Reasons to be grateful: “random acts of generosity” for ecommerce

June 22, 2009

Interesting article in Sunday’s New York Times Magazine about Hyatt’s new “random acts of generosity” marketing approach:  by offering their guests random freebies like free massages and drinks during their stay, Hyatt hopes to win over grateful customers and keep them loyal.  From the article …

Its even better to give ...Jeff Zidell, the vice president who oversees Hyatt’s Gold Passport program, underscores the importance of surprise — both that the favors are “unexpected” and that there’s no discernible pattern to which customers will get them.  The hope seems to be that these grateful customers will reward the chain with future business and also spread positive word of mouth.”

Building generosity into ecommerce

Companies building online interfaces for e-commerce should take note:  inserting seemingly random acts of generosity into the online experience could add up to big wins in terms of enhanced user experience.  Some of the ways companies can do this might include:

  • Save some “specials” or “giveaways” for later in the shopping process, perhaps during check out rather than promoting them up-front.  Specials might include price off or free shipping, a discount off of an additional item, etc.
  • A free coupon for their next order inserted into the package or even a free (low cost) item included right in the box.  Sort of like getting a “free” prize in the Cracker Jacks box, only you weren’t expecting it.
  • A follow up email after the purchase of a high ticket item with a generous offer attached.
  • Random “notes of kindness” sent via email to loyal customers with a coupon offer attached – even if it isn’t attached to a particular sale.

As Hyatt and the researchers that have studied the role of gratitude as it relates to customer loyalty have  discovered, customers like it when companies offer them an unexpected benefit.  And these random acts can add up to big benefits for your company at a time when customers have less money to spend and more places to spend it.

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Why Starbucks is like the Beatles and it’s tough to put the lightening back in the bottle

March 22, 2008

If you’ve been paying attention to the news lately in between sips of your Caramel Macchiato you might have heard that Starbucks is having a mid-life crisis.

(Customers are saying “all we need is love” )

It seems that the once high flying company’s stock has been on a steady downward spiral.  They are closing stores (in the U.S. anyway).  And, the company is getting whacked by a number of competitors including Dunkin Donuts and McDonalds (of all people!).  To reverse this slide, its CEO and founder Howard Schultz has announced an array of new initiatives that will “go back to their core” by brewing a stronger, richer blend, entering into a partnership with Conservation International to certify environmentally responsible whole-bean espresso products, and offering a rewards program for users of the Starbucks customer card.

These are smart initiatives but I’m afraid they won’t be enough.  You see, just as the Beatles were more than a band, Starbucks is more than just a coffee store.  They are a cultural phenom, one of those rare forces that were able to grab hold of the zeitgeist and change how we think about, drink and spend our money on coffee (or in the case of the Beatles, how we listened to, talked about and bought music).  Like the Beatles, Starbucks matured along with their audience.  And, their ego and ambition led to some pretty dumb moves in the process.

If you are old enough to remember the 90s, you may recall the excitement around the opening of a new Starbucks in your neighborhood.  This was not that different from the anticipation certain people felt in the 60s about the next new album or single by that band from Liverpool.  But as time went by, things changed.  

Although Starbucks didn’t “break up” they did have their own Yoko: Hear Music.  Yea, it was cool for awhile to have these alternatitve music CDs hanging around the store.  But then it became kind of annoying.  Paul and Linda went vegan and preached about the environment in their songs while flying between their manses in Scotland, NYC and the Hamptons.  Starbucks sang that same song while it built more and more stores and now rivals McDonalds in the amount of unrecyclable waste that customers toss out during each visit.   And similar to George putting out his triple album of stuff that wasn’t good enough to make it on the earlier Beatles records, Starbucks has filled their stores with lousy pastries and warmed over breakfast sandwiches.  They are still Starbucks but somehow they just aren’t as good as we remember them. 

Like Peter Fonda at the end of the movie Easy Rider, Schultz is now saying “we blew it.”  He went after the fast money and lost his vision, and with it the soul of his brand.  And customers started to look for something else to get excited about.  The chain is a victim of their own success: by essentially becoming like McDonalds it has given people permission to believe that McDonalds can play on their turf.

One positive aspect of this recent wake up call at the company is that a number of people who care about this stuff are actually talking about the customer experience and how Starbucks should focus more on the store environment and staffAnd, the company is (“finally” according to some critics) putting more focus on listening to their customers: Starbucks just introduced a new online community, mystarbucksidea.com, where Schulz and his managers will be able to interact with customers via their corporate blog.  Whether these changes will help improve the customer experience or their competitive position is tough to say. 

But, let’s face it, Starbucks can’t ever get that lightening back in the bottle.  The best they can hope for is to try to re-play their greatest hits in order to hold onto their fan base and consider themselves lucky if they get a surprise hit single once in a while (“(Just Like) Starting Over” perhaps?). 

Or maybe someone like Tom Petty will come along and form a supergroup.