Private Label: The Millennial Preference?

I’ll never forget my first pair of Nikes.  My mom will back me up on this.  It was a big deal.  Those shoes were clean.  The shoes made me feel cool (and trust me I wasn’t cool).  But it meant something else: My family could afford them.  Those shoes were as much a socio-economic symbol as anything else.  That was my generation.  Branding was about cleaner, faster, shinier, whiter.  Conspicuous consumption was the end game (perhaps best hyperbolized in Brett Easton Ellis’ American Psycho) and certainly caused the “greed is good” gaffs that promulgated my generation’s consumer identity.

There is a sea change happening.  51% of millennial buyers have no preference between generics/private labels and national brands.  For example, the company Brandless sells high quality generic products at an intentionally low price point.  Everything Brandless sells is less than three dollars.  Status be damned, their strategy is to connect with a millennial buyer who is underwhelmed by Mad Men branding tactics.  Good product, fair price, no spin.  As millennial buyers begin to take front and center in the market Brandless may very well be on to something that the home service industry should consider: Private labelling in order to broaden reach and appeal among younger home owners.

Generic and/or private label product sales are exploding among millennial buyers.  According to research conducted by the Nielsen group private label sales grew by 4.6% over prior year in the retail clothing segment–a 2.2 billion dollar improvement.  The Private Label Manufacturing Association reports a 10.5% increase over prior year in the food and home goods market.  Amazon Basics, Whole Foods 365 private label products–two examples of aggressive private label strategies that are succeeding.  The German grocer store Aldi is opening locations across the United States.  Aldi is built on the private label concept and offers a “double guarantee” on these products (new product + money back).  Millennials will shop there and, like Brandless, walk away feeling like they haven’t been forced to choose between quality and price point.

From a traditional branding perspective engaging millennials means re-evaluating the efficacy of traditional branding strategies.  As Jeff Fromm notes, “We’re in the early states of consumers controlling the sales cycle.”  Millennial buyers–hyper connected, having lived through a post-2008 economy–want to participate in the research and purchase process.  They’re skeptical of manufactured promises in as much as they’re skeptical of stock photos.  More than half of millennials want benefits and a fair price.

From a contractors perspective this growing affinity toward generics and private label products may start a movement toward private label home service products and equipment.  51% of millennials would likely buy an air conditioner labelled “Cool” and a furnace simply labelled “Cozy” providing that the performance benefits were not seriously degraded and the price point was acceptable.

There’s a brilliant scene in Mad Men in which Don Draper says, “People buy things because it makes them feel good.”  As generic and private label sales start to explode it’s important to note that what makes people, genders, and generations feel good are radically different.  Turns out that smart millennial buyers feel good about saving money without compromising quality while participating in the sales cycle.  Private label products may be just what they’re looking for in their homes.

Episode 5 – Robbi Anthony

Happy Friday podcast listeners!  This is a great episode: I interview my friend Robbi Anthony.  Robbi is the owner of FireDove Technology.  Robbi built my website and shares a ton of relevant web and digital advice.  We had a terrific time recording this and I hope you enjoy it.  As always, thank you for listening.

Take care,  Matt

Canlis 2017. Amazing.

My unabashed respect for this restaurant continues.  I wrote about Canlis a few years ago after the Missus and I visited for the first time.  It was the best meal I’d ever eaten.  It epitomized “the best reality.”  Returning last month I hoped that it would be just as perfect (which is about the only word that I can think of when it comes to eating–nay, experiencing–Canlis because the beautiful and invisible architecture that they’ve erected quietly guides you through an evening that is transformative and escapist).

To me, the previous visit had been about the incredible customer experience that Canlis has and continues to somehow improve.  The details, the service, the cohesion, the way that we felt immediately easy and welcome.  The food was incredible but the service is what I remembered.  This time the food and wine eclipsed it all…

We ordered the pre fix menu.  Heidi ordered the standard wine course and I requested the sommeliers pairings.  9 courses–nuanced, graceful, challenging, new, provocative, arresting, subtle, rich, soft, sequenced.  I’m running out of adjectives but the design and crafting and delivery were out of this world.  And here’s what blows my mind about that evening: I felt like I was eating the chef’s thought process about how he wanted us too feel or react.  It was like the kitchen was sending an embedded message in each course.  At some point I literally said “I think he wants us to taste the sea…” or “This is a taste of loamy verdant earth.”  Somewhere between an oyster and a transparent slice of A5 beef we all just stopped talking and let the food do it for us.  That sounds bizarre but it all sung beautifully.  It is the best meal I’ve ever eaten.

“To be or not to be.”  There’s a difference between doing and being.  There are places that “do” food (“We do steaks” or “We do fish”).  There aren’t that many places that be-come extraordinary.  Doing is perfunctory.  Being is a matter of choice.  Doing is rote.  Being is inspired.  To me, Canlis is being the spirit of invention and hospitality that results in the remarkable.

Again, thank you Canlis.  Thank you for the memories and the macaroons.

Matt

Is self-censorship hurting your company?

Many years ago I wrote a blog post about marketing that was contrary to a client’s opinion at the time.  Their training manager emailed me with a rebuke.  She wrote: “You’re committing political suicide.”  Furthermore, I was “biting the hand that feeds you.”  I was intimidated and afraid.  It was threatening.  I removed the post.  I’d like to think that the blog resulted in a few conversations as to whether I was perhaps a little bit right in my thinking.  Someone suggested that we all collaborate.  That never happened.  In their world there was no room for dissent or opinion that wasn’t along party lines.  They used fear, authority, and intimidation to suppress an opinion.  I was a character in an Orwell or Kafka novel.

Two weeks ago a young social media assistant shared her opinion that the company’s content strategy was directionless and occasionally sexist.  “But I can’t tell the boss that because of his relationship with “Ted.”  She shared her ideas based on credible research and then resigned herself to the status quo and her perception that challenging authority was a very bad career move.

I interviewed two very capable customer service representatives and their manager.  It was clear that they were gauging their answers based on the tacit approval of their manager.  After each reply their eyes quickly shifted to and from the manager.  Was it a good answer?  Did it expose the manager?  Were they saying the right things?  Were they going to get in trouble?

Self-censorship hinders organizational innovation and collaboration.  It happens because of fear or because the traditional org chart lets you know who is and isn’t able to contribute to the “big” decisions.  It happens when managers polarize their authority and work to protect it and therefore value (“don’t make me look bad!).  Perhaps these are natural by-products of the traditional top-down business culture in which a person is told what to do, how to do it, what they shouldn’t do and why.  Lest we forget the striking similarity between 19th century elementary school desks and industrial era factory benches.

In our current era of creative destruction smart companies should evaluate the degree to which self-censorship happens among employees.  Innovative ideas–some good and some bad–are everywhere in a company.  But the only way to make “good” and “bad” determinations is to allow the ideas to be shared in the first place.

Episode 4 -Ryan Swafford

This was a terrific episode to record with my friend Ryan Swafford.  Not only is he a super cool guy but he’s a very sharp sales professional.  In this episode Ryan talks about shifting careers, fitness, Tai Bo, and finding a selling perspective that works.  Thanks for listening!  Episodes are also on iTunes.

 

1000 True Fans

“Start your own revolution and cut out the middle man.” — Billy Bragg

“I have used Twitter for so many things, from places to stay, places to go, things to do…it feels like I’m being taken care of by half a million people.  It’s like having a mom.” — Amanda Palmer

In 2008, before “crowdsourcing” was a term, Kevin Kelly published his seminal essay “1000 True Fans.”  Kelly argues that members of the creative class need only 1000 “true fans” in order to earn a living.  A true fan is a fan who will buy everything that an artist creates and who will push the artist in to their network.  All that the artist needs to do is stay connected to the fans and keep adding value to their lives (that’s a pretty big “all”).  Kelly was writing specifically about independent artists–unencumbered by publicists, PR agents, and advertising agencies–the middle-man.  True one-to-one relationships between the creator and the fan based on transparency, connections, and value.

In the last nine years Kelly’s idea has “scaled up” in lots of ways.  These days small business’ can also create and maintain an immediacy with their fans:

• Technology allows businesses to interact with customers with ZERO outside influence
• The effort needed to maintain connections with fans is small relative to the effort required to create a new fan (although the effort needed to add value to their lives is something that not only requires effort but is so thoroughly non-traditional for most business owners that the friction alone kills the enthusiasm and they opt for the path of least resistance)
• The order of magnitude increases when a company continues to add value to fans’ lives and “they tell two friends, and they tell two friends…”

I’ve never worked with a business owner who hasn’t said “My company grew through word-of-mouth.”  As the business grows the owner finds herself detached from the fans, becoming increasingly dependent on middlemen to create new connections while precious existing connections often go untended.  In simpler terms, too much emotional and practical distance grows between the business and the fan.

Here’s a potential alternative:

A salesperson runs two leads a day, 10 leads a week, 500 leads a year.  The salesperson sells, conservatively, 35% of the leads.  175 sold jobs.  175 fans assuming that things go well.  At the very least, 175 customers who said “Yeah, we trust this person more than anyone else.”  Over a 5 year sales career that’s 875 (hopefully) fans.  According to Kelly’s logic if each of those fans spent $100 per year with the salesperson then…you can do the math.  If they recommend the salesperson within their networks then it scales quickly.

All of this raises some important questions:

When will professional salespeople stop thinking in transactional terms and start thinking about the long-tail gain of the hundreds and hundreds of fans?

When will professional salespeople stop using the term “close the sale” and replace it with “open the relationship?”

Are small businesses owners ready to accept that engagement and value-added content are not ancillary considerations?

Are business owners willing to accept the distance that middle-man programs create between their business and their customer?

Are business owners ready to re-take control of the one-to-one relationships that they’ve buried in CRMs and file boxes?

There’s a lot of truth that “second money is the easiest money.”  True fans–the ones who fall in love with you, your products, your people, your brand–they’ll keep coming back for more.  But IF and only IF you keep adding value to their lives.  That’s when a network, as Tim Sanders notes, creates net worth.

Your processes aren’t the problem.

“I need to write a process for this…”

“I just need to re-write the processes so there’s more consistency…”

“We have processes but everyone follows them differently…”

“We need to be  a process-driven business…”

More processes.  More procedures.  Eliminate the variances.  Dummy-proof the position. Then something goes wrong and it’s back to the drawing board.

What if the process isn’t the problem?

What if your communication about the vision needs fixing?

Instead of death-by-process, I recommend Antoine de Saint-Exupery’s advice:

“If you want to build a ship, don’t drum up the men and women to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”

Are you building a team or raising a family?

“The trick would be to find which few of them had the potential for raw power, the nearly superhuman stamina, the indomitable willpower, and the intellectual capacity necessary to master the details of technique. And which of them, coupled improbably with all those other qualities, had the most important one: the ability to disregard his own ambitions, to throw his ego over the gunwales, to leave it swirling in the wake of his shell, and to pull, not just for himself, not just for glory, but for the other boys in the boat.”
― Daniel James Brown, The Boys in the Boat: Nine Americans and Their Epic Quest for Gold at the 1936 Berlin Olympics

“A happy family is but an earlier heaven.” — George Bernard Shaw

If you haven’t read The Boys in the Boat then buy a copy immediately, set aside a few hours, and dive in.  If you’re from the Northwest you’ll fall (back) in love with our incredible history, the men and women who helped make us who we are and shaped where we love to live.  If you’re a history buff then you’ll go bananas for the classic heroes journey: ragtag Americans vs. Nazis in the 1936 Olympics.  If you’re a business owner you’ll most likely envy–on a “Why can’t I build THAT team?” level–that nine young men of no pedigree, a boat-building genius, and a quiet, visionary leader built a team that created something unspoken and remarkable.  You might ask yourself: “Why don’t I get the very best from everyone on my team?  Why don’t we work better together?  Do we all share the same goal?  Am I building a team or am I raising a family?”

Teams are performance-driven, families aren’t.  Ideally, families are about love, forgiveness, tolerance, patience.  Great teams have familial qualities as well but there’s something else.  Teams inspire and extract the best performance from everyone.  They have to if they want to win.  Nobody on a winning team wants to see a fellow team member fail.  Individual agendas are set aside for the greater good.  There’s no question that winning teams are internally competitive, but not at the expense of the cause.  The self-less dedication to a cause.  It elevates everyone:

“What mattered more than how hard a man rowed was how well everything he did in the boat harmonized with what the other fellows were doing. And a man couldn’t harmonize with his crewmates unless he opened his heart to them. He had to care about his crew.”

Are you building a team or raising a family?

Do you have an inspiring, flag-waving cause?

Does your entire team work in harmony in the interest of winning?

Are performance and attitude held accountable to the  highest standards?

Is ho-hum performance allowed to slide because “that’s just how they are?”

Are individual agendas or egos allowed to supersede the greater good?

Do polarized priorities subterfuge the total effort by pitting one group against another?

Do you accept less than a person’s best?

I know a few business owners who want their businesses to feel like a family.  That’s perfectly fine.  Those environments are usually nice places to work and those owners have their reasons (stress, effort, time with family).  But if you’re starting a business, if you’re managing a team, or if you have owned a business for a long time it’s nonetheless important to have a clear picture of the culture that you’re pulling for: Team or Family?

Podcast #3: Rich Johnson

Episode 3 – Rich Johnson

Hey there listeners and thanks for tuning in!  In this podcast I interviewed Rich Johnson, sales manager for Sherlock Heating and Air Conditioning.  It’s a fun interview and Rich shares his perspective on managing a team, learning to balance multiple demands, and handling price-driven competitors.  Lot’s to learn and I hope you enjoy it.  Matt

Drive for show, putt for dough.

I’ve heard people say putting is 50 percent technique and 50 percent mental. I really believe it is 50 percent technique and 90 percent positive thinking, see, but that adds up to 140 percent, which is why nobody is 100 percent sure how to putt.
 – Chi Chi Rodriguez

The single biggest driver of stickiness, by far, was “decision simplicity” — Harvard Business Review, “To Keep Your Customers, Keep it Simple.”

I don’t recommend playing golf if you have a remotely OCD or addictive or obsessive or solipsistic personality (however I do recommend playing if you’re in to self-improvement–I’ve never played a sport that is so instructive in that regard).  You find yourself playing for the two or three split seconds when the club strikes the ball perfectly, crisply.  Language falters at that moment.  You just know it happened and that it’s gone.  Then you chase the dragon and fall in love with the pursuit.  For guys like me tt’s impossible to perfect.

My grandmother always said: “Drive for show and putt for dough.”  Putting is hard work.   And because you use the putter more than any other club in your bag it’s important to be a better putter than, say, a big hitter.  I use my putter three times more than my driver.  So when my putter started making a weird noise it wasn’t good.  I’m already a master at bogey and double bogey golf.  A funky putter wasn’t going to help.

The local pro thought the noise was from loose epoxy or something in the shaft of the club.  His assistant volunteered to take the putter apart.  Another pro recommended I call Callaway.  His suggestion illustrated a critical point of doing business: keep it simple and earn loyal customers.  

I called Callaway.  The service was incredible.  A gentleman answered the call on the second ring.  His tone was easy, friendly, concerned, and familiar.  He apologized for the problem and thanked me for calling.  He sounded genuinely interested in helping!  Here’s what he didn’t do: make it difficult.  He didn’t ask me questions like: “Did you buy the putter from an authorized Callaway dealer?” or “Did you always keep the putter in the protective cover?” or “Are you sure it’s an authentic Callaway product?”  He didn’t tell me that the putter was not under warranty or that it was no longer in stock.  The CSR eliminated all of the potential friction:

“I’ll ship a new putter to you today.  Once it gets there send the defective putter to us.  No charge.  By the way, are you ok if we send you the new 2017 model?”

A new putter arrived three days later.  Flawless customer service.  Simple customer service.  A win-win solution.

Customer service is the crucible at which a company’s claims and missions and values are tested.  Many companies talk about putting the customer first or being customer-centric.  Not as many companies practice what they preach.  Difficult customer service erodes customer loyalty.  Simple customer service improves it significantly.  When it’s time to buy a new set of clubs I’ll certainly look at Callaway.  Aren’t they also benefiting from a little free press as well?

Simple service, empathetic interactions, win-win solutions, and fast follow-up.  Sometimes the secret ingredients to improve service and sales aren’t that secret.  Keep it simple.