Did You Make Your Customers Smarter Today?

The best brands are waking up to the fact that the way to establish an enduring connection with customers is not to push their own stuff, but to introduce them to new things, make them smarter, help them feel more connected to the front edge of culture.
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On Friday, Starbucks rolled out its first-ever national television ad campaign--a surprising change-up from its history of pioneering new approaches to word-of-mouth marketing and brand building. That and Thursday's announcement that the average number of transactions per store fell for the first time ever (by 1%) last quarter and a downward revision in sales and earnings-growth projections, had analysts and bloggers aflutter.

The charges: "saturation," "desperation," decaffeination and "ubiquity" (that last from Starbucks founder and chairman Howard Schulz himself a decade ago and in an infamous memo leaked earlier this year). To be sure, the coffee giant faces new challenges to its seemingly impervious brand (and growth rate): as the credit crunch drives consumers to tighten spending, the $4 latte no longer seems an inalienable right; at the same time the coffee wars are heating up as McDonald's and Dunkin Donuts act aggressively to claim their share of the expanding coffee culture created by Starbucks. And, the wisdom of shifting course to focus on television advertising (however culturally appropriate and clever the Wieden + Kennedy-created spots are) is debatable. But what's more interesting and important than how much the company is investing in advertising (a fraction of what its rivals spend), is how much it's investing elsewhere when it comes to cultivating a genuine connection with customers.

What Starbucks gets (and has always gotten) is that in a world filled with so much competition (where increasingly one cup of coffee is as good as the next, even if it comes from a fast food joint), it is no longer enough to compete on price, performance, and features--pure economic value. Connecting with customers who already have enough of almost everything is really about emotion, passion, and identity--sharing values. Starbucks' success isn't so much built upon selling overpriced coffee drinks with fancy names. It's built on re-imagining the coffeehouse experience as a "third place"--a home away from home and an office away from the office where customers can connect with the brand and each other.

Coffee as a platform for connection also drives the chain's aggressive exploration of the world of entertainment. Today, Starbucks is a DJ, record label, and book club, all in one. The company has styled itself as a curator of a carefully chosen mix of music, books, and movies. It's not only a tastemaker--it's a market maker. Starbucks sells more than 4 million CDs a year--the chain's exclusive launches can catapult an emerging artist into the limelight, or, as in the case of Paul McCartney, give an established artist his biggest hit in years. Last month, Starbucks extended its partnership with Apple's iTunes with the launch of the iTunes Wi-Fi store in selected cities. Now customers with a laptop or iPhone can access the Starbucks' catalog and playlists to purchase songs in the time it takes for their Venti no whip mochas to appear at the counter. In the case of books, the success of the in-store launch of celeb-author Mitch Albom's latest (100,000 copies to date) was surpassed only by the introduction of newcomer Ismael Beah's A Long Way Gone: Memoirs of a Boy Soldier (117,000 copies).

Sure, customers love a good deal, but what they love even more is feeling like they've discovered something new. Increasingly, the best brands are waking up to the fact that the way to establish an enduring connection with customers is not to push their own stuff, but to act as a host to a whole universe of stuff they think will click with people based on shared values--to introduce them to new things, make them smarter, help them feel more connected to the front edge of culture.

Another global superbrand is taking that insight to heart. In recent years, Nike, which has dominated mainstream sports with celeb-athlete sponsorships and iconic ad campaigns (Just Do It, anyone?), has built an impressive foothold in the anti-establishment, resolutely indy world of skateboarding. They've done it by scrapping their usual tactics and allowing skateboarders themselves to take the lead. The corporate Nike SB team lives and breathes the sport and works closely with its global dream team of pro and amateur skateboarders, who weigh in on shoe design. Importantly, Nike SB restricts advertising to industry publications and only sells its shoes in independent board shops, often in limited editions. The result: fans line up overnight for each new release of a Nike skateboard shoe (including editions designed by a Los Angeles tattoo artist and twin muralists from Brazil), which often end up collectors items selling for many multiples of the retail price on eBay.

Nike's most recent foray into the world of skateboarding has little to do with selling sneakers or mainstream marketing. This week, Nike releases a feature-length film called Nothing But the Truth, available in DVD at board shops and action sports stores around the country. A collaboration with Wieden + Kennedy Entertainment (Note: the fact that both of these brands are W+K clients isn't so much a function of design--or even geography--as of shared values.) NBTT is edgy, engrossing, and not a little bizarre: think Spinal Tap meets skating video. The movie (made with worldclass collaborators like composer Mark Mothersbaugh of Wes Anderson film fame) intercuts sequences of the Nike SB team showing their stuff on the street with scenes from a mockumentary about the skateboarders making their own individual movies. Suffice it to say, the wild creativity and artistry of each rider comes through in both contexts.

Even more important, there's nothing about the film that screams "branded entertainment" (although there are plenty of swoosh shots throughout, Nike is never mentioned until the closing credits). Kirk Iverson, deputy director of W+K Entertainment and a producer on the film, says that NTBB was about "taking risk and connecting with the soul of the sport," more than anything. "People want something more to connect with than just product. They want the brand to stand for something in a human sense."

Now, that doesn't mean Nike is not intent on grabbing a significant share of the $5 billion skateboarding market. The 11 million skateboarders in the U.S. alone (42% of whom are between 6-11 years old) represent the customers of the future for the company. (And it should be noted that at each stop on the 10-city premiere tour Nike released a special limited edition shoe, called "What the Dunk", which immediately sold out.) Yet, with this effort, Nike is going a long way to resolving a central conundrum in marketing today. Marketing is all about leading people down a path, but the tightest, most passionate connections are forged when people discover something on their own. The solution isn't for every brand to start producing feature films. Customers may like to be entertained--but they really love a company that finds a way to make them smarter, better, more connected.

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