Archives For November 2013

I am always and open to learning about new ways of marketing and business building. I recently became aware of a new approach to marketing called “Growth Hacking”. The name intrigued me and I decided to dig deeper to find what it is and how it was different from traditional marketing. I also wanted understand what brands had done it well and what can be learned from this approach. Most marketers that I spoke to were not familiar with the term.

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In his book “Growth Hacker Marketing”, Ryan Holiday states that Growth Hacking is rewriting the rules of marketing. He offers examples of companies that barely existed a few years ago such as Dropbox, Zynga, Pinterest, Instagram and Airbnb. These brands were built using the marketing principles of Growth Hacking. In the absence of a big marketing budgets, startups used growth hacking to build their company. According to Holiday, “a growth hacker doesn’t see marketing as something one does but as something one builds into the product itself”‘ . Growth Hacking is a mindset. A growth hacker is someone who has thrown out the playbook of traditional marketing and replaced it with only what is testable, trackable and scalable. Their tools are e-mails, pay-per-click-ads and blogs instead of commercials and publicity. Growth Hacking is a mindset as opposed to a specific toolkit.

Growth Hackers are marketers with technical skills who understand the principles of direct marketing, testing and offer optimization. Growth Hackers are on a constant quest to get more customers for their product. Their ultimate goal is to achieve product marketing fit through lean business practices and ongoing testing and optimization. They run experiments utilizing A/B Tests, Landing Page Optimization and Predictive Models. Everything they do is scrutinized by its potential impact on scalable growth. Once product marketing fit is achieved businesses will grow because their product or service provides a unique solution to their target audience.

Growth Hacking started in Silicon Valley on technology products but can be applied to any business. For those interested in finding out more about growth hacker marketing, I highly recommend Ryan Holiday’s book. Additional resources include:

Will Growth Hacker Marketing go Mainstream?

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Restoration Hardware has repositioned itself to be a luxury lifestyle brand. It has a great story.  The brand was founded by Stephen Gordon in 1980 in Eureka, California. The idea for the company came while Gordon was restoring his Queen Anne style house. He had great difficulty finding period hardware. He recognized a need in the marketplace. The brand was initially about addressing the need for authentic period hardware. The initial store was founded in Gordon’s house in Eureka. Over time, Restoration Hardware expanded product offerings to include 1920s-themed lighting, bathware, curtains and furniture. Fifty percent of the business was novelty type items. The company expanded rapidly and went public in 1998. By 2001 Restoration Hardware was close to bankruptcy. Its stock had gone from $37 a share to $.50. It problems could be blamed on the lack of a focused merchandise assortment. In 2001, Restoration Hardware did not have a clear point of view.

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Gary Friedman, former President of Williams Sonoma, stepped in and over time saved the company. He spent six years remaking the business, slowly and methodically getting rid of the novelty items and bringing in furniture, linens and lighting. He made Restoration Hardware relevant. Restoration Hardware repositioned itself as a retailer of luxury home furnishings. Restoration Hardware’s sofas, chairs, tables, bureaus and other products are largely modern updates of classical designs. Its target market: households with incomes above $200,000 or “aspirational” customers trading up from department stores and other retailers.

The company struggled when the housing bubble burst in 2008. The company was forced to restructure, close stores and went private in 2008. The company lost money from 2008 to 2011. The company went public again in 2012.

This year it announced plans to transform itself from a high-end brand in home furnishings to a luxury lifestyle brand. The brand has evolved to become RH, which is positioned to curate a lifestyle beyond the four walls of home.

Not only is the company branching into “curated” collections of contemporary art, antiques and kitchen ware, it also plans to launch RH Atelier, a luxury brand of apparel, accessories, footwear and jewelry. Key to Restoration Hardware’s ongoing transformation will be the opening of much larger stores called Design Galleries to better showcase all of its products.

Five full-line Design Galleries have opened since 2011 in Los Angeles, Houston, Scottsdale, Ariz., and most recently Boston and Indianapolis. With an average of 21,600 square feet of selling space, they are about three times the size of the company’s legacy stores, not to mention more productive.

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The Boston outlet is the largest at 40,000 square feet. Besides displaying new product categories such as tabletop goods and “objects of curiosity,” the four-story historic building features a wine bar, beer pub, billiard lounge, library, club rooms and conservatory.

One strong point is the brand’s positioning. It’s above mass-market players such as Crate & Barrel, Williams Sonoma and Pottery Barn, but below top-end designer showrooms used by decorators.

The jury is still out whether the company can make a go of all of its ambitious undertakings. However recent results have been very positive. In the last quarter same store sales increased 26% and earnings jumped 48%. Its stock price has more than doubled since its IPO last year.

Have you shopped at a Restoration Hardware Store?

Michael Kors is one of the hottest fashion brands in the world. It is an overnight sensation that has been 30 years in the making. Persistence pays off. Michael Kors was founded in 1981. Michael Kors has become a  strong global lifestyle brand with a broad appeal. The brand’s products have a “jet-set” aesthetic that is both stylish and sporty. Michael Kors sells affordable luxury. The affordable luxury segment has bounced back strong in 2013. The company sells accessories, footwear and apparel in upscale department stores and its own stores. Michael Kors is the “it” brand in this segment of the market. Michael Kors has surpassed Coach as the number one luxury fashion brand.

Success in the fashion industry is often fleeting. However Michael Kors is currently enjoying fame and success. The brand has done a great job connecting with the American fashion consumer. The brand has excelled because it has stayed focused on the market’s sweet spot — people with money who aren’t rich yet. Michael Kors has a strong understanding of the consumer he is designing for.

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Michael Kors has generated a strong buzz in the market. Kors was a judge on “Project Runway” since it first aired in 2004. The exposure has been very important for the brand. It has built brand awareness with young fashion consumers. When Project Runway started in 2004, the Michael Kors Brand had brand awareness that was under 20%. Today over 70% of Americans are aware of the brand.

Michael Kors is also one of the fastest growing stocks in 2013. The stock price is up over 50% year this year. The brand went public in 2011. It had already surpassed Ralph Lauren in market value. The company has delivered impressive earnings growth the last few quarters and a recent pullback to its 50 day moving average may represent a buying opportunity for aggressive investors. Strong brands that understand their target audience continue to be a good investment.

It will be interesting to see if Michael Kors can continue its rapid growth. It is difficult to maintain that competitive edge. The key will be designing relevant products that meet the lifestyle needs of his target consumer and continuing to market in innovative ways. There is always a market for great design. In the short-term, I wouldn’t bet against Michael Kors.

Do you think the Michael Kors Brand can continue its explosive growth?

On Friday, The Container Store went public on the New York Stock Exchange. Its first day share price doubled from $18 to $36. The Container Store is a great example of the long-term financial value of investing in your brand and your people. Many people mistakenly view brand investments as a short-term expense rather than a long-term investment in future value. Great brands are created by people focused on delivering great customer experiences.

The retailer of containers and other household items generated $828 million from the stock sale. At a current store count of 62, it believes it can expand to 300 stores. It would appear that The Container Store’s long term investments in branding and training were wise decisions.

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The Container Store is a great example of a brand that has a customer focused purpose and strong core values. Their core values are called The Foundation Principles. The Container Store opened in 1978 in Dallas, Texas with a mix of product designed to simplify people’s lives. They started a new category in retail, that of storage and organization. The Texas-based retailer has been on the Fortune 100 Best Companies to Work FOR list for 13 consecutive years. The company has demonstrated a strong commitment to putting its employees first. This commitment to employees helps make the stores exciting places to shop. People enjoy shopping there and employees are excited to be working there.

The brand’s core purpose centers on customer service and employee relations. They believe that happy well trained employees help make customer’s experiences positive. Their Foundation Principles are great and well worth reading. I bring them to you courtesy of their website http://www.containerstore.com. Brands and companies need to take the time to develop their purpose and core values. They need to ensure that their values are lived and practiced every day throughout the organization.

The Container Store’s Seven Foundation Principles are listed below:

1 Great person = 3 good people

We hire only about 3% of all who apply. If you indeed believe that with one great employee, you get three times the productivity of a good employee, you can afford to extensively train them and communicate to them, empower them and pay them 50 to 100% more than what other retailers might pay them.

Communication is Leadership

The Container Store knows the importance of executing every day, consistent, reliable, predictable, effective, thoughtful, compassionate and yes even courteous communication.

Fill the other guy’s basket to the brim. Making money then becomes an easy proposition.

With this guiding sentiment , The Container Store has been successful in creatively crafting mutually beneficial relationships with vendors by doing everything possible to truly “fill their baskets to the brim.” We know that in return, our business and our bottom line will benefit as well.

The Best Selection, Service and Price

Conventional wisdom says that price is mutually exclusive of service and selection. It’s hard for most retailers to offer low pricing and provide exceptional service. A few great retailers have achieved a combination of the best selection and the best service. To add the best price to that equation is generally unheard of, but The Container Store diligently achieves all three simultaneously with this philosophy.

Intuition Does Not Come to An Unprepared Mind

We want our employees to use their intuition — to anticipate the needs of our customers and recommend product solutions… But we know that in order to help employees do this, we have to provide them with the information — the training — to know how best to apply their intuition.

Man in the Desert Selling

We don’t just stop with the obvious. Providing our customers with a complete solution through our Man in the Desert selling philosophy has been key to achieving one of our main goals of having our customers dancing in their organized closet, pantry, home office, etc., because they are so delighted and thrilled with the complete solution we provided them.

Air of Excitement

Three steps in the door and you can tell whether or not a retail store has it. And we know that The Container Store has it! “Air of Excitement” is our employees’ smiling faces and genuine concern for customers’ needs. It’s the bright, visual, innovative and conversation-provoking products we sell. It’s our clean, well-organized shelves. It’s music that is pleasant and speaks to our customers.

Great brands are built by employees inspired by a shared purpose to deliver memorable customers experiences. Wall Street is investing in brands that deliver great customer experiences.

Can you think of another brand or company that puts employees first?