Author: create

Kraft Heinz created the famous ketchup more than 150 years ago. Can it still innovate to suit today’s demanding customer base?

About Heinz

Kraft Heinz has been the undisrupted leader in the condiments space since ketchup was invented in 1869. The company’s purpose of “Let’s Make Life Delicious” drove 2022 net sales of approximately US$26 billion. Today, the company operates in more than 200 countries worldwide and is headquartered in Chicago, United States.

The company is also committed to growing its standing with new products and innovations across six consumer-driven product platforms. It also strives to make an impact through sustainability and ethics in its farming and production efforts.

It is on track to reach carbon neutrality by 2025. Additionally, the company is working to meet its target of having 100% of its ketchup tomatoes sustainably sourced by 2025.

Kraft Heinz’s New Remix Machine Has 200+ Combinations / Ketchup will always play a significant role in Heinz’s portfolio (Source: Kraft Heinz)

What Is The Heinz Remix Dispenser?

Heinz took the spotlight at the recent 2023 National Restaurant Association Show in Chicago, United States (May 20-23, 2023) to showcase the world’s first condiment remix dispenser. Years in the making, the new machine called Heinz Remixdispenser lets customers customize the sauces they put on their burgers, hotdogs, and other foods — up to 200+ combinations.

Using touchscreen controls, customers can choose from a range of sauces “bases” such as Heinz Ketchup, Ranch, and BBQ sauces, and add specially developed sauce “enhancers” such as jalapeño, smoky chipotle, buffalo, and mango at different settings (low, medium, or high) – “to further personalize their sauce with just the right amount of sweetness and/or spiciness,” said Alan Kleinerman, Vice President of Disruption.

Kraft Heinz’s New Remix Machine Has 200+ Combinations / Inclusivity (Source: Kraft Heinz)

“As a company, we’re transforming through innovation by making bigger, more intentional bets to fuel our growth and create new experiences for consumers,” said Kleinerman, “Heinz Remix is a great example of this consumer-first approach to innovation. We’re changing the game for foodservice operators and sauce lovers – dipping will never be the same. With Heinz Remix, it’s more than a sauce dispenser; it’s an insights engine and business model enabler that will help Kraft Heinz understand and respond to consumer trends and flavor preferences in real-time. Who knows – maybe our next new sauce combination will come from a superfan using Heinz Remix!”

New Condiment Remix Machine Has Over 200+ Combinations (Source: Kraft Heinz)

“The launch of Heinz Remix is a first for the sauce category and foodservice industry,” said Peter Hall, President, U.S. Away from Home, Kraft Heinz. “It’s a great example of how we’re leveraging culinary insights and category knowledge to drive greater value for our customers and consumers. Our ambition is to be the leader for taste, flavor and experience anywhere you’re eating, and we’re delivering on that goal with category leading innovations like Heinz Remix.”

When Will The Heinz Remix Dispenser Be Available?

The new Heinz Remix dispenser will be introduced in test markets (including stadiums, restaurants, shopping centers, and movie theaters) by the end of 2023 to early 2024. Tests will be conducted to verify useability, customer engagement, and mass market adaptability.

What Else Can The Heinz Remix Machine Do?

While this innovation will be categorized as a machine, it is much more than that. “It’s a real-time insights generator that will change the way we work with and, importantly, the way we drive value for foodservice operators”, Hall said.

The Consumers Package Goods (CPG) category has a reputation for having a different time collecting consumption data. This innovation will allow the condiment company and its customers to collect and understand consumption and behavioral data.

This fresh set of insights for various stakeholders:
– Track consumer preferences across variables (e.g., geography, events, age demographics, food choices)
– Inventory and demand management (e.g., proactively manage sauce demands based on past consumption data previously not available in detail)
– Marketing opportunities (e.g., utilize the touchscreen displays on the machine to generate interest in different sauce combinations)

The insights will drive additional innovation which could lead to better product personalization across regions, faster product design testing, and improved revenue generation in new and existing product lines.

Not The First of Its Kind

Combination dispensers were first introduced by the Coca-Cola Company in 2009. Dubbed the Coca-Cola Freestyle, the dispenser was an instant hit with consumers and operators. The ability to customize drink choices was an unexpected innovation that drew significant curiosity across all demographics around the world.

In its first introduction, customers would go to designated spots (such as movie theaters) to enjoy this new experience. As a result, many operators saw an uptick in sales. In the past five years, the Coca-Cola Company added the ability for customers to order their favorite drink using the mobile application and create up to 100+ flavor combinations. They are now available at over 50,000 locations.

New Condiment Remix Machine Has 200+ Combinations / Coca-Cola Freestyle Fact Sheet (Source: The Coca-Cola Company)

Heinz hopes to recreate the same magic with its new dispenser. Besides the data collection and product design advantages discussed above, the new “machines” could bring higher hardware profit margins and enhanced maintenance contracts.

Things To Work Out

From the rendering, there is a large distance between the dispenser and the container which could open to a messier operating environment. This could be alleviated by operators providing bigger containers. There is no word yet on the dispenser’s self-cleaning features to ensure that sauces are not mixed together in between uses. New software with be required to collect and analyze the data collected from users.

Color me hungry! This is a great example of how technology can help CPGs participate directly in the customer experience. Which combinations would you want to create?

Follow this link for more information about the Retail Mashup content platform
Follow this link for more insights
Follow this link for more podcast episodes
Follow this link to participate in regular polls

Value brands have utilized base pricing with add-ons for years to attract customers who want products that get the job done without the frills. In particular, the airline industry has perfected this value proposition with products and services that serve travel needs without breaking the bank. However, customers trade low prices for restrictions and are often surprised by the hidden fees (sometimes called “junk” fees) associated with product or service charges.

Introduction – Hidden Fees

Shoppers are weary of the barrage of new fees emerging across the entire retail industry. While these hidden fees have been around through small prints and asterisks, they are now more prominent in mainstream and luxury brands. These fees may not always be consented to in advance or customers have to pay them to continue using a previously purchased item. Details can often be slim on what these hidden fees are for.

Are Shoppers Weary Of Hidden Fees? (Image: cottonbro studio)

Americans are collectively spending nearly US$65 billion on hidden fees, according to the White House. “It’s beyond frustrating to end up spending more than you budgeted because of random, arbitrary fees,” said Federation Trade Commission (FTC) Chair Lina M. Khan. “No one has ever felt that a ‘convenience fee’ was convenient. Companies should compete to provide the best quality at the best price, not to see who can squeeze the most added expenses out of consumers. That’s especially true at a time when families are struggling with the effects of inflation.”

Hidden Fee Implications

Customers who encountered them always feel a sense of betrayal as they may have made a different purchase decision if they had known about these hidden fees. They often will voice their displeasure through direct customer feedback, online reviews, and testimonials. The resulting trust drain may lead customers to reduce or entirely stop purchasing products and services from the brand.

Hidden Fees Examples

Hidden fees can be separated into two types: 1. Functional and 2. Non-Functional or Non-Related. In both instances, reasons for some of the fees may be undisclosed in advance.

Functional hidden fees are for items that customers will need to pay for additionally to use specific features or functions. This payment is required on top of the initial purchase price. Here are some examples:

BMW – $18 monthly fee for use of seat heaters for select European models

Mercedes – $1,200 “acceleration increase” yearly fee to improve a vehicle’s speed

Ring – Just moved previously free security features behind a paywall – including watching a live feed of your video doorbell from the app

Best Buy – Moved purchase of gaming graphics cards to only customers with a $199 Best Buy Totaltech Membership 

Target – Began charging a “bag fee” for curbside and e-commerce pick-up orders

TikTok – Developing a paywall feature to view influencer videos

Amazon – Now adding a delivery surcharge to grocery orders under $150, on top of Prime’s “free delivery” membership

Ticketmaster – The company charges various processing, venue, convenience, and administrative fees of 10-30% for all types of tickets

Non-functional hidden fees are for items that customers do not have to pay to use a product/service but are asked to do so sometimes overtly. At other times, customers paid these fees without knowing until later.

Petco – “charitable donation” request at checkout

Starbucks – Auto prompt for the tip on every mobile app order

Target – 2.5% “public improvement” fee in some stores (often landlord driven to pay for future site improvements)

Saint & Sophia – Online clothing shoppers are asked to “support the team” with tips on e-commerce orders

What’s Being Done On Hidden Fees?

The FTC formed a committee to tackle hidden fees back in October 2022. They are seeking public comments (more than 6,000 comments have been received thus far) on the following:

Unnecessary charges for worthless, free, or fake products or services: Consumers may be slammed with charges for products or services that cost companies nothing to provide, are available for free, or should be included as part of the purchase price. Companies might also upsell consumers on fake products or services that either have no value or never materialize.

Unavoidable charges imposed on captive consumers: Consumers may be forced to pay junk fees because they have no way to avoid or opt out of them. They might be dealing with a company with a monopoly or exclusive rights that can extract fees because there is no competing option. Or consumers might get hit with fees after they have already sunk costs into a product or service, and they can’t easily walk away.

Surprise charges that secretly push up the purchase price: Consumers can experience junk fee shock when companies unexpectedly tack on mystery charges they did not know about, consent to, or factor into the purchase. Companies might hide these fees in the fine print, cram them on at the end of a purchase process, or use digital dark patterns or other deception to collect on them. Some companies might claim that they do not charge any fees and then add on fees after the purchase or sign-up.

Alternative To Charging Hidden Feeds – Better Customer Experience

The customer journey is exhausting. Vast online choices, confusion on product options and quality, gauging review legitimacy, and deciding on pick up or delivery all contribute to shopper fatigue. But unexpected fees and tip requests only compound this fatigue, and make it harder for retailers to charge for the critical stuff like shipping, returns, or legitimate price increases.

It’s tempting for retailers to extend tipping to self-checkout or move product features into subscription models. Many retailers view this as a way to keep base prices low. But the negative impact on customer experience will be smaller basket size, reduced traffic, and waning profits in the long run.

Instead, retailers should consider lengthening the customer experience journey to cater to customers’ specific needs and expectations with choices. Building a better value proposition with the right product mix and partnerships can yield strong customer relationships leading to higher brand trust and extended revenue generation. While processing and administrative fees are unavoidable in some cases, brands should be transparent about them.

Additionally, brands are encouraged to disclose fees in advance to set or reset customers’ expectations. No one wants to feel lied to.

Example – Southwest Airlines
Dallas-based Southwest Airlines may be classified as a low-cost airline but it is very upfront for not charging for baggage, ticket changes, etc. Outside of the pandemic, they have scored well with travelers and achieved years of financial success.

Are Shoppers Weary Of Hidden Fees? // Southwest Airlines are upfront about their fees (Image: Southwest Airlines)

Example – TIME Magazine

TIME is dropping its paywall as of June 1, 2023, and will make all online content free.

The publication which just turned 100 in March 2023 currently has 1.3 million print and 250,000 digital subscribers.

It’s a bold move as print media companies continue to utilize paywalls to generate extra revenue on additional content while subscription fatigue sets in.

Time follows Quartz who noted higher content impressions once their paywall was removed.

Follow this link for more information about the Retail Mashup content platform
Follow this link for more insights
Follow this link for more podcast episodes
Follow this link to participate in regular polls

Retail media networks are making waves in the advertising and retail industries with promises of new sustainable revenue streams and customer engagement opportunities. Are they ready for prime time and should brands hold on investing capital for unrealizable short-term gains?

You can find this podcast episode and others on these major podcast platforms:

Apple Podcasts
Spotify
iHeartMedia
Amazon Music
Google Podcasts
Anchor

Introduction – What Are Retail Media Networks?

What Are Retail Media Networks?
Retail media networks are channels operated or curated by an individual retailer or a multitude of retailers. They can range from standalone materials like posters, postcards, and magazines or more dynamic audio, visual or digital materials. The goal of these networks is to showcase brands, products, and services, improve awareness, and generate new sales. All interactions can be measured through clicks, hot map analysis, and shares.

What are the most popular retail media networks today?
The most popular retail media networks are:

Amazon Advertising

Walmart Connect

Target Roundel

Kroger Precision Network

Instacart

eBay

Best Buy Media

Lowe’s Media

Home Depot Media

Macy’s

Amazon Advertising is the most popular network with more than 200 million Prime members in the United States alone and occupies more than 50% of the revenue.

Walgreens along with Bayer and The Trade Desk discussed The Rise of Retail Media via Adweek’s Spotlight Event

Digital screens are employed around higher-traffic areas to capture in-store shoppers’ attention. Activation will be achieved by scanning a QR code on-screen or locating the items nearby the digital screens. One more advantage of digital retail media networks is audience measurement using different technologies (e.g., traffic sensors) which was not always available with print media or billboards.

Bain and Company stated that “With this critical foundation in place, retailers can better target their customers, attract more site traffic, and build a new business with contribution margins as high as 80% in some cases.”

Additionally, Boston Consulting Group mentioned that the retail media can generate up to US$110 billion of new revenue by the fiscal year 2026. That’s a rise of 300% from 2021.

Transcript

Welcome

 Larry/DeAnn
Hi. Welcome to Retail Mashup. This is the podcast where we find intersections between customer experience and the retail industry. AnzΩzzΩd I’m Dean. I’m Larry.

Retail Media Networks – A Primer

DeAnn
Larry, I was talking to some industry peers recently. A term kept coming up, I see it everywhere and it’s really starting to bug me. Is store as a medium bringing digital signage into a physical store.

It’s becoming one of those overused terms in the retail industry. So I thought I could chat about that with you today. Sounds good. Just as a little bit of a primer. Stores and media are part of retail media networks. Retail media networks are networks of ads designed to deliver ads about brands, services, or virtually anything out to you and me or to anyone through a number of means.

If you go onto a Google search page, for example, you’ll see ads pop up on any number of things, cars, or an item of clothing. You may have been looking at a blender, a company, or a doctor. Anything that the person, brand, or service has paid to put into this retail media network is to be displayed on search pages, on social media pages, on websites, and virtually anywhere online.

Ads, Ads, And More Ads

You will see ads and you can’t get away from them. My gosh, it’s even come into our streaming services now. When you watch Amazon Prime or Netflix without paying the premium. Well, Interestingly enough now retailers are realizing that they’re getting an awful lot of traffic inside their brick-and-mortar stores.

And wouldn’t it be great if you could sell ad space inside your store just like you do online? It would be a new revenue stream. This is a case of, sounds like a great idea, but is it working? When you look at a company like Walmart, for example, last year, it had twice as many people pass through their physical stores as they had to visit their e-commerce site.

Are Retail Media Networks Ready For Prime Time? // Walmart Connect (Source: Walmart)

Wouldn’t it be great to put ads for those in-store eyeballs? And so Walmart is working on it, putting digital screens into stores to show these ads. Well, that’s great for Walmart because they have such a wide range of ads that they can fill their screens with. Content from their own in-house brands, And the brands that they sell inside their stores.

So you’re in the housewares department and you see an ad for a special on fancy cheese. Well, I’m giving a dinner party, so when I buy this nice serving bowl, I’m gonna run over and buy cheese as an appetizer. Great. It’s much harder for a small or even a medium brand or chain to have that same kind of benefit because they’re not selling a broad range of products. that means they have to either create their own content about their own products or their brand, their value statement, or whatever, or they have to bring in outside brands or services into their store.

What If Content Is Not Readily Available?

Of course, it’s a much harder ask because the content isn’t readily available. Most smaller medium brands don’t have a content management system, a way to manage and control those ads. And so bringing in these screens, Now you have to figure out how to keep those screens filled with content so you’re not having a dark screen somewhere.

You have to figure out which ads to show, and which ads not to show. In a Belvedere store, you would not want an ad for Smirnoff vodka, for example. So, this is really the big challenge if you are a Walmart or Target-sized store, it’s great.

It’s gonna work for you. It’s going to boost cross-aisle sales and boost basket size, but it’s probably not gonna bring you the recurring monthly ad revenue that you thought because these are brands that you’re already selling in your store.

Are Retail Media Networks Ready For Prime Time? // Source: Merkle’s Retail Media Research Report

If you’re a medium-sized store like a smaller grocery chain for example, then you are probably not gonna see the same benefits. the promise of recurring ad revenue, the benefits that star in everyone’s eyes right now, are really not there.

So I struggle when I see all of the talks about the benefits of bringing ads into physical stores when we are still several years away from having the content, the technological resources, the ad revenue, or the money, I guess, to pay for the content to make it work across the board.

Discussion

Larry
It’s a very interesting concept that I think many people, brands included, may not have very deep knowledge about. It sounds like if you see a brand like Walmart, implementing a system like this, you want to jump on the bandwagon because it sounds good to have a consistent recurring revenue stream.

DeAnn
And absolutely. if it’s implemented well, you would be able to. Get more ad revenue perhaps by working with brands being showcased And have cross-promotion partnerships too. But that is not what we are seeing in the marketplace.

Example: Airports And Media Networks

Larry
Quite often at airports where a lot of their media screens are controlled by third-party media networks and sometimes I ask myself, “Well, how come the ads are not specifically tailored to travelers? Because it’s very specific. I’m already at the airport, wouldn’t I want to know more.”

Number one, about the airline I’m flying, the airport I’m using, the destinations that I’m going to, or something travel related than something that it’s completely irrelevant. It’s almost that the ads are being shown to me. Given that they’re not useful or personalized, in a way I’m being trained to ignore them.

The more I ignore those ads, the more those ads would not be effective in helping me create more actions to engage and purchase things down the stream. I think that’s important for brands looking into this particular technology to ask themselves how is this technology part of the overall marketing or engagement technology with their customers.

Have they been tested out to ensure ads themselves are filtered or managed? For you so that you Have the best experience possible instead of creating more noise.

DeAnn
I agree. That is a great point, Larry. This is really a conundrum for retailers because it’s getting harder and harder to collect first-party data. Knowing what your customers want so you can understand how to personalize the service to appeal to them is really important for triggering a buy.

First Party Data And Privacy

Apple has already made it. They’ve blocked down their data sharing. It’s going to be harder and harder to collect that first-party data. Bringing people into the store, using cameras and sensors to track behavior is incredibly valuable to a retailer.

Apple introduced privacy features in iOS14.5

But if the content isn’t there, if the ad revenue to offset it doesn’t work out as promised. It really puts retailers in a financial bind when at a time they’re already seeing lower profit margins, tougher supply issues, and pricing constraints with consumer concern about inflation.

it is a tough issue for retailers to try and find new ways to gain that first-party data to understand customer behavior and what products they’re responding to and what products they look at, but never buy.

Retail media looks like a beacon of hope in some very tough times, but I think it is not something that’s operational enough to really deliver on the promises that are being made right now. I think there’s definitely strong potential, but we’re still a few years out.

How Can Brands Make Retail Media Network A Success?

Larry
Before we end, do you have any advice for brands looking into buying the technology? How can they make it work?

DeAnn
So starting small is gonna be important. Controlling expectations. Don’t expect money to fall out of the sky to pay for it all and understand that you’re gonna need to put some skin in the game with an in-house person who has the company’s interests at heart able to work with a group of outside vendors.

That would be it. It’s not sexy, but it’s solid.

Larry
That’s definitely sounding like a really good first step and we will extend this conversation next time to help brands think about strategy, how best to serve themselves, which platform to use, what content to think about, and also how to measure success.

So another amazing episode. If you like this episode and Retail Mashup The Podcast, please press like and subscribe, and we will talk to you next time.

* We made some modifications to the transcript to improve understandability and flow

Follow this link for more information about the Retail Mashup content platform
Follow this link for more insights
Follow this link for more podcast episodes
Follow this link to participate in regular polls

Everything changed on May 10th when Epic Games introduced the “Fall Guys Creative”. This highly sought-after feature will hopefully revigorate casual gamers and streamers having fun dodging obstacles over the past three year. How can tailored customer experience push the game back to the forefront?

Introduction – Fall Guys

What is Fall Guys?
Fall Guys is a free-to-play platform battle royale game developed by Mediatonic and published by Epic Games. Up to 40 players (down from 60) navigate through a series of fast-action obstacle courses in the Blunderdome. Players called “Beans” can compete randomly or through a custom set-up for up to six rounds with the last person standing winning the coveted crown.

Fall Guys Trailer

The game was released in August 2020 and was greeted with good reviews from critics (as of May 2023, it has a Metacritic score of 80 through 25 critic reviews). The success was matched with more than ten million digital copies sold to date. More than 50 million players have registered to play across all gaming platforms like PC, Nintendo Switch, Xbox, and PlayStation.

Monetization

The game uses different in-game currencies Kudos and Show-Bucks (Crowns was phased out). Kudos can be earned through events, in-game challenges, and unlocked via the Season Pass. Show-Bucks will be earned through competing in daily challenges and winning Rounds.

Both can be used to game items. Show-Bucks will be used for items such as costumes, emotes, nametags, faceplates, and more found in the Fall Guys Store. Kudos can be used to “purchase Single Costume Pieces of Common rarity, Common colours, all Nicknames and Nameplates, as well as Common Faceplates and Patterns.”

Fall Guys Creative Brings Back Fun And Players? / Shop (Image: Fall Guys)

Fall Guy Creative

One of the demanded features of Fall Guys is the ability for players to create their Rounds like in the Super Mario Maker series. The letter extended playability and interest. Lego was so inspired that it manufactured its version allowing players to create an infinite number of courses.

At release, players can create up to 20 levels with the same design tools in the level editor as the ones used by the game publisher. This ensures course creation complexity and in-game mechanics are refined from the start. The goal is to reduce the effort required to build amazing rounds.

The new Fall Guys Creative available on May 10, 2023, allows players to build their obstacle course.

Excel Through Customer Experience

Player feedback contributed a big part to the Fall Guys Creative rollout in Season 4. While it was a very popular game during its release in 2020, interest waned as the same old game mechanics and in-game purchases did not excite players. After an all-time peak of 172,026 active Steam players reached in 2020, participation dropped off significantly. The game has around 2,100 active players on May 9, 2023.

Fall Guys Creative Brings Back Fun And Players? / Player Data (Data from Steam)

There has been a wave of reporting in advance of the Season 4 and creator mode rollout. Ahead of the May 10, 2023 rollout date, early reviews of the new creator mode have been positive and reviewers noted how much easy and fun it was to build new courses.

This is a make-or-break moment for the game. Mediatonic can consider the following to engage, acquire, onboard, and service players:

Fresh Content with Creators
Mediatonic has created content to engage all active and non-active players in advance of the release. While additional engagement details are scarce, look for the company to work with popular game streamers like Ludwig, Valkyrae, Pokimane, and Sykkuno who heavily played the game previously to design custom tournaments and be featured in sponsored streams.

Regular Players
Regular players should be rewarded for creating popular or high-quality courses monthly. This shows appreciation for player creativity and time spent building new courses.

Partnership
Similar to Epic Games’ own Fortnite, brand partnerships have a large role in drawing players into purchasing skins and emotes. Mediatonic should extend partnerships with brands in anime, consumer products, and entertainment (e.g., Marvels, Star Wars, Minions, Mario Bro.) to design limited edition skins.

Tournaments
Unlike other titles, Mediatonic and Epic Games have not created leagues or a worldwide tournament for Fall Guys. This may be the time to treat the game as an e-sport.

In-game Mechanics
While the game is easy to play and takes minimal effort to master for hours of fun, the in-game mechanics can become repetitive and sterile after a length of time. In future releases, Mediatonic should invent new play movements and course mechanics to increase difficulty and randomness. The goal is to improve playability on existing courses and keep the game fresh even after multiple hours of play.

Monetization
Instead of a common in-game currency, Fall Guys’ system can be confusing and reduces opportunities to earn and spend the currency in the store. It would be better if the currency can be further streamlined with a tweak in conversion to make it less costly to build new skins, nameplates, etc. After all, what is the point in having unique partnership content if they are out of reach for most players?

Season 4 and the Fall Guys Creative will be available on May 10, 2023, across all gaming platforms.

Follow this link for more information about the Retail Mashup content platform
Follow this link for more insights
Follow this link for more podcast episodes
Follow this link to participate in regular polls

Costco Wholesale Corporation (better known as Costco) has been a fixture in retail shopping for nearly 40 years. Find out how shoppers are enticed with unique customer experiences including a new promotion with Volvo Cars. Did you know Costco sells vehicles?

You can find this podcast episode on major podcast platforms:
Apple Podcasts
Spotify
iHeartMedia 
Amazon Music 
Google Podcasts
Anchor

Introduction – Costco

Costco has been a shopping destination for many worldwide since its operation commerce in September 1983. As of May 2023, it operates over 845 locations in 14 countries. Headquartered in Issaquah, Washington, United States, the retail chain is known for its warehouse aesthetics, high-quality inexpensive food fares, supersized items at reasonable unit prices, and a customer experience strategy focusing on value, product demonstration, and unexpected product drops.

It is also well known for its generous return policy (which Retail Mashup covered in a piece on ChatGPT).

Transcript

Hello

Larry/DeAnn
Hi, this is Retail Mashup. I’m Larry. And I’m DeAnn. Retail Mashup the podcast is where we find the intersections between customer experience and the retail industry. Today, I want to talk about Costco, one of my favorite brands. I go to Costco regularly because it’s a fun activity and I need to buy things for my day-to-day life.

What Is the Costco Promotion With Volvo?

Larry
With Costco, I don’t need to go to the grocery shop every week. Instead, I can buy everything on a monthly basis or every couple of weeks. More importantly, I love the fact that you can have a sample. I miss that component a lot when it comes to my shopping experience, just having known some newer brands. I am able to see, “Ooh, that’s new dumplings or there may be a new bicycle” that they’re selling which may pique my curiosity at the same time.

I want to bring up Costco a little bit because I think most people didn’t realize that with their membership fees, they can actually buy a new car.

Most people would say to me, well, I have never seen any car-related promotions or items where would I get a car through Costco then? Well interestingly, for the month of May, up to July, they have a promotion with Volvo that members would be able to get up to $2,500 incentives on top of any manufacturer promotions on a new 2023 and 2024 vehicle model.

Costco’s Entices Shoppers With Great Customer Experience // New promotion with Volvo (Image: Costco)

And that is all over the US and in Canada, they also have their own separate program with separate incentives. I want to focus on the US. Their relationship with Volvo started in 2007. On top of that, Costco sells used cars and parts, And new parts as part of the auto program that they run.

Customer Engagement

I want to step back and ask myself that same question from before. “Wait a minute. I didn’t know Costco sells cars from a revenue generation perspective.” We talked about partnerships very often. Brands need to reach out to other brands and work together to bring that alignment to what they have to offer.

So why haven’t I seen a Volvo car in and out of Costco? Perhaps to build that excitement, to build that promotion, the first thing they should do maybe is actually show the product. Do people really think about Volvo when they drive a car? do Costco members Think about Volvo as a brand?

Costco’s Entices Shoppers With Great Customer Experience // Mobile Application (Image: Costco)

Having this particular partnership and promotional opportunity is amazing. But I also want to think number one, how are Volvo and Costco promoting and engaging their own customers on this particular partnership? Number two, how is the Costco shopping experience changed to accommodate this particular partnership?

And then number three, dive into after you get a Volvo, what’s next? Are there any specific Volvo after-sale care, gadgets, or parts that would fit well within a Volvo that is being sold by Costco? That would be something I would think. Customer experience is not just about me wanting to buy a Volvo, but really getting me to think about, Ooh, I need a new car.

Brand Association

Maybe I should think about a Volvo in the first place. Maybe get a test drive at Costco. And if I love it, knowing that I actually get an incentive for buying a Volvo at Costco, maybe that would just push me over the edge and allow me that opportunity to get a vehicle that I wanted, and then afterward maintain that relationship between me as a Costco member and Volvo.

That allows me a full circle moment to enjoy the vehicle and promote that relationship to other Costco members, other Volvo members, or just people in general. If I knew in advance that I can get up to $2,500 to get a Volvo, well, That could change the equation on what type of vehicle I want to get.

Discussion

Larry/DeAnn
What do you think? Are you a Costco member and did you know they sell cars?

I am a Costco member and I know they had this arrangement with Volvo, but I know they always make kind of a rotating arrangement with companies. They sell smart fridges from Samsung, for example, and I bought a very large Japanese maple for an extremely cheap price at Costco.

I’m not surprised when I see something out of the box. But I think to your point, I would love to see a car in the center of their store. Now, I’m sure they wouldn’t wanna give up so much real estate for one product, but even a car stop and make people think.

Loyalty Building

It’s also a great loyalty-building opportunity for Costco. As long As that discount really is impactful and makes members feel like they’re getting a special deal that other people can’t get. That is a solidifier for member loyalty. So yeah, that’s a great, great idea.

If I were Volvo, having a car or a picture of a car, or a piece of a car available in the store, would be so attention-grabbing. I’ll almost try to make it look like it’s on a shelf. That would really be an attention grabber and would really elevate what people think of as opportunities to get good deals on products in a Costco.

Costco’s Entices Shoppers With Great Customer Experience // Executive Membership Card (Image: Costco)

So I agree as well. I think it’s understanding the relationship and as a Costco member, I get emails from them, but I don’t typically see specific deals like this coming at me. Perhaps to some degree, Costco has not built the engagement points with me to ask me what I like, and what I’m looking now for. And so if it knows that I’m looking to buy a car, then it would send me more personalized information about this Volvo promotion, then maybe I would be more interested.

Training And Extending Brand Relationships

I also wonder if Volvo people are trained. They understood that, oh, I have a Costco member coming and that, they get up to $2,500, how can I make this person feel special, and that this relationship is important.

What I don’t like seeing sometimes is having brands working together and I think, oh, what a wonderful and interesting partnership. But then once I get to the other brand, they have never heard of the promotion before. It’s as if I made it up, and I just don’t like that feeling of being told I’m wrong, even if I have the information on the screen and they don’t believe that it’s true.

When brands are considering partnerships, the engagement is not just at your own loyalty program or membership level, but also ensuring that at the other end, the partners that you’re working with fully understand. What the deal is about and have the appropriate training or information sessions to guide potential new customers because you’re now building relationships on top of relationships.

Don’t Ruin The Brand Trust You Built

A referral, if you may, where I trust you and I believe in you. That’s why I’m giving you an opportunity to sell something to me. And you don’t want to burn a bridge just because you didn’t know.

Yeah, I think that. A source of annoyance with a lot of people is when they have a coupon or they have a discount in some fashion and it sends them to another store, another brand, and the employees look at you blankly and have no idea that this existed and are not even sure it’s real.

They haven’t been given the information and that is a dropped ball that’s easily correct. Make sure every employee knows what the affiliations or partnerships are. And it can be as simple as having a list. An employee can access quickly to see which offers are legit and which are not.

Case Study – Eames Chair

On the flip side of that, you had talked before about people not being aware that there are bills for sale or discounts available through Costco. That’s actually points of pride and it’s part of their brand. I used to be skeptical of it. Did you know that there’s a famous Eames chair and footstool, that usually sells anywhere from $6,000 when they had a version of it for sale and it was authenticated by the manufacturer?

It was an official Eames chair and it was for sale for $1,800 for one month. So a few lucky people would be able to buy a $6,000 chair for $1,800, and it was authentic. They do this kind of thing frequently and the idea is to kind of keep things shaken up a little bit. you do not Know what you’re gonna get when you walk into a Costco store.

And it’s a big part of what draws customers back so frequently. That and the dollar 50 hotdog, which is very tasty. But I do think also to your point, Once they’re in the store, it has to be communicated somewhere somehow. The Eames chair was sitting there in an aisle. So you turn a corner, walk up on it and Oh my God, there it is.

And it went viral on social media and they sold out really quickly because they had a very limited supply. It could be the same with the vehicles. There has to be some way of letting people stumble onto it. Realize what it is, understand the impact, and start communicating it out. And then I think they’ll really maximize that experience for the customer and blow that up for Volvo as well.

It’s a balance between predictability and discoverability. Giving the audience the perspective that you are going to have a great time coming to Costco. You are able to discover and explore different items you didn’t think about.

We want you to come into the store, not just to have a direct laser focus on what you need, but also to spend dwell time to discover what is also available that you didn’t anticipate. Costco has been able to find that amazing balance to get you to spend more time there without feeling like, oh, I’m spending way too much time there until it’s too late.

Wrap Up

Yeah. Yes, yes. But they feed you so it’s not, it’s not all bad. Well, I definitely love their hotdogs. one of these days I want to go around the world, go to all the different Costcos and see what type of items they have on the menu beyond hotdogs. Oh, that would be fun. Yes.

On that note, this is another episode of Retail Mashup, the podcast. If you like the podcast, please like, comment, and subscribe, and we’ll talk to you next time.

* We made some modifications to the transcript to improve understandability and flow

Follow this link for more information about the Retail Mashup content platform
Follow this link for more insights
Follow this link for more podcast episodes
Follow this link to participate in regular polls