Posts Tagged ‘Misleadership’

It’s easy to imagine how a company moves to variable pricing. They follow the money. They test into it. They realize that the buying behavior of shoppers varies from day to day and hour to hour. Their analytics tells them that someone using Safari has higher average purchases than someone using Firefox. They know that visitors that come to their website after visiting certain websites are more or less price sensitive than if they come from other referring sites. And sometimes, they’ve even learned that it pays to increase prices based on repeat visits. In other words, on some sites, the best price you’ll ever get is the first one they show you. Shop around, come back, and you’ll pay more. (Sort of like a car salesman, who knows that if you come back, he’s got you, and he doesn’t have to lower his price to make the sale.)

Then a marketing manager or someone in the sales department makes the case that they can improve profits by harnessing all of this data into a variable pricing strategy. It’s hard to argue with the data.

So the company invests in a pricing engine or builds its own pricing algorithms and institutes variable pricing. And guess what? Profits go up. Sales go up because shoppers are getting deals created with their buying habits in mind. After all, it is an accepted rule of Internet marketing (and direct marketing before it) that the more relevant and personalized the offer, the better the response. And milking every extra dollar out of a sale (or, in some cases, many extra dollars) increases profits.

A slam dunk, right?

Anybody who remembers the relevance of that phrase knows where I’m going with this.

Pricing may seem like a commodity, but in fact, it is part of brand identity. As is the relationship a buyer has with a brand. And just to be clear, a retailer is a brand, too. Sure, Target sells brands, but it is also a brand. People shop at Target as opposed to Wal-Mart for many of the same reasons that they choose Land’s End over Old Navy.

If you found out that the person next to you in line paid less for the same sweater at Land’s End than you did, how satisfied with Land’s End would you be?

Some shoppers will be so upset they’ll never come back. And others will find out how to get the lower price, and then make sure they do that from now on.

Let’s call the first shopper a Brand Shopper. And the second a Price Shopper.

Price Shoppers are smart. They find coupon sites. They find discount codes. They follow blogs and Twitter feeds that promise to find and deliver the best prices. Some of them use bots or apps to notify them of the best prices on specific retailers and shopping aggregators.

And in many cases, price shoppers know that brand distinction isn’t as important as it used to be. As Seth Godin famously said, most products these days are “good enough.” In other words, the upcharge for a top brand isn’t always worth it, and price shoppers often know that.

If you are courting price shoppers, then you’re always in a pricing war where the shoppers are as well-armed as you are… sometimes better. And the competition can almost always undercut you… unless you’re the rock bottom price, in which case, you’re not varying your prices anyway. You’re Wal-Mart.

With variable pricing, price shoppers learn when to buy, and when not to buy. The profits you initially expected from this major segment wither away.

Now let’s look at Brand Shoppers, the core of your business. Your house list, so to speak. They love you. They swear by you. They only wear/drive/eat you. But it turns out, brand is about more than just quality, or value. Brand is emotional. Brand lets people willingly buy inferior products out of love, or a sense of belonging, or even habit. In other words, brand is like a relationship, the human kind.

And nobody likes to feel cheated on, or duped, or lied to, or made a fool of. When they do, they dump you like a bag of bread that’s gone moldy.

So what happens to your brand loyalists when they find out that you’re playing fast and loose with pricing and they get no benefit for being a loyal customer? Even worse, what happens when they find out that you’ll give a better discount to someone who’s never bought from you before, rather than they, who sing your praises, evangelize your brand to all who will listen, and buy whatever new product you throw at them?

So yeah, variable pricing looks great from inside the bubble. But can someone please explain to me the value of a brand in a world where we’re made to feel like chumps if we don’t outsource our shopping decisions to mindless shopping bots that always find us the best prices, regardless of source, regardless of emotion, regardless of loyalty?

Like I said. Slam dunk.

As Internet marketers, we learn all about reducing stress and anxiety in the user experience. We put “VeriSign Trusted” certificates on our websites. We us HTTPS and put tiny lock icons all over the place to assure our visitors that their information is safe.

This isn’t a new concept. Businesses have always known that reassuring their customers and earning their trust is a critical component of the sales process.

Trust is why we our parents felt reassured when they saw the “Good Housekeeping Seal of Approval” on products from spray starch and dishwasher detergent to cake mixes and cereal. And trust is why we all feel a little more comfortable when we see that a company has been accredited by the Better Business Bureau.

But are we right to trust The Better Business Bureau? What exactly do their ratings mean, and how does a company get rated?

According to their own website…

BBB Accreditation

BBB has determined that COMPANY NAME meets BBB accreditation standards, which include a commitment to make a good faith effort to resolve any consumer complaints. BBB Accredited Businesses pay a fee for accreditation review/monitoring and for support of BBB services to the public.

BBB accreditation does not mean that the business’ products or services have been evaluated or endorsed by BBB, or that BBB has made a determination as to the business’ product quality or competency in performing services.

And from their explanation about grading:

BBB letter grades represent the BBB’s opinion of the business. The BBB grade is based on BBB file information about the business. In some cases, a business’ grade may be lowered if the BBB does not have sufficient information about the business despite BBB requests for that information from the business.

BBB assigns letter grades from A+ (highest) to F (lowest). In some cases, BBB will not grade the business (indicated by an NR, or “No Rating”) for reasons that include insufficient information about a business or ongoing review/update of the business’ file.

BBB Business Reviews generally explain the most significant factors that raised or lowered a business’ grade.

BBB grades are not a guarantee of a business’ reliability or performance, and BBB recommends that consumers consider a business’ grade in addition to all other available information about the business.

So, according to the Better Business Bureau itself, “BBB grades are not a guarantee of a business’ reliability or performance” and BBB accreditation “does not mean that the business’ products or services have been evaluated or endorsed by BBB.”

So why should we care about a BBB rating? What is the actual value of being accredited by the Better Business Bureau?

Back in November 2010, ABC news reported on a scandal at the Los Angeles BBB, where a group of business owners accused the BBB of “running a “pay for play” scheme in which A+ ratings are awarded to those who pay membership fees, and F ratings used to punish those who don’t.” To prove the point, they paid $425 to the LA BBB and obtained an A- rating for a fictitious company they created called Hamas, named after the Middle Eastern terror group. The ABC News investigators even went to the organization with 2 small business owners and were told their grades of C could be raised to A+ if they paid $395 membership fees.

Picture of the Better Business Bureau A- rating for Hamas, a known terrorist organization

Photo courtesy of http://www.bbbroundup.com

Of course, you can’t find the BBB rating of Hamas anymore. And the BBB investigated the LA BBB for violations and actions they claimed did not follow their policies. On Dec. 22, ABC News reported that William Mitchell, the CEO of the LA Chapter of the BBB resigned amid that ongoing investigation by the national headquarters.

But if you think that the questionable ratings ended there, you would be sorely mistaken. Here are some other companies and their ratings as of 2/18/12:

  • Monsanto A+ (2 complaints closed within the last 3 years)
  • BP America, Inc. A+ (16 complaints closed in last 3 years, BBB knows of no significant government actions involving BP America, Inc.)
  • Charter Communications Inc. A+ (5527 complaints closed in last 3 years, 1488 closed in last 12 months)
  • Citi A- (6383 complaints closed in last 3 years, 2,539 in last 12 months, multiple government actions)

In case you don’t know who Charter Communications is, they were Business Insider’s Worst Company in America 2010. Monsanto is widely considered to be one of the worst environmental criminals in the US, and was the company upon which George Clooney’s movie, Michael Clayton, was based. Citigroup is, well, Citigroup, and just agreed to pay the U.S. $158 Million to settle mortgage fraud claims, which is in addition to the $1.8 Billion Citigroup has to pay the Justice Dept. as part of the $25 Billion mortgage loan settlement from the nations top lenders.

But for me, the real kicker is BP America’s A+ rating, with only 16 complaints in the last 3 years. 16 complaints? No significant government actions? For those of us with short memories, the Deepwater Horizon exploded and sank on April 20, 2010, triggering the worst oil spill in history. Since then, the Justice Dept. has investigated the spill, as has the U.S. House Committee on Energy and Commerce, and President Obama issued an Executive Order establishing a bipartisan National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. No significant government action indeed.

Just to summarize: you can claim to be an organization that blows up buses full of innocent women and children and get an A+ rating from the BBB. You can engage in fraudulent business practices to the point that the U.S. government fines you nearly $2 Billion dollars and you can get an A- rating from the BBB. And you can poison the Gulf of Mexico, destroying the ecosystem and eviscerating the fishing and tourism industries of Louisiana, Mississippi, Alabama and Florida and get an A+ rating from the BBB.

Can someone please explain to me why anybody should ever trust a BBB rating?

Do you remember the movie “Dave?”  In the 1993 political comedy, the President suffers a stroke while having an affair, and rather than let the public know, his Chief of Staff and Communications Director convince a look-alike to impersonate him.

In a conspiracy reminiscent of the movie, a much loved popular icon died recently, and rather than let him go, his handlers have conspired to make us think he’s still alive.

I’m talking about the Maytag Repairman, that lonely symbol of stoic superfluity in the face of unwavering reliability, a commercial icon who has been with us since 1967.

I’m not complaining about the latest actor to play Ol’ Lonely, Clay Earl Jackson, who replaced Hardy Rawls, who replaced Gordon Jump, who replaced Jesse White, the original Maytag Repairman.

No, I’m complaining about something that actually matters: brand integrity.

You see, the point of the Maytag repairman was that he was lonely because Maytags were so reliable that there was nothing for Ol’ Lonely to do. It was the core of Maytag’s brand image, the way Volvos are safe, Coke is refreshing and Apple is cool. “Built Strong to Last Long” says the Maytag website.

I was having lunch with my friend Steve the other day, and he told me something shocking. His Maytag broke down, more than once, and in the ensuing nightmare Steve found out that Maytag doesn’t service their own products anymore. They subcontract to third party repairmen through a third party customer support line.

In other words, the Maytag Repairman does not actually work for Maytag anymore.

Not that you’d know it from the language on their website: “To help you depend on your Maytag appliance for years to come, we’ve handpicked the best maintenance and service technicians.” And if you do need help, they’ve made it easy for you to schedule an appointment: “Skip the phone call and schedule an appointment online right now.” After all, they wouldn’t want you to talk to a live customer support representative who might spill the beans about their domestic outsourcing.

Another thing you might not easily learn from their website is that Maytag was bought by Whirlpool on April Fools Day, 2006. (No joke:  Wikipedia says April 1, although the Whirlpool corporate site says March 31. What a difference a day makes.) According to the Maytag article on Wikipedia, the plants would be closed within a year, most employees terminated, and the Board of Directors and CEO given 5 years severance. The name, however, would continue to be used on re-branded Whirlpool appliances. And obviously, so too the Maytag Repairman.

The Maytag site won’t tell you any of this. The beautifully produced flash Maytag Timeline goes all the way to 2007 and neglects to mention the sale.

In “About Maytag”, under “Corporation” there is in fact a link to Whirlpool, “Our Parent Company” as well as mentions in the press releases. And even though the “Investors” link says “Read the latest news and press releases from Maytag and Whirlpool Corporation” it takes you straight to the Whirlpool site… and then promptly disses Maytag.  Right there, in the Corporate Profile, it says “Whirlpool’s primary brand names — KitchenAid, Roper, Bauknecht, Ignis, Brastemp, Consul and its global Whirlpool brand — are marketed in more than 170 countries worldwide. Whirlpool Corporation is a significant supplier to Sears Holdings Corporation, which owns and controls the Kenmore brand name.”

Did you see Maytag listed?  Me neither.

Even worse, Kenmore was listed. Now I’m really worried. I was raised trusting Kenmore, and if Whirlpool has brought the same care and consideration to Kenmore that it’s brought to Maytag, I may have to switch to LG.

While the death of the Maytag repairman may come as a shock to you and me, customer review sites like BizRate and RateItAll are filled with uniformly negative reviews by customers who discovered he was gone the hard way. From their high end machines to their low, washing machines to refrigerator/freezers, the majority of the reviews all basically say the same thing:  Don’t buy Maytag. “Broke twice in a year and a half.” “We were warned but didn’t listen.” “Nightmare on Elm Street doesn’t compare.” “Buy at your own peril — Maytag’s folly.” “Extended service plan is awful.”

Interestingly, some of the customers say they bought their lemons because of positive online reviews. I did see professional reviews by a company named alaTest.co.Uk that were uniformly glowing and served to raise the overall ratings, at least on Biz Rate.

But when I went to Consumer Reports, I found that in the one category I checked, Washing Machines, Maytag was the most repair-prone among front loaders and second most among top loaders. (I wonder what Consumer Reports says about alaTest.co.uk?)

To sum up:  a company that built its brand reputation on quality and reliability, that took everything they stood for and created an iconic brand image symbolized by one of the most memorable advertising campaigns of all time, is not only not reliable, it isn’t even a real company anymore.

And yet, the Maytag Repairman is still starring in commercials, spewing an empty promise, like a long gone Fred Astaire dancing with a vacuum or a ghastly computer generated Orville Redenbacher shilling popcorn. Dead men walking.

In this day and age, can a brand actually believe that it can get away with pretending to be something that it’s not?  Is a brand reliable just because it says it is?  Is misleadership a virtue now?

I subscribe to the belief that a brand is the conversation its stakeholders have about it, not the marketing propaganda it spews at consumers.

So can someone please explain to me how long we’re going to allow this unholy zombie of a Maytag Repairman to walk among us before we get our torches and send it flaming into the blackness where it belongs?


Have you seen the commercials where the guy is singing about freecreditreport.com? In one he and his band are dressed as pirates in a cheesy seafood restaurant. In another, he and his “posse” are playing their instruments and singing as they drive a mangled used subcompact car off the lot.

The jingles are very catchy, the kind that get stuck in your head and won’t leave until you think of something even stickier and nastier, like “I’m too sexy for my shirt.” (Sorry, I had to do it.)

In the car commercial, he sings “F-R-E-E that spells free credit report.com baby.”

Only guess what? Freecreditreports.com isn’t free. It charges a monthly monitoring fee, which you can cancel without ever paying, although I’m guessing that many people forget and I’m betting their business model is based on a particular percentage of people doing exactly that.

In their defense, at the end of the commercial, in fine print at the top of the screen and in a rapid voiceover they say “Offer applies with enrollment in Triple Advantage.”  I guess that constitutes fair warning that something is up, although there’s no mention of a fee of any kind, while the URL freecreditreport.com is highly visible in bold white type in the lower right corner throughout the entire commercial.

On their website they are equally clear and honest. In small gray type on a grey background, smaller than the bold type on the rest of the page, off to the side, away from the big golden oval that says, in glowing letters, “Get your Free Credit Report & Score,” it says:

“IMPORTANT INFORMATION

When you order your free report here, you will begin your free trial membership in Triple AdvantageSM Credit Monitoring. If you don’t cancel your membership within the 7-day trial period**, you will be billed $14.95 for each month that you continue your membership.

ConsumerInfo.com, Inc. and Freecreditreport.com are not affiliated with the annual free credit report program. Under a new Federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report under that law, you must go to http://www.annualcreditreport.com.”

That’s quite a different little tune than “F-R-E-E that spells free credit report.com baby.”

Listening to that song got me thinking about another song, which I hereby dedicate to those champions of misleadership at Freecreditreports.com. (Apologies to Kris Kristofferson, who wrote the original Me and Bobby McGee – yes, he wrote it, not Janis.)

Free is just another word for hidden fees to pay,
those fees are piling up now every day,
New is just another word for same stuff different day
Don’t they have to mean the things they say, oh yeah,
How can it be free if we have to pay?

Can someone please explain to me how we as an industry expect people to listen to our ads and believe our claims when we keep singing the same misleading song?