Loyalty Is a Two-Way Street at Starbucks

What defines loyalty in the customer-brand relationship? Until this week, Starbucks defined it as the number of times the customer bought a cup of coffee; buy 12 cups and you get one for free. The retailer has now re-defined loyalty as the amount of money spent. This has caused upset among some of its “loyal” customers, who now must purchase 32 cups of coffee to get that free cup. Starbucks apparently was inspired by certain airlines — Delta and United — that now award loyalty points based on the amount of dollars spent, and not on the number of miles traveled. This might telegraph as: We want your money but we don’t want you.

The Starbucks switch was at least partly motivated by profits; obviously it is more profitable to motivate its most profitable customers. However, it also suggests a change in culture. As reported in The New York Times, the Starbucks loyalty program previously was premised on a warmer, fuzzier idea, as articulated by a Starbucks marketing manager in a 2012 blog post: “At Starbucks, our rewards program comes from a different philosophy. At its simplest, we like seeing you, regardless of whether your purchase is a short-brewed coffee or four Venti White Chocolate Mochas. My Starbucks Rewards is designed to show our appreciation simply for stopping by.”

This would be consistent with the way Starbucks famously welcomes everyone to hang out as long as they like at their stores, even if they buy nothing at all. Sadly, such “customers” are the poor cousins of those who gamed the Starbucks loyalty program by asking cashiers to ring up each item separately to artificially inflate their number of visits. This subterfuge also caused lines to slow, making the Starbucks experience worse for everyone else.

The Starbucks-customer relationship in total calls into question the very meaning of “loyalty,” and whether it even exists in a commercial context. As the Times article notes: “Starbucks fell into a trap that is common with loyalty programs: establishing not just an exchange relationship with its customers based on mutual benefit, but a communal relationship based on mutual caring and support … If customers are going to take a ‘hey, it’s just business’ approach to their relationship with Starbucks, they should expect the company to do the same — and it has.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Zappos Pushes for National Leap Day … Day

Fast Company: “On February 29, everyone at Zappos will get a paid day off. It’s the first time, since the company opened, that its call center—normally open 24 hours a day, all year—will ever close. Their reasoning: Leap Day is extra time, and we should probably use it for something we normally wouldn’t do.”

“On Change.org, the company is leading a push to get 100,000 signatures on a petition to make Leap Day an official national holiday. Because the petition only ensures that congress and the president will have to consider the idea—and they’ll still need support—they’re also trying to convince other companies to give employees a paid day off, and pushing for states to adopt it as a holiday too.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Does Diversity Fuel Innovation?

The Economist: “Ronald Burt, a sociologist at the University of Chicago, has produced several studies which suggest that people with more diverse sources of information consistently generate better ideas … And internal surveys at Google have found that diverse teams are often the most innovative.”

However: “Diversity does not produce better results automatically … It does so only if it is managed well. (Source: David Livermore, author, Driven By Difference). The biggest challenge is to do with trust. Employees need to trust each other if they are to produce their best work … it is easier to establish trust with those you have a lot in common with … Diverse teams … are more likely to produce truly innovative ideas, but they are also more likely to fail completely.”

“A second challenge is to do with culture. Too many companies fail to rethink their management styles as they open their doors to new groups. They issue ambiguous instructions which presume that everyone comes from the same background … They evaluate people on their willingness to speak up without realising that some people—women especially, in many countries—are brought up to hold their tongues and defer to authority.”

“It is easy for companies to think that they have embraced diversity if they appoint the right number of people with the right biological characteristics. That can be hollow if they all come from the same backgrounds … Companies will find it hard to make a success of diversity if they refuse to recognise that it brings challenges as well as opportunities.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Is Creativity a Fruit of Dementia?

The Wall Street Journal: “There are several theories on the connection between dementia and artistry. The first involves the prefrontal cortex, contained within the frontal lobe, home of high-level analysis and planning. When the region is damaged in frontotemporal dementia, people stop filtering their behavior and let go of their inhibitions. In the absence of the prefrontal lobe’s self-monitoring, an underlying creative drive emerges.”

“By looking back at the brains of these patients, researchers have found that most of the damage is on the left side—leading to a second theory. Many studies have shown that while the left brain is more analytical and calculating, the right hemisphere is better at interpreting visuospatial relationships and, by extension, creating artwork. When the previously dominant left hemisphere is damaged, the visuospatial faculties of the right hemisphere rise to prominence.”

Also: “It turns out that psychologists have noticed the prevalence of artistic talent among dyslexic children. Studies of university students further reveal high rates of dyslexia among art students. Based on studies of the writing of Leonardo da Vinci, Jackson Pollock and Andy Warhol, some scholars believe they were dyslexic.”

“With further study, we may come to confirm traditional lessons on how to harness creative potential—by releasing our inhibitions, not overthinking, and engaging in free association.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Samsung: Retail as a ‘Cultural Center’

Samsung’s NYC flagship store — Samsung 837 — is a “cultural center” that is designed “to build experiences rather than push product,” reports Engadget. “Across three floors you’ll find a 75-seat amphitheater, a full working kitchen and plenty of bench space for tech support and workshops. The amphitheater hosts a three-story interactive screen that was used for an art installation this week, but will be repurposed for screenings and presentations as well.”

“The ground level art gallery showcases works that use technology in a major way. The current exhibition, ‘Social Galaxy’ by Black Egg, contains a mirrored tunnel lined with Samsung devices. Users input their Instagram handle at the entrance and then, within seconds, the displays pull in images and comments from their accounts, creating a rapid cacophony of sound and color.”

“A set of chairs in the front of the store offer up a ‘4D’ virtual reality experience, by having you strap a Gear VR to your face as you sit in a chair that bobs in time whatever you’re looking at … Samsung 837 sourced a lot of its style locally as well. The employee uniforms came from designer line Rag & Bone, which has a location right across the street. The store also has a partnership with the nearby Standard hotel. Samsung 837 considers itself part of the Meatpacking District community, as well as a destination for both tourists and locals.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

The End of Average

The New York Times: “We march through life measuring ourselves on one scale after another, from developmental markers through standardized tests and employment evaluations, cardiac risk and bone density scores. Not to mention the ready-made clothes that never fit anyone quite right. Does it have to be that way? … Absolutely not, says Todd Rose in The Age of Average, a subversive and readable introduction to what has been called the new science of the individual.”

“For educators, it’s all those brilliant underachievers (not to mention all those idiots with Harvard diplomas). For doctors, it’s all the outliers who survive dire disease predictors — or even dire diseases — decades beyond expectation … For human resource personnel, it’s the new hires who satisfy every single one of a dozen standard criteria and yet utterly fail to perform.”

The author cites “the not-unfamiliar notion that all human characteristics are multidimensional, not only in specifics but also in time and context. Reducing this mass of data to a single simple variable (as in a ‘slow’ toddler, an ‘aggressive’ teenager, a ‘prediabetic,’ a Harvard graduate) may well result in a set of flawed conclusions.”

“In other words, big data may have landed us in the Age of Average, but really enormous data, with many observations of a single person’s biology and behavior taken over time and in different contexts, may yield a far better understanding of that individual than do group norms.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Big Data Keeps Getting Bigger

The Wall Street Journal: “A recent survey by consultants NewVantage Partners has found that the number of U.S. firms using big data in the past three years has jumped 58 percentage points to 63% penetration—while 70% of firms now say that big data is of critical importance to their firms, an astounding jump from 21% in 2012. That’s one of the fastest tech-adoption rates ever. Meanwhile, the title of chief data officer—the C-Suite manager of big data—a title that until recently didn’t even exist, is now found in 54% of companies surveyed.

“The commercial impact of this revolution can be found everywhere from products and services that can predict the unique needs of individual customers, to improved credit precision, to stores that adapt (through special discounts and deals that pop up on your smartphone) to each customer who walks through the door.

“To date, much of this activity has remained hidden from sight. But soon it will burst forth much more publicly—and the experiences of daily life will be profoundly transformed into a new set of personalized, predictive and empowered experiences we can barely imagine today.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

littleBits: Designing A Gender-Neutral Toy

C-Suite Strategies, a special supplement in The Wall Street Journal, featured an interview with Ayah Bdeir, founder of littleBits Electronics, makers of gender-neutral kits for building electronic toys — “snap-together electronic circuits, motors, lights and motors.”

“We want to help kids and adults understand the world around them further and reinvent it,” Ms. Bdeir, herself an engineer, says. In response to a question about how she creates gender-neutrality, especially in a category that is traditionally male-oriented, she responds:

“We are deliberately gender-neutral in the design of our product, packaging and communications, the colors we pick, the inventors we feature, the inventions we select [for publicity]. We promote creativity in art, in music, in design, not gendered hobbies. We market littleBits as a tool for invention, learning and play, as opposed to marketing it as a toy, which avoids placing it in either the pink or blue aisle.

The traditional association with robotics and vehicles is that they’re boys’ tools. So, we have bright colors that look like candy. There’s an extra effort to make the circuits look beautiful. And it turns out boys are not turned off. Anecdotally, our teachers tell us it’s close to 40% to 50% girls, which is unheard of in electronics.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Main & Vine: New Kroger Format Emphasizes ‘Community’

Seattle Times: A new, small-format Kroger store in Gig Harbor, WA, combines quality produce (like Whole Foods) and lower prices (like Trader Joe’s) but most of all is positioned as “not just as a grocery store but as a community hub, where local products are prominently displayed, community involvement is highlighted and people can hang out in the store’s two-level cafe area.”

“In the ‘brew and blend’ cafe area, beers including those from Gig Harbor’s 7 Seas Brewing are on tap, and coffee from Gig Harbor’s Cutters Point Coffee is served. Customers can eat sitting at tables and chairs or can people watch from lounge chairs on the upper level.”

“Local and regional wines and beers are arrayed prominently in the adult-beverage section, Gig Harbor’s Artondale Farm has its own stand for soaps and lotions, local artists painted the murals on the walls, and a product display features a small wooden boat built by Gig Harbor BoatShop … The name came from what the company wanted the brand to represent, with ‘Main’ evoking the Main Street of a community and ‘Vine’ conveying green and fresh.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Inclusive Design: Microsoft Thinks Outside the XBox

Fast Company: “Dubbed inclusive design, (Microsoft) begins with studying overlooked communities, ranging from dyslexics to the deaf. By learning about how they adapt to their world, the hope is that you can actually build better new products for everyone else.”

“What’s more, by finding more analogues between tribes of people outside the mainstream and situations that we’ve all found ourselves in, you can come up with all kinds of new products. The big idea is that in order to build machines that adapt to humans better, there needs to be a more robust process for watching how humans adapt to each other, and to their world … They are finding the expertise and ingenuity that arises naturally, when people are forced to live a life differently from most … the promise of this new design process isn’t in just a better Microsoft.”

August de los Reyes of Xbox: ”If we’re successful, we’re going to change the way products are designed across the industry. Period. That’s my vision.”

Facebooktwittergoogle_plusredditpinterestlinkedinmail