Luxury Market Continues to Grow

We see this uptick in our client mix.  Since we focus on luxury brands this is a good thing. The luxury market is growing nicely as the rest of the markets suffer.  In a classic “let them eat cake” scenario the question is…Will the rest of the markets follow the luxury products or is this a tease before a second recession.  If you look at the stock market today (down 275 as of this post) and down almost 10% for the week, you can understand confusion in the marketplace.  However, we will take the good news whenever we can.
BUY, BUY, BUY.  It’s good for your country!
Cheers,
Glenn Zagoren

Even Marked Up, Luxury Goods Fly Off Shelves

By STEPHANIE CLIFFORD

Nordstrom has a waiting list for a Chanel sequined tweed coat with a $9,010 price. Neiman Marcus has sold out in almost every size of Christian Louboutin “Bianca” platform pumps, at $775 a pair. Mercedes-Benz said it sold more cars last month in the United States than it had in any July in five years.

Lissette Gutierrez chose a pair of $1,495 Christian Louboutin shoes at Bergdorf Goodman in Manhattan.

A Gucci coat for $11,950 at Bergdorf Goodman, where more customers have been willing to pay top dollar for luxury goods.

Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. Luxury goods stores, which fared much worse than other retailers in the recession, are more than recovering — they are zooming. Many high-end businesses are even able to mark up, rather than discount, items to attract customers who equate quality with price.

“If a designer shoe goes up from $800 to $860, who notices?” said Arnold Aronson, managing director of retail strategies at the consulting firm Kurt Salmon, and the former chairman and chief executive of Saks.

The rich do not spend quite as they did in the free-wheeling period before the recession, but they are closer to that level.

The luxury category has posted 10 consecutive months of sales increases compared with the year earlier, even as overall consumer spending on categories like furniture and electronics has been tepid, according to the research service MasterCard Advisors SpendingPulse. In July, the luxury segment had an 11.6 percent increase, the biggest monthly gain in more than a year.

What changed? Mostly, the stock market, retailers and analysts said, as well as a good bit of shopping psychology. Even with the sharp drop in stocks over the last week, the Dow Jones is up about 80 percent from its low in March 2009. And with the overall economy nowhere near its recession lows, buying nice, expensive things is back in vogue for people who can afford it.

“Our business is fairly closely tied to how the market performs,” said Karen W. Katz, the president and chief executive of Neiman Marcus Group. “Though there are bumps based on different economic data, it’s generally been trending in a positive direction.”

Caroline Limpert, 31, an entrepreneur in New York, says she is happy to spend on classic pieces, like the Yves Saint Laurent tote she has in both chocolate and black, but since the recession, she avoids conspicuous items.

“Over all, you want to wear less branded items,” she said. “If you have the wherewithal to spend, you never want to be showy about it.” Still, she said, she is quick to buy at the beginning of each season. “I buy things that could sell out.”

The recent earnings reports of some luxury goods retailers and automobile companies show just how much the high-end shopper has been willing to spend again.

Tiffany’s first-quarter sales were up 20 percent to $761 million. Last week LVMH, which owns expensive brands like Louis Vuitton and Givenchy, reported sales growth in the first half of 2011 of 13 percent to 10.3 billion euros, or $14.9 billion. Also last week, PPR, home to Gucci, Yves Saint Laurent and other brands, said its luxury segment’s sales gained 23 percent in the first half. Profits are also up by double digits for many of these companies.

BMW this week said it more than doubled its quarterly profit from a year ago as sales rose 16.5 percent; Porsche said its first-half profit rose 59 percent; and Mercedes-Benz said July sales of its high-end S-Class sedans — some of which cost more than $200,000 — jumped nearly 14 percent in the United States.

The success luxury retailers are having in selling $250 Ermenegildo Zegna ties and $2,800 David Yurman pavé rings — the kind encircled with small precious stones — stands in stark contrast to the retailers who cater to more average Americans.

Apparel stores are holding near fire sales to get people to spend. Wal-Mart is selling smaller packages because some shoppers do not have enough cash on hand to afford multipacks of toilet paper. Retailers from Victoria’s Secret to the Children’s Place are nudging prices up by just pennies, worried they will lose customers if they do anything more.

While the free spending of the affluent may not be of much comfort to people who are out of jobs or out of cash, the rich may contribute disproportionately to the overall economic recovery.

“This group is key because the top 5 percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending,” said Mark Zandi, chief economist of Moody’s Analytics. “That was key to why we suffered such a bad recession — their spending fell very sharply.”

Just a few years ago, luxury retailers were suffering. Too many items were chasing too few buyers, and high-end stores began cutting prices. As a result, consumers awaited 70 percent discounts rather than buying right away. Sales of luxury goods fell 17.9 percent in October 2008 from a year earlier, SpendingPulse said, and double-digit declines continued through May 2009.

Now, many stores are stocking up on luxury items, as shoppers flock to racks of expensive goods.

“They’re buying the special pieces, whether it’s the exotic leathers, the more fashion-forward pieces,” said Stephen I. Sadove, the chairman and chief executive of Saks Fifth Avenue. “There’s a dramatic decline in the amount of promotions in the luxury sector — we’re seeing higher levels of full-priced selling than we saw prerecession.”

In 2008, for example, the most expensive Louboutin item that Saks sold was a $1,575 pair of suede boots. Now, it is a $2,495 pair of suede boots that are thigh-high. Crème de la Mer, the facial cream, cost $1,350 for 16 ounces at Bergdorf Goodman in 2008; it now costs $1,650.

“I think that she’s willing to pay whatever price the manufacturer and the retailer deem appropriate, if she sees that there’s intrinsic value in it,” Ms. Katz said.

Part of the demand is also driven by the snob factor: at luxury stores, higher prices are often considered a mark of quality.

“You just can’t buy a pair of shoes for less than $1,000 in some of the luxury brands, and some of the price points have gone to $2,000,” said Jyothi Rao, general manager for the women’s business at Gilt Groupe, a Web site that sells designer brands at a discount. “There’s absolutely a customer for it.”

Jennifer Margolin, a personal shopper in San Francisco, said she had noticed changes in clients’ attitudes. They “pay full price if they absolutely love it,” she said. “Before it was almost completely shying away, where now it’s like, ‘O.K., I’m comfortable getting a Goyard bag,’ but they get it for the quality.”

Goyard bags, in addition to having a distinctive pattern, will usually run a few thousand dollars. And, yes, they are selling out quickly.

This article has been revised to reflect the following correction:

Correction: August 4, 2011

An earlier version of this article erroneously referred to Karen Katz on second reference as Mr. Katz. Also, a caption misidentified the brand of shoes being purchased at Bergdorf Goodman. They were Christian Louboutin, not Louis Vuitton.

Photos: Deidre Schoo for The New York Times

Among Affluent Americans, Print Media Is Tops

While “New Media” is a component of a campaign it is called “New” for a reason. You must balance your advertising program to generate maximum reach. -GZ

 

Death of Traditional Outlets Has Been Greatly Exaggerated

By: Stephen Kraus, Bio

Published: August 01, 2011

Mark Twain famously quipped that news of his death was exaggerated when the press mistook his cousin’s serious illness for his own. Today, much the same could be said about traditional media. It seems that its death is foretold by any number of pundits with every new release of data on social media and digital devices. (Facebook’s 500 million members would make it the third-largest country in the world! Ashton Kutcher has more than 7 million Twitter followers! IPad-mania sweeps through coffee shops around the world!)

 

Of course, there is no denying the rapidly growing and truly disruptive impact of new devices and social media. But at the same time, there is also no denying that traditional outlets are thriving in the lives of consumers today, and that they form the core of how most consumers interact with media. This is true for the general population, and it is even true among the affluent Americans that we study, even though they have the discretionary income to indulge in an array of devices, as well as the digital literacy to get the most out of them.

Throughout 2011, we have used our Mendelsohn Affluent Barometer to track new and traditional media use among American Affluents. This monthly survey consists of more than 1,000 online interviews with respondents making at least $100,000 in annual household income — in other words, the 20% of Americans who account for about 60% of U.S. income and approximately 70% of U.S. net worth. The survey was conducted between March and May 2011.

When asked how they read magazines, 93% said they read hard-copy print versions; in contrast, less than a third read them on computers, and no other format garnered more than 10%. The same pattern is evident for newspapers, which 86% read in print, compared to the 39% who read them on computers, and 14% who read them via smartphone. TV shows are watched on TVs by 94%, followed by 23% who watch them on computers. Websites are viewed on computers by 94%, followed by 32% viewing them on smartphones. The pattern is clear across all media. The vast majority consume content through its most traditional outlet: magazines and newspapers in print, websites on computers, video content through TVs and so on.

 

Media usage among all Affluents. Source: Mendelsohn Affluent Barometer

Similarly, we explored data on the importance of traditional media in our Ad Age article last month, “Media Use in Extraordinary Times.” When asked how affluents followed Osama bin Laden’s death, network TV topped the list, cited by 70%, and an additional 40% cited printed newspapers. Similarly, when asked how the followed the earthquake, tsunami and nuclear crisis in Japan, network TV again topped the list, cited by 76%, with an additional 49% citing printed newspapers.

It has been well-documented that younger consumers differ in their media-consumption patterns from their older counterparts, and certainly they have been earlier adopters and heavier users of some emerging and alternative platforms. But even today’s younger generation shows the characteristic pattern of tending to consume media through its most traditional outlet, even as they show more cross-platform “experimentation.” For example, among those aged 18-34:

• 88% read magazines in print, followed by 35% who read them online
• Newspapers show the greatest amount of experimentation — 70% read newspapers in print, followed relatively closely by 54% who read them online
• 94% view video content on TV, followed by 35% who do so on computers
• 93% read websites on computers, followed by 38% who do so on smarthphones

 

 

Media usage among Affluents ages 18-34. Source: Mendelsohn Affluent Barometer

Of course, we’re not denying the widespread use and tremendous impact of “new” media. It is vitally important in the lives of consumers, particularly Affluents, and is becoming more so. Moreover, any business that suddenly finds 20-30% of its best customers “experimenting” with less profitable options (from “analog dollars to digital dimes”) will face serious challenges. Reports of Twain’s death were indeed exaggerated when he made his famous remark in 1897, but perhaps those reports are better characterized as premature; he had 13 more years left before an obituary became appropriate. Reports of the death of traditional media are equally premature.

Don’t Kill Print Media Yet

As the world of media and advertising becomes more fragmented due to the internet do not rule out key print publications yet.

Vogue ad pages are up almost 10% over last year and up 25% from the year before.

The interesting part of this September issue (beside the fact that you need a forklift to move it) is that there are bar codes within the publication that will link to advertisers’ Facebook “Like” buttons.  This will provide a nice analytic to see how the print is pulling as well as allow future “push” messages through Facebook.  A great blending of conventional and internet advertising.

Vogue’s September Issue Leads Fashion Pack With 584 Ad Pages

http://adage.com/article/mediaworks/vogue-s-september-issue-leads-fashion-pack-584-ad-pages/228826/

Cheers,
Glenn Zagoren
CEO

Pros and Cons about Social Media

 

As I advise our clients, there is no one element of a program that works without all the elements pulling together.  I do believe that there is a place for social media, and we use it,  but not that the expense of conventional, targeted, great creative advertising.  I recently found this article in Ad Age and thought that it was interesting in that on the surface the Social Media company was boasting success with their stealth campaign.  A client who was unfamiliar with the social media world might have bought into that success pitch.  The bottom line is still this….did we sell more products this month than last month?  Did more people know about my product and did I build positive branding in their minds.  Don’t always believe the hype.

Cheers,
Glenn Zagoren
CEO
The Zagoren Collective
www.zagoren.com

Guerrilla ‘Success’ for Cap’n Crunch Does Social-Media Proponents No Favors

Resistant Marketers Still Focused on Numbers, not Relationships — and These Numbers Are Small

By: Bob Garfield Bio

Published: March 07, 2011

Bob Garfield

With Frienders like this, who needs enemies?

Michael Gutweiler and Cory Smale, two Chicago 20-somethings trying to get attention for their new social-media boutique, hit on a clever idea. They found a large, iconic brand that inexplicably had no presence on social media and decided, with no permission much less a contract from the marketer, to establish that presence themselves.

Thus, two months back, the “Where’s the Cap’n?” campaign was born.

Yes, the two pirates stealthily boarded Quaker Oats’ ship and shanghaied Cap’n Crunch, the seafaring breakfast-candy trademark. Then they created a Facebook page for him, and a Twitter feed, and an online petition — all to pressure Quaker into bringing the skipper from the seven seas to the digital space.

Pretty good idea, no? Cap’N Crunch! It’s like kidnapping Frank Sinatra Jr. (which, in 1963, somebody did, gaining $240,000 in ransom, tons of attention and only four-and-a-half years in prison). Sure enough, here’s a two-man company, the Giant Steps, featured in Advertising Age, which is a lot more than most startups ever accomplish. They’ve done so thanks to an email declaring success: “… our campaign and the voice of our movement has been heard — the Cap’n is now coming to Twitter.”

Quaker has informed them of its plans to formalize the Twitter presence some time in 2011.

“It’s a win for us,” Gutweiler told me. “We’re the new players in the league. We have strong beliefs and we’re gonna live by them. … We were able to create the most-visited, the most-mentioned cereal page on Twitter within the past two months — and they’re not an official account.”

So, once again, excellent little guerrilla-marketing gimmick for Gutweiler and (no relation to P&G’s John) Smale. The problem is, should this exercise land them in any corporate conference rooms to pitch, the brand-evangelism message they’re conveying is not the one that will be heard. What skeptical marketers will home in on is the metric the ill-named Giant Steps uses to document its success.

“Within the first week,” says Gutweiler in recounting the triumph, “we had more than 420-430 [Twitter] followers.” Then, when the pace began to slow, they announced they would give away a Flip camera for every 1,000 followers they accumulated, and 72 hours later they were at 1,100.

Woo-hoo.

See, the thing is, if you expect to be taken seriously by people who buy audiences by the 10s and 100s of millions, it is best not to pound your chest over 1,100 people, two-thirds of whom have been bribed. In boxing, this is what is called “leading with your chin.” At this very moment, men and women with large budgets and insufficient devotion to social media are congratulating themselves for not being suckered into distracting, inefficient, unscalable and, above all, uncontrollable expeditions into the final frontier.

Mention that to Gutweiler, and the poor young fellow starts to sputter: “You see, it’s not just about the numbers; it’s about the engagement.”

And about that he is exactly correct. Social media are everybody’s destiny, but not because you can swoop in and buy followers like so many Gross Ratings Points. This is relationship building, by its nature a painstaking, piecemeal process. As it happens, the GRP world is disappearing and the social graph beckoning. The bad news is that scale is elusive. But bear in mind that the “efficiency” of mass media is itself dubious; the costs are rising, most spending is wasted on non-prospects and most prospects aren’t seeing your ads. Even in starkly un-giant numbers, social relationships offer a measure of trust and sustainability that mass media could never, ever forge. Gutweiler and Smale had actual, ongoing exchanges with the Crunch-o-sphere.

“We didn’t push a product,” he says. “We talked about the weather.”

OK, well done. That is indeed how people relate to one another, and eventually those relationships inform all sorts of choices, including what kind of crap to eat in the morning. Can we agree, though, that at this stage of social-media evangelism, bragging about such infinitesimal reach is a little on the counter-productive side? Can we agree that what we need demonstrations of relationship building that rely on other metrics — brand loyalty, let’s say — that get to the heart of why the collapse of traditional marketing will yield more good news than bad?

I asked Michael Gutweiler if he had impressed Quaker enough to win a piece of Cap’n Crunch business. Here’s what he said: “To be honest with you, that’s not what this was about. This was to show that all brands need to be on the digital space. That we are in 2011 and there are hundreds if not thousands of brands not on the digital space kind of baffles our minds.”

Or, to frame the answer in a slightly different way: “No.”

Maybe a name change would do the trick. The Giant Steps is false advertising. Sure, a giant leap is in progress, but with apologies to Neil Armstrong, it’s all happening One Small Step at a time.

ABOUT THE AUTHOR

Bob Garfield, now a consultant, has reported on advertising, marketing and media for 28 years.

Gap to Scrap New Logo, Return to Old Design

Plans to Announce Change on Company Facebook Page

By: Andrew Hampp and Rupal Parekh, Published: Oct 12, 2010

Gap will say goodbye to the new logo.

Just four days after confirming its surprise new logo was, in fact, legit, Gap is returning to its old design, Ad Age has learned. The announcement is expected to be made at 4:30 Pacific Time today on the brand’s Facebook page.

Marka Hansen, Gap North America president, informed the company’s marketing department this afternoon of the change, acknowledging that the switch was a mistake and that the company would be tabling any changes for the foreseeable future.

The logo, created by New York agency Laird & Partners, was intended to be a long-term commitment for the brand with a nod to the future. Ms. Hansen’s about-face about the Gap’s new logo was foreshadowed by a blog post she wrote for the Huffington Post last Thursday. “We chose this design as it’s more contemporary and current. It honors our heritage through the blue box while still taking it forward,” she said. “Now, given the passionate outpouring from customers that followed, we’ve decided to engage in the dialogue, take their feedback on board and work together as we move ahead and evolve to the next phase of Gap.”

Calls to Laird & Partners were not immediately returned.

Gap representative Louise Callagy also told Ad Age that the logo debacle does not mean that it has ended its relationship with Laird & Partners. “We are still engaged,” she said.

The scrapping of the design—which re-created the retailer’s name in a bold Helvetica font with a blue gradiated box perched atop the P—comes after Gap was put through the ringer last week for its new look. The company became the whipping boy of designers, who besides merely disliking the new logo were enraged at the suggestion that design professionals should help fix the mistake by offering up ideas for free.

Read the rest of the story, and a statement from Marka Hansen, president of Gap Brand, North America on Adage.com.

GAP Logo Update

Ad Age:
Gap Speaks Out: Yes, the Logo Is Real
And No, the Rollout Wasn’t Some Social-Media Experiment

By Natalie Zmuda
Published: October 07, 2010

NEW YORK (AdAge.com) — Gap has finally shed some light on its new logo, which has had the industry buzzing and wondering why the retailer ditched its previous iconic mark.

The logo, created with Laird & Partners, New York, is meant to be the latest “evolution” for the brand, which has been updating its product, rolling out pop-up stores and tapping hot designers such as Patrick Robinson. The logo is also in line with the label on Gap’s popular 1969 jeans line.

Tell us what you think: Do you expect a company to seek your input before making a major change to its logo, packaging, product?

Louise Callagy, a Gap spokeswoman, told Ad Age that the brand is changing and the company wanted a new logo to reflect that. “For the last two years we’ve been working on evolving the brand identity for Gap,” she said. “[The new logo] is more contemporary and current and honors the heritage of the Gap brand with the blue box but takes it forward.”

The plan, Ms. Callagy explained, was to roll out the logo on the North American Gap.com site, create some momentum and then feature it in the upcoming holiday campaign. Laird & Partners also worked on the holiday campaign, which is set to include Foursquare founders Dennis Crowley and Naveen Selvadurai, as well as Lauren Bush.

Laird & Partners did not return a call for comment.

But, given the swift, predominantly negative response online, plans to roll out the new logo further now appear to be in flux. Ms. Callagy said she couldn’t comment on whether the logo would be rolled out to stores. After the logo has been in the marketplace for some time, she added, the retailer would be prepared to discuss whether it will take the logo overseas. Gap operates some 1,500 stores worldwide.

Replacing signage, updating credit cards, employee name badges and the like would surely be a pricey endeavor. If Gap decides to trash the new logo completely, at least the debacle won’t have cost it millions; it would save itself the heartache experienced by Tropicana when it yanked product off of shelves last year after a much-maligned redesign.

Ms. Callagy said the retailer has been surprised by the response to the new logo, which was received well internally. The retailer has also been tracking the parody accounts @gaplogo and @oldgaplogo. For now, it doesn’t have plans to respond to the accounts.

“It’s impressive, the passionate outpouring from customers,” Ms. Callagy said. “Given this response, we decided to open it up. We’ll explain more specifics in the next few days.”

Gap posted a message on its Facebook page last night saying that in light of the response to its new logo it will be conducting a “crowdsourcing project.”

“Thanks for everyone’s input on the new logo! We’ve had the same logo for 20+ years, and this is just one of the things we’re changing,” The Facebook post reads. “We know this logo created a lot of buzz and we’re thrilled to see passionate debates unfolding! So much so we’re asking you to share your designs. We love our version, but we’d like to … see other ideas. Stay tuned for details in the next few days on this crowdsourcing project.”

Asked why Gap handled the rollout the way it did, Ms. Callagy said it was intentional. “Gap’s target customer is the millennial, and we’re exploring ways to communicate with them,” she said. “On Monday, without a lot of fanfare, we introduced the logo on the Gap.com site. … That’s in line with them.”

But what about the customers who feel betrayed by the way Gap up and changed the brand without cluing them in? “We’re addressing that by opening it up and having everyone participate in the process,” she said. “We’ll see how it goes.”

What was GAP thinking with its new logo?

There have been some great rebranding campaigns over the years.  Some so subtle that you don’t even know that they are being rebranded.  For example:  The Morton Salt girl has been updated regularly to fit the fashion of the time.  The Quaker Oats logo has been brilliantly modernized through time.  Even IBM has understood the value of brand equity.  But every once in a while you get slammed with something like this new Gap logo or the failed Tropicana repackaging.

Ok, I am ready to buy some technology or B2B service from this new Gap.

Sometimes you need to just step away from all the analytics and focus groups and clients paranoia and just look at the new design and say “how does that look?”.   Don’t get me wrong here…I don’t think the original logo was a humdinger either but there is an estimated $4 billion of brand equity behind it.

You gotta have some serious needs to go off on a flyer and hit the world with your new image.  Brings back memories of New Coke.  Anyone care to see if the old Gap gets brought back a brilliant fanfare.  I am sure that this is their master plan.  Worked for Coke.

Glenn Zagoren

Customer service is dead!

By Tom Asacker

Back in the day, when customer service was king, I worked after school pumping gas and handing out collectible tumblers at my father’s service station. That’s what they called it back then: a service station, not a gas station. The consistent delivery of fast and friendly service was a significant source of differentiation and, in many cases, a customer’s compelling reason to choose. It is strikingly different today. Customers not only pump their own gas (except in New Jersey and Oregon, where the law prohibits it), they also scan and bag their groceries, configure their computers, manage their stock portfolios, and check themselves in at the airport. On the chance occasion a customer needs assistance, more often than not it’s to have a question answered or a product exchanged.

If you take a few minutes to Google the phrase “customer service is dead” and read the horror stories listed in the search results, you’ll eventually come to believe that customer service is a quaint thing of the past. Is it? Is customer service, as we lovingly remember it, really dead? Is it, like the modern-day kings of constitutional monarchies, a mere symbol of a bygone era? I think so. I can remember, as part of my aforementioned job, routinely checking customers’ oil levels. And I was never questioned when I advised them, frequently, that they were down a quart. When was the last time you had to add a quart of oil to your car between oil changes? I also remember squeegeeing windows and attending to tumbler requests, never once barked at to “hurry up!” Today, the fastest of fast food isn’t fast enough.

 Quality, Technology, Impatience . . . Oh my!

Customer service used to be an integral component of a marketplace besieged with poor quality products, a computerless environment, and laid-back customers. It was simply, and necessarily, a way to help customers who couldn’t help themselves. Today, customer service is usually a symptom of something gone awry. Other than businesses where personal interaction is a necessary evil, like technical products, or ones where it’s a stragetic, value-added component, a component that customers are willing to pay for (think Zappos), customer service is best when it doesn’t exist at all. One of the promises of the new economy was that customers would finally be in charge. And it’s true, they are. But only if companies put them in charge. The imperative of customer-oriented organizations today is to do just that; help customers by helping them help themselves. The goal is perfect customer service through no customer service.

Customer service is now a proactive, strategic endeavor. Read it again. It’s not simply about training, attitude and execution. It’s about innovation, operational and technical excellence, and managing — and influencing — customers’ changing expectations. Customers who, by and large, want their products and services to be perfect, free and now! This means that before you ask “How do we teach our people to make eye contact?” you should ask “Do our customers want to make eye contact?” And instead of asking “How do we reduce customers’ telephone on hold times,” ask “How do we get customers to stop calling us?” Yes, great customer service is often defined by how a business responds to inevitable and, in some cases, unpredictable product and service failures. But the best organizations prevent those problems from occurring in the first place.

To Know and Not to Do is Not to Know

This probably sounds like nothing more than common sense to every customer service executive in America. But it must be something more, otherwise why do the accounts of extended wait times, difficult return policies, and other service nightmares continue to provide grist to the blogging mill? The cynic would point to disengaged employees and the general difficulty of providing satisfactory service to today’s overbearing consumer. I don’t buy it. I believe that most people have empathy and a genuine desire to address customers’ issues and concerns. And most customers are caring and reasonable as well. No, the problem, like just about every business problem today, is one of mindset. Most organizations view customer service as the complaint department or, best case, the customer satisfaction department.

Near the end of my part-time, gas pumping career, I remember my father contemplating the opening of a brand new, self-service gas station directly across the street from his little full-service station. With his greasy arm around my shoulder, sweat dripping from his brow, and his head shaking side to side in bemusement, he assured me that “People will never pump their own gas.” “Plus,” he coolly added. “Our customers aren’t just satisfied. They love us.” Yup, they loved us alright. But they loved saving a few pennies a gallon even more. Face it. The customer service of our fathers’ days, like my father’s little full-service station, is long gone and it’s not coming back. Customer service should now be thought of as the customer experience department, and its mandate should be to purposefully and tenaciously help the organization design the best darn customer experience possible. Customer service is, in fact, dead. Long live the customer experience!

  Tom Asacker

 

Famed Framer Forges Into a Digital Future

By Joann S. Lublin
The Wall Street Journal

Behind a locked, gray-metal door on Manhattan’s Upper East Side, Eli Wilner’s narrow gallery is filled with about 1,000 pricey frames. They’re mainly antiques, fetching up to $250,000 apiece.

Bryan Derballa for The Wall Street Journal
Eli Wilner, above, has been responsible for framing some of the world’s most renowned paintings.

But the frames the patrician dealer waxes rhapsodic about nowadays appear on his smartphone. And those Mr. Wilner sells for 12 cents each.

In late June, the 54-year-old framer of classic paintings for customers such as the Metropolitan Museum of Art and auction house Christie’s introduced an application for framing digital photos on Apple Inc.’s iPhone and iPad. The app allows users to email, Twitter or print their “masterpieces” framed with more than 100 styles based on Eli Wilner & Co.’s past and present inventory.

“I am the premiere framer in the world,” says Mr. Wilner, an avowed perfectionist. But, he predicts, “the virtual-frame business will certainly outpace my real-frame business someday.”

His small firm rang up sales of $4.7 million last year, down from its 1997 peak of $7.2 million.

Going digital wasn’t easy. Devising the app took seven months, cost Mr. Wilner nearly $300,000 and required tryouts with six developers.

The move took the dealer, collector and restorer far from the rarefied world of fine-art frames, where he looms large.

“Eli Wilner is the foremost American authority on historical-period framing,” says Benjamin Doller, a vice chairman of Sotheby’s. The auction house buys or borrows about 100 of his frames every year for its painting sales.

Bryan Derballa for The Wall Street Journal
Mr. Wilner shows a picture of his cat framed on an iPhone using the application he conceived.

Wilner & Co. has built replicas of antique frames for 26 White House paintings, including a Childe Hassam that hangs near President Obama’s desk. He lent Christie’s a replica frame for a 1932 portrait by Pablo Picasso that fetched $106.5 million this spring—the most ever paid for a work of art at auction. Christie’s says the buyer later acquired the frame for about $60,000.

Mr. Wilner’s artisans spent two years crafting a gilded replica of the mid-19th century frame for “Washington Crossing the Delaware,” a highly popular painting at the Metropolitan Museum of Art. A 12-foot-wide carved crest with an American eagle dominates the replica, which consumed more than 12,000 sheets of gold leaf. The museum will unveil the restored painting in January 2012.

Mr. Wilner, a native of Israel, grew up in New York. He says he “dreamt of being a great artist” after a great uncle who collected art placed one of his childhood pastels inside an 18th-century Italian frame and hung it beside a Chagall. That pastel now adorns a wall of the Wilner gallery, which previously was a gambling den.

After realizing he never would become a famous painter, Mr. Wilner became a framer instead. He started his company in 1983 and initially worked out of his 300-square-foot, walk-up apartment.

His first foray into low-cost territory failed. In 1989, he used images from his collection to make magnet frames. They never made money, and he halted production last year.

Mr. Wilner began exploring digital photo frames in late 2009, because he still yearned to share his love of framing “with the entire world at a price that was affordable.”

He hoped to unveil the application in January. After rejecting several software developers who couldn’t work fast enough, he finally settled on Glenn Zagoren, a friend with an eponymous business-development and marketing collective.

Two staffers toiled seven days a week for three months resizing digital frames from his magnet venture to fit iPhones and iPads. One of those employees subsequently took three weeks preparing prototype frames shaped like ducks and other animals. Mr. Wilner rejected the idea.

He also rejected an idea from Mr. Zagoren to offer “people who prefer something hipper” some modern digital frames in fuchsia, magenta and lime green rather than just black, silver and gold.

Bryan Derballa for The Wall Street Journal
Master carver Felix Teran works in Mr. Wilner’s Long Island City studio

The framer called Mr. Zagoren every day at 5:30 a.m. for lengthy updates about the project. The Saturday after the app launched, Mr. Wilner emailed him 80 times with questions and suggested tweaks. Among them: substitute the word “widths” for “thicknesses” in describing the frames’ three sizes. The manic oversight nearly drove the production team nuts.

“I am very much hands on,” Mr. Wilner concedes.

With his digital framing app in the can, Mr. Wilner is already musing about new ventures. He’d like to offer major retailers large numbers of replicas. But he insists those frames must be high-quality. “My businesses are my art, he says.

Don’t Let Short-Term Strategies Kill Your Brand

By:  Sylvia Townsend Warner

Times of economic duress bring out the best, and the worst, of a marketing arsenal. Although some cool ideas are born in times such as these, it is vital to remember that brand identity is paramount.

Last year, Starbucks began to get a lot of press for all the wrong reasons due to its response to dropping sales and increased competition. The coffee company is known for selling a premium cup of coffee at a premium price. As the economy went into a nosedive, competition from McDonald’s and Dunkin’ Donuts kicked into high gear, as both targeted high-end coffee drinkers.

Starbucks had a lot of choices but decided to bank on an “instant coffee” brand extension. They also wanted to be known as “just another coffee shop.” The campaign didn’t work as well as anticipated, and said messaging was put away.

What Starbucks could have done was to slightly lower its prices on its most expensive coffees and communicate its price changes through various advertising and marketing efforts. In other words, during a time where America is sacrificing Starbucks to save money, Starbucks should sacrifice a little profit to save America from bad coffee.

Some mistakes to avoid when implementing short-term strategies:

• Make sure that the consumers understand the reasoning behind the change.
• Ensure that any changes to the brand are communicated and reinforced socially.
• Be consistent with current brand standards; anything that detracts from the brand will confuse consumers and cause discrepancies in brand perception.
• Maintain brand’s market position by upholding brand standards at all levels from corporate management to consumers.
• Keep the messaging short and simple.
• Do not let a short-term campaign dilute the brand.
• Remember that your brand should not only mean what it says, but does what it says.