Jon Michaeli’s Blog

Tropicana does an about-face

Posted in Uncategorized by Jon Michaeli on February 23, 2009
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Kudos to Tropicana for listening to its customers and reading my last blog entry on the subject “Branding Gone Wrong” :).  The New York Times describes the debacle as Pepsico’s own version of New Coke. Ouch!

Tropicana will return to its original packaging in March after receiving tons of complaints and insults. While the article cites “hate” mail, email and phone calls, there’s no doubt the public’s voice spread far more quickly due to the social web, forcing Tropicana’s hand.

I admire the company’s admission that it made a mistake and its swift reaction. That said, I’m completely mystified how a company with some of the country’s foremost brand experts and an ad budget in the hundreds of millions of dollars can make such an egregious error in the first place….


Tough times call for strong leaders daring to be different

Posted in Uncategorized by Jon Michaeli on February 19, 2009
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Ah the Sequoia deck. If you work for a venture backed high tech startup, you’ve likely heard of this infamous PowerPoint, which Sequoia Capital originally drafted around the internet bubble of 2001, then distributed an updated version to its portfolio companies in Oct 2008. If you’re not familiar, the deck provides an overview of the financial crisis and outlines a plan of action.

This deck was taken as gospel and adopted as the modus operandi by VCs and CEOs throughout the land on how to react to the current economic turmoil. Not surprisingly, layoffs and salary cuts were an integral part of the 9-point plan.

I’m not naïve. I appreciate the severity of the financial crisis, and I believe VCs have every right to protect their investments by lengthening the runway of their unprofitable companies (especially considering the consensus that we are in the midst of what will be a prolonged recession). And in many cases, I’m convinced a reduction in headcount is warranted. But unfortunately, the cost of such action is not given due consideration.

I recently met with the President of a very promising startup, who told me if he were to cut salaries across the board by 10%, he would reduce burn enough to keep the lights on one more month. His reaction – “If that month is going to make or break this company, then so be it.”

At the very least, this “dare to be different” perspective is refreshing. In his opinion, the increased morale and productivity gained by bucking the trend will far more than offset the higher salary cost. The benefit is difficult to quantify, which is why this part of the equation is often overlooked. What is easy for most folks to identify with is that at the end of the day, it takes more than a paycheck to stay engaged and motivated.

And make no mistake, the true leaders who “have your back” when times are tough, will reap rewards in the form of increased loyalty when the situation improves. As for the CEOs who dispense of X% of their staff without a moment’s reflection (e.g. how might the team be restructured and/or retooled for efficiency?), they will learn a lesson when times improve. Staffers who made the cuts but were in constant fear of losing their jobs will jump ship to companies where they feel valued and respected.

A drycleaner puts customers first…and wins

Posted in Uncategorized by Jon Michaeli on February 16, 2009
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What makes one drycleaner different from another? In some neighborhoods, there is an environmentally friendly option (a big plus in my opinion), and sure some are a bit more “upscale” and pricier than others. Turnaround time and hours of operation are sometimes important too. And a select few will pick up and deliver to your office or home. Other than that, in my experience most are equally equipped to perform their intended function – clean and get the stains out of your clothes. So when you live in an area with competitively priced cleaners on every corner, what keeps you loyal?

I’m going to pause for a moment, because on the off-chance people read this post, they may ask, “So what’s unique about drycleaning? The same logic applies for many other everyday local services where the service or product is fairly commoditized (gas stations, pharmacies, banks, etc.). I would argue the difference is that, at least in the Boston area, the drycleaning industry is greatly fragmented; most stores are independently owned and operated with the exception of a few “larger” regional chains. As such, very few drycleaners invest in their brand. I feel cheap when I buy unbranded gasoline and honestly expect something bad to happen to my car. And banks do plenty of advertising. But let’s face it, it’s tough to get too attached to your drycleaner.

Now back to my main point. Even if you bring your clothes to a quality outfit, eventually there will be some sort of mishap…a shirt that shrinks, a hole in a sweater, a scarf that gets lost. Mistakes happen, especially when you are turning around high volumes of clothing (often cleaned offsite) within 24 hours.

That is why the most effective way for a drycleaner to maintain loyalty is to have a customer-friendly policy when they screw up. Last year, my cleaners, Lapels, ripped a nice pair of pants and the next day mailed me a check for $150 to buy a replacement. From my perspective, this is the right thing to do, but as it is so incredibly rare for a drycleaner to take responsibility for so much of a cracked button, Lapels has now won my business until I leave town (even if they don’t have the longest hours or the absolute cheapest prices). Compare that to Zoots (a “boutique” chain), which lost my brand new $100 Hugo Boss button down shirt, then reimbursed me for the cost of laundering it eight times ($16).  Yeah thanks a lot – and could you find a more arbitrary policy please? Supposedly, 8 cleanings is the lifespan of the average shirt. Maybe when you launder them with Zoots it is, by mine seem to make it much longer. I took the $16 and bought a new t-shirt.

But again, I digress.  Anyway, Lapels keeping my business isn’t where it ends. I have told this story of “polar opposites” to many people living in my town. So, the takeaway is that in the drycleaning industry, investing a little in customer satisfaction will inevitably fuel positive word of mouth in the community, resulting in both valuable customer retention and acquisition. Too bad so many (including Zoots) primarily rely on uncreative copycat tactics, such as costly mailer and in-store coupons in an attempt to get people coming back. 9 times out of 10, I don’t have time to open those mailers and simply toss them in the trash. Lapels made a mistake once, spent $100 to make it right, and now I and at least 5 of my friends (and probably some of their friends as well) don’t even think of going anywhere else.

Tropicana branding gone wrong

Posted in Uncategorized by Jon Michaeli on February 3, 2009
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I understand the rationale behind Tropicana’s new brand image (the New York Times had a good summary article), and quite honestly the execution stinks. The premise, promoting quality and value, makes perfect sense. I learned quite some time ago that Tropicana is not from concentrate and decided I’m willing to pay a little more for a premium product.

In tight times, reinforcing quality and value is the way to go. And I don’t question that simplifying the packaging could reinforce this message…but the most important test on how well it resonates with customers is at the point of purchase, and there it fails miserably, at least in my neck of the woods.

Call it a non-statistically significant sample size and poke holes all you want in my simple market research study, but after 2 to 3 trips to the market, I’m reasonably convinced the drastic design change on the carton isn’t for the best. Here are some opinions and observations of shoppers I spoke to:

  • The glass of juice looks more yellow than orange, and the package is bland and lifeless. At least before, there was a fresh and juicy orange that made me want to drink a glass.
  • The cartons just blend in with the shelf, and I can’t even read what’s written. Don’t they know some of us older folks can’t see very well?
  • I can’t tell what’s straight OJ, what’s a mixture, what has pulp, and so forth. I’m assuming they spend a lot of money creating all of those varieties. Now, I could easily grab the wrong one.
  • The lettering is so faint and small that whatever new messages they’re trying to feed me aren’t getting through.
  • This feels like a discount brand, like the quality has gone down, which is the opposite of what I’d guess they’re trying to achieve.
  • I didn’t even notice the cap is shaped like an orange until you told me.

Let me simplify. I used to feel good about having Tropicana in my fridge – like yeah, I’ve got the good stuff. And now, quite honestly, it’s an eye sore.

Of course when you dominate the shelf space (40% market share) and your re-branding campaign is accompanied by a $35 million ad budget, I suppose you can easily reach the masses and spell out for them what’s otherwise far from obvious. Unfortunately, you can’t easily change what they will “naturally” feel when they look at the product in the fridge.