Here is an interesting read. There is a moral to this story...read to find it out!
Lois Geller, Contributor
There’s a J.C. Penney Store in the Aventura Mall, not far from where I live. I often walk through it to get into the mall and occasionally stop to buy a workout t-shirt or a hoodie jacket.
The store was usually busy and I often had to stand on line behind a half dozen women.
I hadn’t been in a Penney’s for a while when a friend came to visit on a rainy weekend in February. He needed a raincoat, so, somewhere north of here, we stopped at a mall and there was a J.C. Penney store.
When we walked in, I thought we were in the wrong store. The place was trendy and light with brand name merchandise nicely featured. No people, though. No raincoats, either. On to Target.
A couple of years ago, I posted a newsy item in my Catalog Marketing Groupabout Bill Ackman getting the J.C. Penney board to approve the hiring of Ron Johnson, the man responsible for the wildly successfulApple Stores. At the time, it occurred to me that the move was like hiring Warren Buffett to run a chain of Dollar stores.
Johnson hired a bunch of execs who actually commuted by corporate jets from the coasts to JCP’sTexas HQ. Johnson said he was going to reinvent the whole department store concept. He immediately ditched the good old couponing and on-sale strategy, and replaced it “fair and square” pricing. Again, it reminded me of something. In this case it sounded a lot like the no- haggling nonsense car dealers tried a few years ago.
As a direct marketer, I was aghast!
We test everything before we roll it out. We even test pennies. Is $19.97 better than $19.98? Let’s find out. Test, Test, Test.
I watched the unfolding saga with interest. The Aventura store continued to look nice but it also looked like it was five minutes before opening:staff, merchandise but no customers.
According to an article in the always interesting business section of The New York Post, one of Johnson’s minions had dared to ask the jet-setting honcho if it might be a good idea to test the new idea.
“We didn’t test at Apple,” he apparently replied.
The stock, JCP, plummeted. On April 27, 2012, it was $36.89. On April 10, 2013, it was $13.55.
He didn’t test at J.C. Penney, either. Just changed the whole strategy, alienated loyal customers and emptied the stores out. Of all the ideas, the only one that’s truly dumb is not testing big concepts.
A direct marketer might have counseled “Get some real world feedback. Test in a statistically valid number of stores in a few regions, say Pennsylvania, Alabama, Iowa and Oregon.” That basic idea might have saved JCP shareholders about $20 a share.
Perhaps Johnson’s oddest thinking that what works in one retail environment (Apple) would work in an entirely different one (JCP).
When we test, we test lists, offer, creative, and media.
Years ago, I tested Better Homes and Gardens recipe books with different offers. One worked very well. Let’s try it on the decorating series. Ooops, didn’t work. But another offer did. Test.
I learned years ago to test one thing at a time.So in direct marketing, we test the Offer, or the Lists, or Creative, all in separate test cells, so we know exactly what performs best. Then we pick the best performer in each category and put them all together in a Control Package and test that.
We always continue to use the control, until we beat it. Sometimes a tiny change can make a huge difference, and sometimes a whole new approach also works. But we always test small, and roll out cautiously. People’s jobs and investments are at stake.
I do wish J.C. Penney had tested all kinds of great approaches in different regions. I wish they had called in a results-driven direct marketer. I wish they’d called me. I would have saved them so much money, and resources, and kept the value of their stock.
Well, now Ron Johnson is gone, and I’ll wait by the phone.
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Written by Bruce MacDonald, a 30 year veteran of the Agri-food industry, in "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain", Bruce applies his background and expertise in Agri-foods and social media to the latest trends, tools and methodologies needed to craft a successful on-line campaign. While the book focuses on the Agri-food market specifically, I believe that many of the points Bruce makes are equally applicable to most other industries.
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