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Why retailers must embrace the Relationship Era
Indifference is expensive. Hostility is unaffordable. Trust is priceless.
Some companies learn this by accident, happy or otherwise. Others have that understanding, you might say, baked in. One such is Panera Bread, the chain of almost 1,500 bakery cafés in the "quick casual" restaurant segment. Panera's hallmarks are freshly baked bread, a healthy menu by chain restaurant standards and welcoming service.
The goal is to create what chairman and co-CEO Ron Shaich calls "positive energy" and personal touch. "That's our whole marketing effort," Shaich says. "It's fueling word of mouth. Marketing is simply amplification of the experience within. It's not like we are going to convince you that we are something that we are not."
What they are is successful and growing. Over the past fifteen years, the average Panera café has gone from $1.1 million in annual sales to $2.4 million. This is a reflection of total dedication to both customer experience and employee satisfaction, which are complementary for all the obvious reasons.
"I got a letter from a woman in Florida who was undergoing cancer chemotherapy," Shaich says. "And she came in without hair one day, one of our people reached over and gave her a hug and said 'Can we buy you lunch? We just want to be here in support of you.' And she was so moved by this, she wrote me. I mean this happens thousands of times when you can create that kind of space for people." Such episodes, routine or not, are as affecting for employees as they are for clientele. Shaich says the ensuing company lore imbues the workplace with a sense of purpose.
"Profit is a byproduct. It’s pretty clear to me, it's a byproduct of pleasing people and when you please people, they come back. And when they come back, they leave something." Yeah, including their money. Panera did $2 billion in 2012. Its stock chart looks like Mt. Rainier. Shares were selling for $15 in the year 2000. Now they’re at $169.
Consider this simple experiment:
Type "I love Apple" into your search bar. You will get 3.27 million hits. If you type "I love Starbucks," 2.7 million hits. Zappos: 1.19 million.
And "I love Citibank"? You get 21,100. AT&T Wireless: 7,890. Exxon: 4,730. Dow Chemical: 3. Out of 7 billion human beings, 3! Just to put that into context: If you type "I love Satan," you get 293,000 hits. Now consider this: Citibank, AT&T Wireless, ExxonMobil and Dow among them spend $2 billion a year on advertising. Money, it turns out, really can't buy you love. It can't even buy you like.
Millions of people will, of their own volition, announce to the world their affection for a brand. Not for a person, not for an artwork, not for a dessert but for a good or service. Congratulations. People care about you.The methodology here may not be especially rigorous, but the results dramatize three immutable facts of contemporary marketing life:
Except for a handful of industrial juggernauts mainly removed from public view (including ExxonMobil, truth be told) doing business in the Relationship Era has many requirements. Ethical conduct. Seamless customer relations. Constant contact and cooperation with all stakeholders, including not just investors but also employees, suppliers, distributors and retailers, neighbors, governments and the society at large. It must be an all- pervasive imperative to earn the trust of all concerned — not as a means to gain advantage in a sale or negotiation but as an end in itself. We shall meditate on this subject in detail in the next chapter.
Suffice for the moment to say that in bygone eras, trust was at best subsidiary to the all pervasive focus on increased sales and market share. And in the current environment, the degree to which consumer trust influences purchasing decisions has never been higher and is clearly rising. Yet, paradoxically, trust and transactions are independent variables. Only when you view them as such can you fully understand their relationship in true brand sustainability, as we shall illustrate presently.
Meantime, let us nonetheless think about the value of trust relationships — versus the dependence on advertising and public relations to shape perceptions about a brand.
"It's always been about the individualized relationship," says Scott Olrich, CMO of Responsys, which provides relationship based marketing software for some of the largest brands in the world. "A century or so back, the local corner shop lived or died based on the relationships they built. As new means of mass communication emerged, companies used their increased reach to try to advertise their way out of that responsibility. But today every aspect of a company's behavior is on public display. A relationship first approach to every customer interaction has again become the imperative."
Dealing with this new reality requires an entirely new mentality across nearly all areas of an enterprise, in which every function of business embraces the Relationship Era — but in consumer interactions most of all. The behaviors associated with the Consumer Era nowadays seem cold- blooded and opportunistic, like a swinger on the prowl in a bar. The Relationship Era approach has more in common with romance, or, at least, a human connection.
Some companies learn this by accident, happy or otherwise. Others have that understanding, you might say, baked in. One such is Panera Bread, the chain of almost 1,500 bakery cafés in the "quick casual" restaurant segment. Panera's hallmarks are freshly baked bread, a healthy menu by chain restaurant standards and welcoming service.
The goal is to create what chairman and co-CEO Ron Shaich calls "positive energy" and personal touch. "That's our whole marketing effort," Shaich says. "It's fueling word of mouth. Marketing is simply amplification of the experience within. It's not like we are going to convince you that we are something that we are not."
What they are is successful and growing. Over the past fifteen years, the average Panera café has gone from $1.1 million in annual sales to $2.4 million. This is a reflection of total dedication to both customer experience and employee satisfaction, which are complementary for all the obvious reasons.
"I got a letter from a woman in Florida who was undergoing cancer chemotherapy," Shaich says. "And she came in without hair one day, one of our people reached over and gave her a hug and said 'Can we buy you lunch? We just want to be here in support of you.' And she was so moved by this, she wrote me. I mean this happens thousands of times when you can create that kind of space for people." Such episodes, routine or not, are as affecting for employees as they are for clientele. Shaich says the ensuing company lore imbues the workplace with a sense of purpose.
"Profit is a byproduct. It’s pretty clear to me, it's a byproduct of pleasing people and when you please people, they come back. And when they come back, they leave something." Yeah, including their money. Panera did $2 billion in 2012. Its stock chart looks like Mt. Rainier. Shares were selling for $15 in the year 2000. Now they’re at $169.
Consider this simple experiment:
Type "I love Apple" into your search bar. You will get 3.27 million hits. If you type "I love Starbucks," 2.7 million hits. Zappos: 1.19 million.
And "I love Citibank"? You get 21,100. AT&T Wireless: 7,890. Exxon: 4,730. Dow Chemical: 3. Out of 7 billion human beings, 3! Just to put that into context: If you type "I love Satan," you get 293,000 hits. Now consider this: Citibank, AT&T Wireless, ExxonMobil and Dow among them spend $2 billion a year on advertising. Money, it turns out, really can't buy you love. It can't even buy you like.
Millions of people will, of their own volition, announce to the world their affection for a brand. Not for a person, not for an artwork, not for a dessert but for a good or service. Congratulations. People care about you.The methodology here may not be especially rigorous, but the results dramatize three immutable facts of contemporary marketing life:
- Your brand is inextricably entwined in such relationships. If you were to type in "I hate Exxon," you'd get 2. 16 million hits— not counting the "I hate ExxonMobil" Facebook page. People are decreasingly listening to your messages, but that hasn’t stopped them from thinking about you and talking about you. And each of those expressions of like, dislike, ardor or disgust has an exponent attached to it, reflecting the outward ripples of social interaction.
- What used to happen in the privacy of your own boardroom, plants and C-suite is now extremely public and common currency on the Internet. People in glass houses shouldn't do anything illegal, embarrassing, hypocritical, offensive, tasteless, vulgar, excessively greedy or otherwise incorrect — especially when getting caught being honorable and constructive has such benefits. Perhaps by coincidence, but most likely not, this sudden vast availability of information corresponds with a societal megatrend of judging institutions not only on their offerings but on their conduct. Thus, for the first time in commercial history, there is not just moral value but asset value in being a mensch.
Except for a handful of industrial juggernauts mainly removed from public view (including ExxonMobil, truth be told) doing business in the Relationship Era has many requirements. Ethical conduct. Seamless customer relations. Constant contact and cooperation with all stakeholders, including not just investors but also employees, suppliers, distributors and retailers, neighbors, governments and the society at large. It must be an all- pervasive imperative to earn the trust of all concerned — not as a means to gain advantage in a sale or negotiation but as an end in itself. We shall meditate on this subject in detail in the next chapter.
Suffice for the moment to say that in bygone eras, trust was at best subsidiary to the all pervasive focus on increased sales and market share. And in the current environment, the degree to which consumer trust influences purchasing decisions has never been higher and is clearly rising. Yet, paradoxically, trust and transactions are independent variables. Only when you view them as such can you fully understand their relationship in true brand sustainability, as we shall illustrate presently.
Meantime, let us nonetheless think about the value of trust relationships — versus the dependence on advertising and public relations to shape perceptions about a brand.
"It's always been about the individualized relationship," says Scott Olrich, CMO of Responsys, which provides relationship based marketing software for some of the largest brands in the world. "A century or so back, the local corner shop lived or died based on the relationships they built. As new means of mass communication emerged, companies used their increased reach to try to advertise their way out of that responsibility. But today every aspect of a company's behavior is on public display. A relationship first approach to every customer interaction has again become the imperative."
Dealing with this new reality requires an entirely new mentality across nearly all areas of an enterprise, in which every function of business embraces the Relationship Era — but in consumer interactions most of all. The behaviors associated with the Consumer Era nowadays seem cold- blooded and opportunistic, like a swinger on the prowl in a bar. The Relationship Era approach has more in common with romance, or, at least, a human connection.
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