(This is the second in a two-part blog-exchange on brand decision-making I’m doing with Denise Lee Yohn.  I kicked things off last week with a post called “Killing Retail Giants” and today Denise answers the questions I posed to her about retail small businesses.  We’re both teaching sessions in the Marketing Profs University course, Marketing Your Small Business .  Denise’s webinar, Why Small Businesses Need Brands and How to Build Them, airs next week.  Register now and use coupon code DENNYVIP to receive $200 off!)

SD:  Technology – from QR codes to crowd sourcing/sharing/tapping to social anything – is all the rage…and yet, at least from what I’m hearing from clients and a few far enough away from the blogosphere and close enough to a real P&L, it’s the actual human contact – the face to face – that converts. What do we make of this “original, old-school social networking” called floor-level selling versus the newest and greatest socially enabled thing of the moment? Where do you put your dollars today?

Denise:  I agree with former Apple retail head and current JC Penney CEO Ron Johnson who stated in a recent interview, “Physical stores are still the primary way people acquire merchandise, and I think that will be true 50 years from now.”  And as long as stores continue to exist, so will the importance of salesmanship. 

People may use technology to do more research before they enter a store, but according to a study published in the McKinsey Quarterly last year, as many as 40% of customers remain open to persuasion.

It makes sense.  If a customer is in store these days, she’s not there to waste her time.  She wants information, engagement, discovery, entertainment, inspiration, service – something.  A lot of elements in the store will address this desire, but a salesperson still holds the key to converting browsers into buyers and skepticism into sales. 

The sales process is definitely more art than science and individual flair and style-flexing is paramount, but a good salesperson follows four basic steps: open, ask for needs, demonstrate, and close.  Technology can help in each step. 

Through social networking, salespeople can lure customers into their stores.  And we’re just moments away from making it possible for customers to be greeted personally through mobile location sensors and tracking.  Salespeople are already using tablets to show a range of solutions or to highlight usage occasions, thus facilitating a conversation about needs. 

Virtual dressing rooms and smart-phone enabled product demos make for compelling sales demonstrations.  And access to customers’ social networks, price/inventory transparency, personalized deals, and mobile checkout are technology-enabled tools to help salespeople close the deal.

So technology is facilitates the sales process but it’s the salesperson that drives it, so I’d invest in sales training and tools.

SD:  There’s an eternal, titanic struggle for control between retailers and manufacturers. We’ve seen major big box retailers literally put weak manufacturers out of business with exorbitant “vision funds” and high co-op expenses to drive in-store foot traffic. We’ve also seen relatively new powerhouses over the past few years send products into retail with literally zero margin. Where’s the balance of power now? More importantly, how does the lowly manufacturer (or lowly retailer) gain at least an equal seat at the table, let alone the semblance of an upper hand?

Denise:   The struggle is indeed eternal, and I suspect the balance of power between retailers and manufacturers will continue to fluctuate indefinitely.  But there are two approaches that create a win-win for both parties:  exclusive product and private label.  Both require tight partnerships between the two sides.

With exclusive product, manufacturers develop a unique product tailored for a specific retailer.  Right now, this is mostly happening through cosmetic differences on existing products – e.g., providing exclusive colors or sizes, or using different brand names on the same product.  This is the easiest, lowest-cost approach. 

There are bigger opportunities, though, for retailers and manufacturers to collaborate on new product development — integrating retailers’ detailed customer data into manufacturers’ product expertise to create truly tailored offerings. Years ago when I was at Sony Electronics, we developed an exclusive line of products for women at Target.  It provided differentiation and value for both Sony and Target.

Private label is another approach to consider, especially for smaller manufacturers.  By developing products to be sold under the retailer’s brand name, manufacturers exchange for brand equity for access and volume – a smart trade-off in some cases – while retailers benefit on margin.  In the past, private label may have been looked upon as the ugly step child, but according to another McKinsey study, consumers are more receptive to store brands these days.  It’s a viable solution to the eternal struggle.

Don’t Buy This Jacket.

Outdoor athletes – the real high achievers, in particular – understand Patagonia’s tagline. And Patagonia’s tagline clearly shows that they understand their core market to a remarkable degree.  That’s nice, for a change.

Outdoor enthusiasts do things that the rest of us don’t. They spend time on mountains. In winter. On purpose. They run in lousy weather and do it for longer distances than the rest of us would under any condition. They train for events with names like “The Canadian Death Race” that make everyday triathlon competitions look pale. They’re different.

They’re different people, too. Where your Under Armour athlete plays team sports and is highly competitive to the point of trying to beat you to the coffee machine, the outdoor athlete is more cooperative. More than racing the clock, or a competitor, they’re trying to best themselves. And the connection to the great outdoors overrides all. They want to leave a lighter footprint on the earth and respond to others who feel the same way.

Which brings us back to Patagonia. Don’t Buy This Jacket – unless you’re looking to buy fewer, better things; unless you understand that paying more for something of great value means it will last longer, perform at a higher level and inspire other similar minded people to do the same.

Don’t buy this jacket as a fashion statement – buy it as a personal statement, an understatement that shows a commitment to earth, culture, self and a nod to smart consumerism, much the way Scott Griffith of Zipcar described the evolving nature of consumption in my interview with him (in Killing Giants: 10 Strategies to Topple the Goliath In Your Industry).

From a psychological standpoint, it’s a great example of a strategic retreat – of arguing against your own self-interests. Don’t buy this jacket says you can trust us because we’re not out to hustle you into buying something you don’t need. It hits a clever decision trigger, particularly for this group.

It’s a smart ad because it speaks to this market. I’m not suggesting it would work for another because it probably wouldn’t.  But squint at the lesson and see how this decision trigger can work for you.

Regards.

Quick: close your eyes and describe to me what a cordless toothbrush would be like if it was designed by Apple.

What color would it be? What would the finish look like? What materials, what tactile feedback would it give? What would it feel like on your teeth? What would it sound like?

We used to do this with Sony back in the day.

In the 1990’s, when I was there, Sony was the most powerful brand on earth. You could imagine any product and describe in detail the mat black finish, the beveled edges, where the Sony logo would be, what the buttons would feel like and everything else.

Apple is what Sony was.

Which makes it hard to watch Sony ads today that have stooped so low as to require actors to wear Sony shirts just so we can figure out who makes these strange products. What was once iconic is now the joke whose punchline needs more explaining.

Sony CEO Howard Stringer hit the nail on the head recently in an interview where he bristled at the notion that Sony had slipped technologically. From an interview carried in Bloomberg:

It’s not lack of sleep, though, that irritates him when it’s suggested that Sony is not considered the innovator it once was. “Oh, f–k, we make so much more than we used to,” he said. He ticked off some of the products coming out this year, including binoculars that can record video and goggles for watching 3-D video games and movies. Don’t tell me that Sony technology isn’t great,” he said.

Goggles for watching 3D glasses? This is the company that created the Walkman.

Sony, unfortunately, is a cautionary tale in how a giant missed a key structural shift – a concept that Dr. Steven Feinberg discussed with me in his interview in Killing Giants: 10 Strategies to Topple the Goliath In Your Industry. While many would point out that the first shift the once mighty company missed was the entire idea of digital, the scond – and more damaging – mistake was missing out on The Internet.

How could this master innovator miss launching iTunes, iPods/Pads/Phones and everything else? They should have launched the Kindle. They should have launched Netflix. Hell, they could have launched Zipcar – with a Sony branded Tesla Motors – had they continued on the trajectory they were on  in 1995. Alas. Not to be.

When I was in the boardroom at the first unveiling of the competitive Diamond Rio (for those members of the class too young to know, the Diamond Rio was the first – the absolute first – digital music player), the bureaucracy ensconced at the top of Personal Audio declared, and I quote: “Digital music will never reach the technical quality of linear tape.” Somebody actually said that.

It pains me, because I truly love the company. For some strange reason, some small part of me still bleeds Sony blue. I’m not sure why, given the state of affairs, but I do.

Sony, unfortunately, gives us a cautionary tale of a former Giant felled by many Giant Killers, all of whom saw the structural shifts before Sony did.

*  *  * 

Key Takeaways:

How do you avoid this? I wish this was easy. It’s not. These shifts are often easier to see in the rear view mirror. But in the spirit of providing some guidance here, consider the following:

1. What has materially changed in your customers’ lives in the past year? The past 3 years? What technological, societal, socio-economic or other “structures” have shifted? Zipcar saw the collapse of the economy, the rise of smart consumerism, the desire for a lower carbon footprint, the appearance of smartphones with LBS and GPS capabilities and the comfort that consumers had with Internet-based self-service. Hertz had the Number 1 Club.

2. What do these shifts mean for your “Giant”? What could they mean to you?

3. Which of these shifts are you actively disregarding? Which ones do you dismiss with complete contempt – just like Sony did with the Rio? Ask yourself a simple question: What if you’re wrong?

4. How would you draw the spokes radiating out from the central hub of these shifts, articulating how you could take advantage of each? How would “the rise of smart consumerism,” where fewer better purchases are made and each purchase must compete with all other potential purchases, impact your offering?

*  *  *

Sony’s downfall also shows what happens when a visionary leader – Akio Morita, in Sony’s case – leaves the helm. A cautionary tale for Apple, as well, isn’t it?

Regards.

Yes, that's me in 1981 at Rikkyo University, Tokyo.

We’ve read that the majority of liberal arts degree majors coming out of college will be well suited for the burgeoning barista segment of the service industry in the coming years. We’ve read that trade schools are far better uses of your educational dollars than a liberal arts BA from a 4 year school. And we’ve been bombarded with exhortations that only science and math (I’m sure engineering fits in there somewhere) are the only worthy academic pursuits. Hell, even accounting has been somehow given a bad name.

I have a different point of view than much of what’s been described in the popular press concerning the value of a liberal arts degree. To be clear, I’m a liberal arts degree holder – I got a BA in East Asian Studies in 1983, thinking I was on my way into the foreign service, when I took a hard right hand turn and chose business school instead. Understand that business schools in the late ‘80’s and early ‘90’s wanted liberal arts majors, largely for the same reason I’m going to suggest here. It’s this:

Liberal arts majors are taught to dig deep and understand what’s under the surface.

Sure, lots of degrees teach thinking. It’s just that your run of the mill liberal arts student has to do more than hold a thought or think through a problem. They have to analyze. They have to research. They have to develop competing points of view, evaluate them all, come to conclusions and then defend them to PhD’s (professors) and peers.  And they have to be able to communicate, because their medium is words, from Jacobean Tragedies to the Meiji Restoration to the Munduruku tribe of the Amazon. As for work ethic, my East Asian 400 series courses at Washington & Lee University (courtesy of Dr. Roger Jeans, perhaps the toughest and best professor of any subject I’ve ever taken) were among the most rigorous of my academic career – which included an MBA from Wharton.

What does your company do? Does it require people to understand nuance, gather large amounts of data – both qualitative and quantitative – and synthesize it? Do you have customers who have opinions, stated and unstated? Does your company use words and images to persuade and enlist support? Your liberal arts majors do this pretty well – often a damn sight better than their more quantitatively oriented peers. Actually, they are always better at this. But I’m just showing my bias here.

My BA isn’t why people hire me anymore, honestly, as it’s pretty far back in my past. But before you kick dirt on the liberal arts degree, do some research beyond the surface area. Understand the nuance, the context, the qualitative and quantitative nature of the discussion first.

Chances are that people who find the degree un-hirable are referring more to individuals than areas of expertise.

Regards.

“In the land of the blind, the one eyed man is king.”

I’ve noticed something over the years, both as a corporate executive and as a consultant: if you’re the guy in the room with a point of view – someone who has a vision of where the ship needs to go and how it ought to get there – you’re probably alone. It’s a rare gift. It’s also a dangerous one.

Tamsin Smith, the former president of Product (RED), gave me a wonderful interview setting up a chapter in Killing Giants: 10 Strategies to Topple the Goliath In Your Industry. In it, she explained the power of (RED)’s point of view and its catalyzing effect on partners.

“(RED)’s impact was that there was an idea that gave brands a point of view and an energy and excitement above and beyond what they’d normally encounter in their scope of business… it lit a fire because people want to believe in something.”

To be clear, GAP had a point of view – it just hadn’t found its voice. (RED) gave them an amplifier that helped them form the message. The result was, in Tamsin’s words, some of the best work to come out of GAP in ages.

An interesting thing happens when you present your vision of the future: people discover they have an image to live up to – your customers, your partners and even your own employees. Once we’ve given them anchor point, they’ve got a target to hit. Interestingly, it seems that they don’t even have to believe in it. Much as we see in negotiating theory, merely stating a position immediately changes the other potential unspoken outcomes. They’re either with you or their trying hard to escape your gravitational force.

Understand the dark side, too. Your having an opinion makes you a marked man. (Or woman). Those who control the destiny of your company, if it’s not you, may have their own point of view. Your having one, too, makes you competition. And corporations, for all their break room poster exhortations, usually don’t want “leaders” – they want followers. Having a point of view makes you dangerous. How you express your point of view and how it neatly dovetails in with those in positions of power will determine whether you move up or out.

Regardless of the risk, do it. Create it. If for no other reason than your sanity, create that point of view and find the right way, within your cultural framing, to express it. Why, given the risks, is this smart? Because your customers and partners are looking for a reason to believe. It’s your job to create that vision of the future, that potential outcome that everyone can see themselves in because they can’t. It’s a rare gift. You’re supposed to use it.

They’re waiting for someone to show them the way.

Regards.