Is Co-op’s thank you sincere?

2013 certainly wasn’t a great year for the Co-op. Challenging times were never too far away when it came to a company boasting ethical banking practice.  It’s an interesting and brave move to highlight some of the issues the bank has experienced in a print advertisement. But the Brand Avenger wonders if this is more about rewarding loyal customers or carefully managing consumer perception through PR?

http://www.brandrepublic.com/news/1226782/co-op-bank-runs-second-ad-following-scandal/

Don’t get me wrong. There is certainly a lot that can be said for the decision to advertise in this way. Taking the decision to publicly put your hands up and admit wrongdoing and lack of judgment is a big step for any individual to do, let alone a company with customers and investors. However, there are many ways Co-op could choose to market this message.  Print advertisements are mass awareness tools. They are not designed to tailor a message to a select group of consumers. If it was all about rewarding loyalty surely there are other measures that can be used for this.

http://bigdoor.com/blog/2013/11/06/10-tips-for-loyalty-program-success/

Plenty of companies adhere to at least some of the hints and tips in the above article to reward loyalty. And there are plenty of companies that do it considerably well. Tesco built a 30% market share in the UK retail market through utilizing Clubcard data. Google are beginning to target advertisements through data from G Mail customers. The point is if you really want to send a message to your loyal customers there are many ways you can do it better than broadsheet.

http://www.nytimes.com/2014/01/13/business/ge-capital-to-help-set-up-loyalty-programs-for-retailers.html?_r=0

Understanding your most valuable customers to reward loyalty certainly is a lucrative business at the moment as it has for a number of years. Anyone who has considerable access to data is exploring options to create loyalty schemes. The benefit of data is that it provides a realistic view into consumer preferences. It’s this understanding that can allow companies to target communication, so if you do want to reward your loyal customers you can identify them to do so. No one is saying Co-op is wrong to print the advert. There might just be a better way to do that if that was more important to them than a bit of PR.

The Greggs or Dregs of Society?

You wouldn't believe how much of an impact the weather can have on the short term stability of brand value. In UK high street baker Gregg's case there doesn't seem to be any other plausible reason for a recent 7% decline in sales than the UK July Summer heat wave.

http://www.bbc.co.uk/news/business-23585083

You will have to forgive The Brand Avenger for a slight degree of skepticism but I feel Gregg's may have slightly exaggerated the impact of the weather on this occasion. No matter which way the high street baker wants to paint it their current strategy and product offering is just simply not giving the UK consumer what they need.

Of course for the sake of fairness we should try and understand if the weather could of had an impact on the major brands on the UK high street? Could it be that instead of hitting the stores the UK consumer has decided to spend the majority of their days lazing on a coast line beach bumming it up and down the Country instead? Well interestingly enough all results would suggest that to the contrary of Gregg's view most major and minor brands on the high streets have enjoyed considerable growth during the uncharacteristic summer months.

http://www.bbc.co.uk/news/business-23583825

So then it must simply come down to product offering? For whatever reason customers are simply not buying what Gregg's are cooking. Who wanted to supplement their Saturday morning sunbathe with a steak slice pasty? turns out not too many people. Who wanted to jump into the pool with a chicken bake or a hot sausage roll? Even less by the looks of it. Gregg's lack of understanding has quite simply led to a fall in profit. This can almost certainly be seen by the fact that despite the slump in sales customers perception in the brand remains largely unchanged.

http://www.marketingweek.co.uk/news/brand-audit-greggs/4007572.article

You may feel that a 29% year on year fall on profits is enough to suggest that something just isn't working with the perceived brand value of Gregg's with their consumers. However the fact of the matter is that brand perception scores remain fairly positive, clearly demonstrating a major positive factor for the brand. Their battle is not to try and change the perception of the consumer or gain trust following a PR disaster. Their major challenge now has to be built around something far more fundamental.

The key question the chief executive Roger Whiteside should be asking himself is how has Gregg's allowed themselves to become so out of touch with the UK consumer when major competitors such as Pret continue to prosper? The answer all lies with the knowledge the baker has of its consumers, or lack thereof in this instance. Gregg's shouldn't be in a position where their ranging is fixed throughout the year. The product portfolio and product offering should be flexible enough to allow for fluid and fast paced changes. Gregg's know what they have to do to build this important knowledge bank but so far they have been slow to release there much hyped 'loyalty scheme'.

http://www.telegraph.co.uk/finance/markets/questor/10026151/Questor-share-tip-Greggs-will-only-be-a-tasty-proposition-if-loyalty-scheme-works.html

Why is a loyalty scheme so important for the long term stability of the Gregg's brand? First of all it will help Gregg's build a fundamental understanding of their customers and will help with decisions such as when, what, where and how many products should be stocked across the thousands of stores that make up their estate. It can allow the high street chain to surprise and delight their most valuable customers with rewards and offers for the products they most buy. I would wager a bet that at least half of their sales are generated by their most loyal customers. Generating surplus income from these customers shouldn't be an uphill battle as these are the guys who want to shop with Gregg's in the first place.

But if Gregg's are looking to loyalty to build a sustainable long term viable strategy they need to do it right. We are long past the days where free coffee stamp cards or random, un-targeted product discounts are enough. If the scheme is to work it needs to be linked to customer information, pick out this info on and actual purchase behaviour and offer attractive discounts and marketing strategy based on what customers want.