m feeling flush but because I know their products and legendary reputation for customer focus. Third, from experience I know the Nordstrom’s brand shirt will look new and unwrinkled even after 50 washings. When I unpack in a hotel room, the shirt will barely need touch-up with an iron before wearing, and as I wear it all day, it will maintain a crisp appearance. Should the shirt ever show a defect, such as a splitting seam, Nordstrom’s will replace it without hesitation. This is the future of luxury brands: not just value but core values; not just low prices but product longevity; and not just surface bling but deep customer connection. Accordingly, here are a few strategies my firm has been recommending to purveyors of luxury products: Build communities around your products. The legendary Harley-Davidson has always commanded higher prices than foreign motorcycles partly because of HOG (Harley Owners Group), a network providing powerful referential reinforcement. Differentiate with values that address emerging Boomer needs to seek higher purpose in lifestyle choices. A watch is more than a watch when acquired as a future heirloom for a grandchild. This understanding has been among implied underpinnings in marketing of luxury watches for Swiss manufacturers such as Breitling. Make an unassailable quality and durability case. Most Boomers have been burned many times by shoddy products that seemed like a good deal but then break shortly after purchase. Boomers generally believe the adage: You get what you pay for. Consider tiered pricing. Just as airlines such as Frontier are unveiling tiered ticket prices in coach class, luxury class products can be offered to consumers as good, better and best (not cheap, cheaper, cheapest), without compromising upscale brand stature or differentiation. Strategic Implications: These are but a few of the strategies my company has been helping clients implement. Many opportunities exist to convert luxury into longevity and superb into sustainability — core values Boomers seek today with their discretionary dollars. And don’t be misled. Boomers still have billions of discretionary dollars to spend yearly, even following one of the deepest recessions since the Great Depression. By far they have greater economic clout than any other generational cohort, so to eschew this market would be economic suicide.  ...

I am honored to be the first guest blogger on Arjun’s blog. I don’t need to know that others were asked before me and turned down the opportunity. I seized the chance to tell my tale of the turnaround of a brand; or least the beginnings of a turnaround. By definition, a turnaround has to end in success, or it is merely a brand that is still in trouble moving in a different direction than it was previously moving. There are some glorious turnaround stories in the retail and restaurant industry, but contrary to public perception, there are not a lot of these stories. Target was a turnaround, moving from me-too to gee-whiz. Olive Garden was a turnaround, moving from bada-bing, to bada-boom. In fact, the architect of that turnaround, Brad Blum, is trying his hand at turning around the chain that caused Olive Garden to need a turnaround: Romano’s Macaroni Grill. Even in the restaurant industry there is poetic justice. My turnaround story is about my new place of employment, Boston Market. Boston Market has a storied and colorful history in the restaurant industry. It holds the record of growing faster than any other restaurant chain before it. It grew from 25 stores to almost 1,200 stores in less than six years. It was one of the most talked-about restaurant chains during the early to mid-90s as it rocketed across the country, and onto the tables of American families. It dominated the conversations of competitors, customers and the capital markets. And then the wheels fell off. The company was required to restate its financial statements to include the losses of its franchise partners. This caused the stock to plummet, and ultimately resulted in the company filing for Chapter 11 bankruptcy protection. Two years later McDonald’s purchased the company out of bankruptcy and owned it for the next seven years. It was originally assumed that they bought it for the real estate, but they saw an opportunity with the brand and tinkered with the rotisserie chicken and hot sides formula. However, they never reinvested in the base business. In 2007, McDonald’s decided to sell Boston Market to Sun Capital Partners, a private equity firm with almost 80 businesses and several other restaurant concepts. The business they purchased now has approximately 525 locations. I came aboard 4 months ago with marching orders to engineer a turnaround. Businesses need turnarounds for a variety of reasons. Sometimes they have made a series of missteps that result in the business moving away from its core customers. Other times a business has made no steps, and the marketplace has passed them by. This is what has happened to Boston Market. While it was suffering from the effects of bankruptcy, and then a large owner with bigger fish (or patties) to fry, the world around it changed: fast casual was born. Fast casual gives the customer the quality of casual dining without the tip, the time, or the price tag. Unfortunately for Boston Market, fast casual operates at a price point similar to its own, but with a better service model. Fast casual typically will bring the food to your table after you have ordered it at the counter and paid. In addition, grocery stores studied the Boston Market concept intensely and offered their own versions of rotisserie chickens, side dishes, and a host of other items to make a meal from. At their annual conferences, grocery stores even had seminars on how to “Boston Marketize Your Prepared Foods Program.” The world around it had turned hostile. We are early into our turnaround program at Boston Market. We involved over 100 corporate and field employees, and outside vendors, in an in-depth look at the business and the marketplace around us. We defined for ourselves what success will look like in the future. We have put into motion a series of tests which will tell us if we are on the right path, and if we are, we will roll out these programs across the system. The odds are against us, but they have been ever since the company embarked on its unprecedented growth program. The company is deep in talent and tenure, and employees at all levels of the organization are pushing the brand upward. The most important part of the early stages of any turnaround is that the people inside the company believe that it can be turned around. From there, everything else is possible. We will begin with baby steps to rejoin the restaurant world around us, then move quicker and quicker as we pick up momentum, and change becomes part of the culture. Check us out now (we need the business), and then see where we are in a year. I think you will be surprised and delighted at how nimble a 25-year old chain can be when it wants to. And we want to....