Make common sense of Target’s new price matching policy

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On January 9, Target Corporation (NYSE: TGT) rewarded shoppers with a new permanent price matching policy. This continues the 2012 Holiday price match campaign that clearly delivered to the retailer’s great expectations of keeping customers in the store vs. exiting to shop online.

As pricing/value drives Target’s brand message, there’s no reason not to expect otherwise than permanence in their new policy. The question at the back of my mind was Why? What happens if Target promises and then retracts? Will its core brand be damaged? It’s a risk question of quality and numbers.

In the new normal of everyday crisis brand management, dys-satisfied customers shout, shrug and resume shopping. Changing big, entrenched behaviors (like loyalty) aren’t worth the trouble. Remember threats to leave Facebook, Instagram, Pinterest when policies changed abruptly? Hot-flash irritability gives way to inertia when it comes to promises not kept or unsweetened and untested policy changes. (More about behavior below.)

However the price-match wars play out, Target customers will continue to shop there. The dinosaur minority (i.e., those who read a circular then come in to shop and buy) may change through word of mouth. The growing tech-smart base will no longer stray because the price will always be right, guaranteed says Target. Target shoppers are loyal to price and to themselves first, even though they have strong brand awareness of Target as a value driver. Not a Target customer myself, this is what I hear through the consumer grapevine.

It all makes sense. Most know the expression “Does Macy’s [34th St] tell Gimbels [32rd St]”.  (Some understand it from childhood experience!) Back in the days, Gimbels took on Macy’s in every way, up to opening New York’s first bargain basement in a department store according to David K. Randall. In “Only the Store Is Gone,” (The New York Times, 2/19/2006) Randall describes the intense retail rivalry. Gimbels closed in 1987 and by 2006, ground broke on luxury apartments on the venerable retail ground.

Is retail deja vu unfolding?

Flat out, Target tells Amazon.com, (NYSE:AMZN) Best Buy(NYSE:BBY) (and all the other discounters) that they plan to own their price-minded, tech savvy customers whatever it takes. And there’s the great Amen. For Target and its customers, it’s win-win. Target has taken actions that are brand-savvy. The price matching policy  responds to existing customer behaviors: shopping for best prices. Now, Target-happy customers will head for the checkout, not the exit.

When in doubt, tweak

Tweaking technology to match prices is easy and cost-efficient. Compared to re-pricing and relabeling merchandise, it’s hardly a cost at all. It’s a defensive move that shifts that operational task to your competitors. But now, poised to react to any price, Target is really responding to customer needs and existing behaviors. Now, they’ve taken online price shopping and made it part of the Target customer experience.

In fact, this new price matching is more efficient than rebranding along some price point and suffering the consequences. Think JC Penney and their lingering fiasco. Their new brand angel promising no coupons didn’t succeed because it sought to change a behavior that customers actually like – the thrill of getting a good deal.

Image credit: abduzeedo.com via Elizabeth on Pinterest

Avoid turning sweetspots into sore points

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Customer Ecology 101

In the world of customer experience optimization, there seems to be a very dull experience that strikes a very sharp chord with consumers. You call a care rep to solve a problem. It’s a natural instinct;

we want to be able to communicate with someone when there is an issue that needs to be resolved.

  Doug416 reviewed Bank of America 1 out of 5 marks
Published on: mybanktracker.com, Feb 22nd 2012

Yet, in the midst of the conversation, you receive a cross-sell pitch. In fact, personal experience prompted this professional tweet during the Jan 30th Twitter chat of colleagues in customer experience optimization (#cxo, Mondays, Noon EST). There were enough RT’s (retweets) and replies to call for a blog post to examine this point of #customerecology. Here’s the takeaway:

There are four compelling reasons not to cross-sell in the midst of a customer’s crisis. It may not be a crisis to the enterprise, but to a customer it is.

1. Stressed brains freeze short-term memory.

This stress mode is distinctly different from positive-minded brains that are sweet to the endorphins. In fact, when reporting negative information, we can provide more detail. Noted brain researcher Robert M. Sapolsky has published significantly on the impact of chronic stress on memory – short-term memory, in particular.

Not only does a positive message get lost, it gets stored in a negative brain space. Also consider behavioral scientist Pavlov and his conditioned stimuli and response.  It’s hard to recall one without the other. Cognitive science confirms this linguistic-educational-psychological connection.

2. Cross-selling to stress is dismissive.

Distraction is an obvious technique for changing the subject and taking control of a conversation. Who hasn’t seen or been a parent using distraction to get the attention of a child in the throes of a tantrum. Yet, as an adult consumer who has initiated a call to a care center, the cross-sell often sounds like distraction, and so a form of assault or power-control. Cognitive science is rich in this area.

3. Care reps care; sales reps sell.

Using a the Gallup Strengths-Finder model, care reps are not adept sellers. The required engagement skills are reactive, not proactive. Highly-skilled problem solvers, their emotional intelligence lies in crisis management. Despite instruction and intention, the cross-sell message can sound exactly what it is, a message from a script. Here’s an example from mybanktracker.com:

Dreadful

Since the banking failures, when I now go into BofA, they are annoyingly pleasant — totally phony, to the point where I just use the ATM.

CustomerCliff reviewed Bank of America 2 out of 5 marks
Published on mybanktracker.com Feb 27th 2012

4. Savvy consumers know better.

The distrust of consumers to large enterprises may be at an all-time high. Online Shoppers Are Rooting for the Little Guy -NYTimes.com Authors Stephanie Clifford and Clair Cain Miller examine how growing consumer wariness of e-commerce megaliths and feature thriving mom-and-pop, main street enterprises. The authors quote:

A large number of Americans have a general suspicion of bigness in the economic world —they equate bigness with power, monopoly.

—Michael Walden Professor Regional Economics North Carolina State University

Alternative: Solve now, cross-sell later.

If time-outs work for child care, they can work for your customer care enterprise. The two-step process may well be worth the cost. Following up at a later date (even within 24 hours) can provide just enough time to:

  1. Confirm that the problem was fully solved
  2. Avert any secondary problems that may have come up
  3. Confirm the quality of the conversation with a rep.

Kudos to computer and ISP care reps in this area. As a routine, these unnamed, unseen techies take control of a customers computer screen to solve a problem.  It’s the most obviously example of when not to pitch or cross-sell.

Instead, a post-care note frequently follows up a service session within 12 to 24 hours. In one form or another, the message reaches out to the customer, seeking to confirm (or not):

  1. a positive outcome to the session
  2. a positive experience during the session
  3. a professional demeanor on the part of the representative.

Apply caution in the age of empowered wariness

Empowered wariness is the attitude held by even the most loyal consumers these days. That’s why it’s essential to think twice about cross-selling during a sensitive, problem-based touchpoint.  Don’t risk turning sweetspots into sore points.

What is your management experience?

Post your comments here, bookmark this article, and share with a colleague.

  • Are there customers resistant to outbound, intentional cross-selling?
  • If so, has your organization been successful in reducing or eliminating resistance?

Best, E.

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