When Lululemon announced they had launched a loyalty program, they became the latest brand to shift focus from their core business to take a new direction.
As the likes of Staples and Apple have shown, this services-over-product approach can be key to moving forward and adapting to the new behaviours of today’s consumers.
In this week’s episode of Marketing on Tap, we look at how brands are pivoting away from what first made them successful, and whether the loyalty program model can be used in other industries.
Settle back and enjoy this week’s topic, brought to you in the usual unscripted manner that you’ve come to expect when Sam and Danny take the mic.
If you prefer to listen on the go, the audio version of this week’s episode can be listened to below.
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Transcription:
Intro: Join marketers, authors and craft beer enthusiasts Sam Fiorella and Danny Brown for a hobby discussion on all things digital over a cheeky pint or two. Topics on the menu include influence marketing, social media, brand advocacy, and a taste testing of real-world digital marketing campaigns. Some are smooth — others don’t sit so well. Don’t forget to stick around for last call, where the boys will serve you up one final marketing takeaway that you can go out and apply in the real world. It’s a great primer before the weekend.
Sam Fiorella: Welcome back everybody to another episode of Marketing on Tap. This is my mate Danny Brown. Hi, I’m Sam Fiorella. Today, we’re going to carry on with yoga pants.
Danny Brown: Hey hey, I’m still not wearing mine.
Sam Fiorella: Yeah, he’s still not wearing his. Lulu Lemon is following us now, apparently. Danny got a whole shipment of free yoga pants.
Sam Fiorella: I read an article just this morning, in fact, about Lulu Lemon’s new venture, which is turning their stores … or their business, really … into a bit of a membership program.
Sam Fiorella: They are now starting to sell memberships, where for, I think it’s 128 bucks Canadian, you can get not only a pair of their yoga pants with a special emblem on it, but you get other perks. Like access to certain classes, and other things inside of a box.
Sam Fiorella: Anyways, the idea here is that you’re getting more than just the physical retail experience. They’re trying to create some kind of a community.
Sam Fiorella: Anyway, we want to talk about that and how the marketing is shifting today. You’re moving away from just your traditional business and how you really have to incorporate this concept of community. And I want to explore that in different businesses.
Danny Brown: Okay.
Sam Fiorella: So that’s today’s topic. How do we move forward from traditional businesses and encompass communities? In the meantime though, we’ve got something really interesting.
Danny Brown: We have. We’ve got a new beer. Red Racer, who’s over in Surrey, BC. Normally they’re known for their IPAs and some of their stouts and their amber ales. But, they brought out a s’more stout.
Sam Fiorella: A s’more stout?
Danny Brown: A s’mores stout, so you’ve got your mix of your cracker biscuit, your marshmallow, your chocolate.
Sam Fiorella: And for normal people cracker biscuits are graham crackers.
Danny Brown: Well we’re getting close to cottage season again.
Sam Fiorella: I can’t wait to see Robert’s face on this one.
Danny Brown: It’s 5 1/2%, so it’s not a pretty huge beer. Something more like an easy seasonal for an end of night drink.
Sam Fiorella: Alright. So again, this is one of those beers that is a cross between desert and a beer.
Danny Brown: Yeah exactly. Yeah.
Sam Fiorella: Alright. Well cheers everybody.
Danny Brown: Cheers.
Sam Fiorella: Let’s give this one a try. Wait Robert, I need to get you on the Robert cam. Where are we? There we go.
Sam Fiorella: Oh, that’s actually really good.
Danny Brown: That’s like an English ale.
Sam Fiorella: Yeah.
Danny Brown: Yeah.
Sam Fiorella: And it’s warm, so it’s perfect for Robert.
Danny Brown: Yup. Yeah, it’s not been chilled to perfection. Yeah, it’s done a good job, Red Racer. I’m going to grab a couple bottles of that on the way home. That’s really nice.
Sam Fiorella: Yeah, you know what? I’m really liking this. I’m not sure that I got Robert effectively on that one. I think I ended up taking a picture of him instead of a video. But for the record, Robert actually seemed to not grimace at this one, so it’s good.
Sam Fiorella: Okay Danny, let’s get back to the topic at hand … Lulu Lemon. Turning their product or their business from a product business to a retail business to a membership based business, which is kind of interesting. I read a little bit about it in this article where the president was saying that they really listened to the audience, and they really want to get involved in the local communities, which I thought was really kind of interesting.
Sam Fiorella: Is this the future of every business is going to go to community-based engagement?
Danny Brown: I think it’s certainly a good idea. When you look at a lot of retailers now, they’re going to the local approach. Lulu Lemon … we spoke about it last week, they got attacked with their sales … they’re trying to climb back up. And even now you look at the stocks, they’re still below where they were earlier in the year.
Danny Brown: For these guys, I’m not sure how effective this … it’s a first stab at it, so we have yet to see.
Danny Brown: But you mentioned it’s 128 bucks a month.
Sam Fiorella: Yeah, something like that.
Danny Brown: The average leggings cost 98 bucks and you’ve got the perks and the gifts they’re including and shipping. So, they’re going to be taking a hit or not, so it will be interesting to see how that part pans out.
Sam Fiorella: Well, interesting on the price. One of the things the president said in the article that I read was that they’re actually considering upping the price based on such positive initial demand for this program.
Danny Brown: Right.
Sam Fiorella: Now I don’t know if that’s just bluster and marketing on his behalf, or if there is actually that kind of ….
Danny Brown: Well, that’s another thing going that one of the golden rules in marketing is you don’t increase your price immediately after launch because you’re going to piss off the potential customers you could have had at the launch price.
Sam Fiorella: Yeah.
Danny Brown: Going with price you’re happy with and then maybe reduce it if you need to, or go up that way.
Danny Brown: So, I don’t know, I’m biased against Lulu Lemon because of the whole thing that we spoke about the other week there.
Sam Fiorella: Yeah.
Danny Brown: And my legs don’t look great in their yoga pants. So that’s another reason.
Sam Fiorella: Yeah, I can attest to that.
Danny Brown: Yeah. I mean we’ve been looking at some of the brands we shop with, and some of the brands I shop with is very community driven. Its people that are involved in the community either sponsoring sports fields and school kids, or partnering with other businesses, etc.
Danny Brown: And as people move away from corporations are seen as tax grabs and treat employees like crap. Like [inaudible 00:05:39] we spoke about a few weeks back.
Sam Fiorella: Yeah.
Danny Brown: I do think consumers are starting to be very more selective about who they shop with and what they give back.
Sam Fiorella: I’m going to disagree with you on this one because I think that this is actually a brilliant move on their part.
Sam Fiorella: I too, like you, just don’t like the brand. I don’t like the snobbiness of the brand.
Danny Brown: Yeah.
Sam Fiorella: I don’t like how they’ve reacted to customer complaints. And certainly besides the fact that I don’t wear yoga pants, I wouldn’t shop there, and I am frequently trying to discourage my daughter or my wife from shopping there.
Sam Fiorella: But, my personal feelings about the brand this side, I do believe this is a logical evolution for them. We over the last three or four months that we’ve been doing this podcast we’ve talked often about businesses having to evolve beyond … reinvent themselves.
Danny Brown: Mm-hmm (affirmative). Yeah.
Sam Fiorella: And not just reinvent their business, but change the board game, right? Completely reinvent the industry — do something different.
Sam Fiorella: And I think for them this one way to reinvent their business. Because part of what they’re doing is their yoga pants, that these members get, actually have some kind of a special emblem on it, from what I read. And so when you’re in a class … whether it’s one of the classes that they’ve sponsored and that you get free as a member, or whether you’re just going into a regular gym and going to yoga class … if you see somebody else in those, you know they’re also a member. And the idea, that’s to spark conversation. Goes, oh you’re a member too? You can sit down and have your chai tea after the yoga.
Danny Brown: Yeah.
Sam Fiorella: Whatever it is.
Sam Fiorella: And so that concept of fostering community around your brand, is frankly what we do for all of our customers. Right? [crosstalk 00:07:28]
Sam Fiorella: So that is a smart thing to do beyond. So I’m giving them kudos for this whole community building thing. I wish they would get the rest of their brand in order, and their other community engagement in order. But I think that from a business perspective this is great.
Sam Fiorella: And you move over to what Staples just announced. So Staples here in Canada, in Kirkland, Quebec, is the first one … they’re moving away from retail. Well, not moving away from, but expanding their physical location to include co-working spaces.
Sam Fiorella: I remember we’ve already talked about this in the past, where Staples as an example of a business that’s moving away from just product sales, and going into services as a way to differentiate itself with their service centers with their computer labs and all that stuff. Now they’re actually restructuring their physical location to offer open desks for people to come in and work. You can grab a coffee, you can network with other business people … collaborate.
Sam Fiorella: And then, of course, get your coffee and potentially buy a product.
Danny Brown: Buy a product. Yeah, exactly.
Sam Fiorella: Or use the services that they have available to you. Be it computers, printing, photocopying … whatever else they offer.
Sam Fiorella: So I love that idea because of the … again, they’re looking at how do we build community around our brand? Which is another reason for somebody to come into the store, whereas most people don’t go into stores anymore.
Danny Brown: Yeah, true.
Sam Fiorella: They buy online, right?
Danny Brown: Yeah.
Sam Fiorella: And incidentally, the second store that is being currently renovated, is the one right down the road. The one that we go to … 370 something University Avenue [crosstalk 00:09:02].
Danny Brown: Yeah.
Sam Fiorella: Yeah. I noticed the other day when I was in there … which is interesting because we talked about this … I needed some supplies. I ordered it online and I went to pick it up so that I don’t have to spend time going up and down the aisles. Right?
Sam Fiorella: So that was one innovation that I think a lot of retailers are sort of getting involved in. So this is another one. Giving me a chance or reason to actually stay if I’m a small business, which makes sense.
Danny Brown: Right.
Sam Fiorella: What do you think the impact on Staples in going to be with this shift that they’re making?
Danny Brown: I mean obviously everybody knows them as a brick and mortar retailer that sells computer business supplies, etc. So it makes sense for them to be moving to that co-working space. My only [inaudible 00:09:41] because of the likes of WeWork and places like that have the [inaudible 00:09:45], and they pigeon holing themselves in now that nobody really knows what Staples is for.
Danny Brown: Are they a business supply place? Are they a cow-working place? Are they something else?
Sam Fiorella: Yeah, I’m not sure that’s going to be an issue. I mean, definitely you have to consider what is your brand and you have to be focused when it comes to a brand. You can’t be all things to all people … marketing 101.
Sam Fiorella: However, they are a business depot.
Danny Brown: Yup.
Sam Fiorella: Which, I think, might have even been one of the …. wasn’t Business Depot a …
Danny Brown: Home Depot?
Sam Fiorella: No, no.
Danny Brown: Oh, Business Depot is the name the name we were going to come up with for their services ad.
Sam Fiorella: Yeah. Well, Business Depot was actually one of their competitors or that they ended up buying. I used to work for Staples many many years ago. I know all these little tid bits of trivia.
Sam Fiorella: Anyway, so that’s what they’re trying to do. It says we are part of your business. So, I actually think they might have one step up on a place like WeWork. They don’t necessarily have the facilities or [crosstalk 00:10:39]
Danny Brown: Right.
Sam Fiorella: They’ve already got the real estate … another thing they got going for them. How much real estate do they have across North America?
Danny Brown: Ah, that’s true. It’s big real estate.
Sam Fiorella: You know what I mean? And if it’s the same kind of membership idea as a WeWork, where as long as you have your card, you can get in and use those offices anywhere you go, wherever you’re traveling across the country. It might be something kind of interesting.
Danny Brown: Well, and especially the [inaudible 00:10:59] program.
Sam Fiorella: Yeah.
Danny Brown: Kind of like what Lulu Lemon is doing. So you come, you co-work and you get x percentage off our [crosstalk 00:11:05].
Sam Fiorella: Yeah, you either get discounts in the store or you get some freebies. I know that a lot of businesses are moving toward these loyalty programs to try and retain your business.
Sam Fiorella: It’s not just about building community like the beauty industry is still really big on these subscription box services.
Danny Brown: Yeah, yeah.
Sam Fiorella: Always trying to find a way to connect you to that brand and get repeat business.
Sam Fiorella: So, what I think might kind of be interesting for this conversation in the time we have left is, why don’t we take a look at this principal and how does it apply in general? So we talked about Lulu Lemon expanding into some kind of a loyalty program … going beyond brick and mortar retail. We talked about Staples now looking at co-locating work spaces for small businesses and entrepreneurs. Again, getting away from just straight line, retail brick and mortar.
Sam Fiorella: Let’s take another industry … craft beer. That’s one of our favorite topics.
Danny Brown: Always.
Sam Fiorella: So does that principal apply? Maybe lets brainstorm a little bit. What would we do if we were to start a craft brew brewery.
Danny Brown: Yeah.
Sam Fiorella: Which, by the way, when we retire that’s definitely what we’re doing.
Danny Brown: Are we doing that? Oh, we wait til we retire?
Sam Fiorella: We can drink until then. But, yeah, I’m not going to give up [inaudible 00:12:22] until that point.
Sam Fiorella: But what would we do differently? How do we take a traditional craft brewery and do something different? Because they’re opening like crazy across this country, but they’re also closing like crazy.
Danny Brown: That’s true. Yeah.
Sam Fiorella: So what could they do differently?
Danny Brown: There’s a couple. I mean, one of the things that we’re seeing already is the beer clubs. So Small Batch …
Sam Fiorella: Beer Co?
Danny Brown: Yeah, so there’s Beer Box, there’s Small Batch Dispatch, I think it’s called. And where you basically pay a monthly, or quarter or annual membership, and every month you’ll get seven or eight really small …
Sam Fiorella: So, it’s like a wine of the month club?
Danny Brown: Yeah. But you get seven or eight beers that you could never get anywhere across Ontario, unless you lived in these little places. So they’re very rare and unique beers, or hard to get beers. So I like that I’m a member of the Small Batch Dispatch. That’s a real good one.
Danny Brown: But one of the things that I’d like to see which I don’t really see anybody do … If you go to a craft brewer … one of the things that I love about going to the craft brewer tap room is the staff are so knowledgeable and they’ll talk to you about your likes, dislikes … what you normally drink, and recommend a beer. And that’s great because you don’t have to worry about picking the wrong beer, or you’ve never been to a tap room before.
Danny Brown: But you don’t see that online, right? Because websites for the most part are the first touch points of all craft brewers for their potential customers because they’re located in very specific areas.
Danny Brown: So as in a way to do like an identification quiz … okay, have you drank Bud in the past? What do you prefer?
Sam Fiorella: Yeah.
Danny Brown: So you move to the big macro beers. Did you like that xyz beer? Okay, and based on say four or five quick yes or no tick boxes, okay we’re going to recommend you this seller … this pale ale … this pilsner, etc. And when you go into the tap room, we’ll give you a free sampler and you can keep your glass. That kind of thing to get into the room from the website.
Sam Fiorella: I mean, that’s interesting and definitely, again, picking up and learning from what the wines are doing. When you subscribe to one of those wine of the month clubs, they often send you a bunch of samples.
Danny Brown: Right.
Sam Fiorella: That you can sort of do the quiz and taste, and what you like and then make comments, and then they’ll give you the wine based on what they determine is your taste which is a result of the survey that you’ve done or the tasting that you’ve done.
Sam Fiorella: But to learn from what Lulu Lemon is doing, and what Staples is doing, they’re focus is really community. Building community around the brand. So I look at it a little bit differently. I’d say maybe take the concept of a tap room, which is difficult right now to make money at, right? Because there’s too many of them, and I guess there’s maybe not enough people that either take the time or that release [inaudible 00:15:00] craft beer. I don’t know why they’re not busier than what they already are.
Sam Fiorella: And maybe make it more of a community center type environment.
Danny Brown: Right.
Sam Fiorella: So I know that the one we were at just recently …
Danny Brown: Black Lab.
Sam Fiorella: Black Lab.
Danny Brown: Yeah, yeah.
Sam Fiorella: One of the new breweries here in Toronto that … or craft breweries that we just did an on-site at.
Danny Brown: Yeah.
Sam Fiorella: I got an email from them, or a social media post the other day where they do a mom’s club … I think it’s on Thursday mornings or something, where mom come in with their babies and their dogs and they just have like a meet up.
Danny Brown: Oh really, yeah? Yeah, yeah.
Sam Fiorella: And of course they can sample the beer while they’re there, and maybe buy some beer for themselves or their husbands when they go home.
Sam Fiorella: But I thought it was, kind of, a really interesting concept. Of all the places that you would think moms and their babies would go …
Danny Brown: Is a tap room.
Sam Fiorella: A tap room is not the place. But because it is dog friendly, and it’s a beautiful open space, right? I thought that was a great thing. And I know quite frequently now they’re doing these oyster tastings. So they got a local restaurant or a local caterer to come in with oysters, and then you can sample the oysters while sampling their beer at the same time. So it becomes a place for the local community to go and hang out as opposed to going to a bar.
Danny Brown: Yeah, yeah.
Sam Fiorella: Like a typical bar, or restaurant or something like that. So it’s a little bit more community focused. Less pressure than you would maybe get at a bar. Maybe not as expensive as of what you would normally spend at a bar. So that community idea, I think, is really kind of different that they could potentially build more on than what they’re already doing.
Danny Brown: Yeah. No I like that. I know there is a few brewers that take that community approach and they get involved in trying any fundraising for the local community.
Sam Fiorella: Yeah.
Danny Brown: Great Lakes are friends over in [inaudible 00:16:42] … next week they’re having a Christmas bazaar where they get eight or ten local crafts people in selling their goods, and they’ll whatever they sell, and the beers will be cheaper. And you can donate to charity and food banks, etc. And they’ve got a huge, loyal, customer base there.
Danny Brown: So, again, it’s going back to that social responsibility on a smaller scale, but competing with the …
Sam Fiorella: Sorry, I got to interrupt you. Is Robert’s glass empty?
Danny Brown: Good grief.
Sam Fiorella: You actually had the whole thing?
Danny Brown: That’s why he’s sitting down. You’re going to sleep now.
Sam Fiorella: Yeah. Well, he is. He’s going to fall asleep with [crosstalk 00:17:18]. I’ve never seen him finish one of our beers here while we’re doing this.
Speaker 4: Before you guys.
Danny Brown: Wow. Look at that. Red Racer. Kudos. That’s amazing.
Sam Fiorella: I think they need a round of applause for that.
Sam Fiorella: So we got to get a little bit more crazy than that, because I think that, again, just the community … yeah, a lot of the craft brewers are trying to do that. What else could we do that’s really just pushing the boundaries because to just say, yeah we already have a tap room … let’s offer some food and let’s get the community to come in … turn it into a community center. Offer it for birthday parties and Christmas parties, and things like that. Yeah that’s good, but is it enough. Because some of them are doing it and still not surviving.
Danny Brown: Yeah.
Sam Fiorella: I think we would have to push the limit a little further to changing their structure. Because, remember it’s not about improving what you got, it’s about completely tearing apart the business model and rebuilding and creating something different.
Danny Brown: Yeah.
Sam Fiorella: So maybe instead of just offering this space for community engagement, which I think a lot of them are already doing and it’s not always working … maybe create some kind of a community council, or an advisory group where your advocates … your fans of the beer or of your place, will help direct your next brew.
Sam Fiorella: So teach them how to make beer. Not how to make it themselves, but if they understand the process behind it, it’s not just a place to go and have a beer and maybe meet with friends, it’s a place to go and actually provide user feedback. If it was Robert in that community, he says give me the warmest, blandest beer possible.
Danny Brown: I would send him to the bar next door.
Sam Fiorella: Yeah. And if you were there, you’d say I love IPAs. I’d love to see something done with IPAs .
Danny Brown: Right, yeah.
Sam Fiorella: Whatever it is. For me it would be what is the strongest beer you can possibly make? Let’s experiment with that.
Sam Fiorella: Something, again, to change that narrative beyond just come here to drink beer.
Danny Brown: Yeah.
Sam Fiorella: You know what I mean? Find some way to sort of expand it. You know what I mean? Maybe even turn it into brew and food tastings or pairings, or something like that. But basically it has to change beyond just the retail.
Danny Brown: Yeah.
Sam Fiorella: So anyway, we’re getting the signal. We found our bell in our move into our new offices here.
Danny Brown: Thanks Steven.
Sam Fiorella: That’s our last call. What’s the one take away that everybody should sort of think about as they leave listening to this podcast?
Danny Brown: Yeah. I think, obviously, experiment. Because that’s what the guys are doing … Lulu Lemon … that’s the first thing for them, and see what works, what doesn’t work, and try tailor it to … obviously using it daily you get [inaudible 00:20:10]. Okay, this is worked, this is what didn’t work.
Sam Fiorella: Right.
Danny Brown: And these are what the guys are doing when they’re here. And basically taking your online knowledge base to your offline based on [inaudible 00:20:23]
Sam Fiorella: Yeah. I think that’s definitely the lesson to be learned here. From where Staples is moving, where Lulu Lemon is moving, and certainly lessons learned from Sears dying, which we talked about a few weeks back, is that you cannot just stay stagnant.
Sam Fiorella: The internet is disrupting so much more than just how we communicate online. It’s really disrupting what’s happening offline. And the concepts of building a community around your brand and allowing people to engage, whatever that is for you … I think is the take away that every business has to start thinking about, otherwise you will end up going the way of Sears.
Danny Brown: Yup, exactly.
Sam Fiorella: So I think that this is a really good conversation to keep having. Let’s keep looking for these examples of how traditional businesses are reinventing themselves to build on this community concept.
Sam Fiorella: So that’s it for this week. I hope you found some of these ideas, or this discussion, helpful to your business. Join us again next week where we will be talking about whatever …
Danny Brown: Whatever. Just leave it at that. We’ll figure it out. [crosstalk 00:21:30]
Sam Fiorella: And another beer. In the meantime, everybody cheers.
Danny Brown: Cheers.
Outro: You’ve been listening to Marketing on Tap, with Sam Fiorella and Danny Brown. If you enjoyed this episode, make sure to subscribe so you don’t miss the next one. And please feel free to leave a show review. That’s always worth a cheers.
The post Marketing on Tap Episode 22: Loyalty Programs, Business Pivots, and Craft Beer Marketing appeared first on Sensei Marketing.