The real health of the Tesco brand

Dave Lewis, Tesco chief executive

 

We saw recently that Tesco announced a quite staggering £6.4bn loss on trading. A huge headline figure, but in reality a total myth to allow the business the time and money to restructure.

The loss was caused by £7bn of one off write downs including a property write down of £4.7bn. Now, I’m no accountant, but if my maths are anywhere near right, this will meant they can reclaim at least £1.4bn in tax on their profits they paid last year and maybe claw some back from previous years too. So rather than lose £6.4bn, they have actually made £2bn in actual cash profit in the last 12 months. With me so far?

On the day that Tesco made the announcement, their share price fell by 5% to 223p. But in reality it had been at a low of only 150p during that same year and it is a huge growth in actual value over the same period. It’s at around 216p today. Hardly the sign of a business in crisis in the eyes of the market.

The disparity in their profit is far stranger when you consider how they got away with such a HUGE property write down when Helical Bar, the (mainly) London based Property Developer announced yesterday that their portfolio had increased in value by 27% in the previous 12 months?

Each of the other supermarkets seems to have followed suit with huge portfolio write downs, which only goes to confirm that it is another corrupt accounting practice each of them is employing to claw back tax.

Jack Welch, the former GE CEO said in a famous interview that with bad news, you have to get it all out fast, as it’s going to come out anyway. This feels to me what Tesco have done. They have painted a picture that is even worse than reality to shock the expectations lower.

This will give them the time, money and opportunity to take stock and rebuild the brand by putting in front line staff. They need to rebuild relationships with suppliers and build trust with customers. They need to listen, adapt and listen some more. And then they need to action their ideas fast, before the market moves again.

The Tesco brand is not dead, it’s just sleeping. It’ll be back and hopefully with a little more grace and a desire to please customers rather than only focus on the profit.

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Real engagement for brands is more than just online engagement

I saw this video today by Gary Turk and shared it on Facebook on my personal account. Without any form of promotion, today it has been shared 40 times which is exceptional. If you watch the video it talks about real engagement.

Brand engagement is about more than just likes and shares on facebook Johnny Lyle
Brand engagement is about more than just likes and shares on Facebook

As a brand and social media specialist who shows real brands how to treat their customers and behave online, it is a very, very timely reminder that real engagement is about far more than likes, shares and a few extra follows. You have to be brilliant offline to allow people to get you online.

Real engagement is about getting inside people’s heads. It’s about becoming part of their lives, so they can’t live without you. It’s about building proper relationships where you give things as well as just take them.

Real engagement is real life and that’s what Gary’s film shows us.

Virgin are still living their brand

Virgin Trains Vs East Midlands Trains

I was in London for a very early meeting last week and chose to travel out of Grantham on the East Coast mainline that is now operated by Virgin trains. It was always a quick route, normally cheaper than East Midlands Trains and in my experience anyway, dead reliable.

I have always have had high expectations of Virgin and their brand. They promise a lot with their values, so they have a lot to live up to.

And they didn’t just live up to them, they completely exceeded them. Perfect service, genuinely chatty, friendly staff and a great choice of breakfast options delivered to your table at no extra cost. (my bacon sarnie was lovely thanks) and free wifi that was fast enough to be usable for work.

On the way home later, they added a choice of hot meals or a selection of (very tasty) sandwiches and wine or beer and teas and coffees, again all included in the price. It just feels like they are being generous in every respect, even though the actual cost must be tiny, the perceived value and the warmth this drives towards the brand is massive.

Today i’m back on the slightly more expensive and slower East Midlands Train to Nottingham. Full priced menu, wifi that doesn’t work properly (It’s so slow that I can’t even load Speedtest.net to test how bad it is). The staff are still very friendly and I did get a glass of wine on the way home, so overall, i’m not particularly inspired to travel on this route again. It’s Grantham and Virgin for me.

So this proves that you can drive your brand values right through to your service standards and you can keep delivering them over and over again and find new ways to win over and delight your customers.

Thanks Sir Richard.

Why I won’t be buying an Apple Watch

This is why you don't need an Apple Watch - The DeTomaso Matera Automatic watch

I am a big fan of Apple. I have been forever and at 49 years old, one of my claims to fame is that I have never owned a PC of any description. I had a few Nokia phones in the early days but that’s about it. I have been Apple through and through since around 1989.

But I won’t be joining the masses in buying the rather overpriced Apple Watch. I simply can’t see the point. It alerts you to what your phone is doing in your pocket and you’ll look like a dick if you talk to it (who really uses Siri other than to make it tell you jokes?). You’ll very quickly give up checking all of the notifications as they are so frequent anyway with five email and even more social media accounts on my phone. What’s compounds the misery is that being on Bluetooth all day will only make the battery life even more useless again. It’s bad enough having to charge my iPhone twice a day, but my watch too?

No, sorry Apple. This is a step too far for me. It’s not making my life easier. I’ll stick with my simple mechanical watch that tells the time. It doesn’t try and multi-task or be my personal assistant and it manages to wind itself just by being on my wrist. No batteries, reliable as you like and it glows in the dark so I can read it at night.

Thanks Apple, but no thanks.

What’s best for Top Gear, The BBC and Clarkson

Top-Gear-logo

There’s been lots of talk about Jeremy Clarkson and his behaviour, but this post is about the Top Gear brand itself and BBC’s ownership.

Back in 2009 Andy Wilman, Executive Producer, Clarkson’s mate and Old Reptonian school chum said he thought the series was nearer the beginning than the end. He also said that the three presenters were playing to their cartoon characters a bit too much. So the end of the series and the current format in the UK is hardly a surprise. I stopped watching in around 2011, when it became totally formulaic. 22 years with little change is just too much for any brand let alone a TV format. Madonna has had at least four reinventions in the same period and a bit of a slip at the Brits to keep her front of mind.

So the BBC have a decision to make. Start the next series with a new lead presenter and the other two presenters, or reinvent the whole thing?

For me, they have to let the current series and the current format die. Let Clarkson walk away and give the chance for the brand in the UK to regenerate. Clarkson no longer has any form of ownership as he sold his shareholding back to the BBC in 2012, he hardly needs the money anyway, and we all need a break from him and his cronies.

It’s the TV version of crop rotation. Let the brand lie fallow for a few years to find a new format again and spring back brighter than ever, having been created for a new audience.

For the BBC, their income is reasonably secure as the brand is already licensed to the US, Australia, Russia and Korea and there are plenty of licensed spin-offs generating income. I’m sure the repeats will grace our screens for many years to come. But if they keep flogging the current format, like the Golden Goose, it will whither and die anyway.

Go on BBC, do us a favour. Come out and confidently tell us that you are resting the brand and will recommission it in the future with a new format. I believe it’s the only way Top Gear can regain any credibility and build an appeal to a new, younger audience. After all, the car market is not the same as 22 years ago and it’ll certainly be very different in another 22 years. So take the chance to create something new and every bit as fresh as this used to be.

There’s nothing wrong with Google Glass, but they defined their audience wrongly

Google Glass courtesy of Fast Company
Google Glass courtesy of Fast Company

One of the most important elements of creating a brand is deciding who your audience is. Most of us think we know intuitively. And yet for me, really putting the work in here is often overlooked. The more you understand the needs, thoughts, desires and motivations of your REAL audience, the more fully you can wrap the brand around them. You create something they need before they realise they need it, rather than reacting to others.

So, in the last few weeks, Google have just admitted with Google Glass that they got this audience definition completely wrong at launch. It was aimed at techies and geeks. All of us have probably laughed at someone at a trade show talking to their glasses whilst recording everything they see?

So whilst there has been some celebration in it being scrapped as it has been unpopular with consumers for reasons of privacy invasion, its real use was in a professional environment.

With the need for medical staff to both protect themselves from litigation and bring in external help when they need it, Glass is perfect. It allows a paramedic at a scene to call upon external expertise in an instant. Who would laugh at that? And it also allows a doctor to record every part of a procedure and log it with a patient’s records, in case anything goes wrong, or more positively if anything unexpectedly goes right and they can refer back as to why.

So, good on Google for admitting their mistake and repositioning. It’s not often a product that was given such a big launch and failed is given a second chance. In the longer term, I can see this, or its derivative, becoming standard headwear for anyone who has to deal with the general public.

 

Abercrombie and Fitch is Rethinking its Brand

Mike Jeffries A&F Messed up his own company - Couldn't have happened to a nicer bloke

Mike Jeffries A&F Messed up his own company – Couldn’t have happened to a nicer bloke

I love an article like this. Total Customer are reporting that Abercrombie & Fitch are having to remove their branding from their branded products, because it has become a turn-off for customers.

Last year, I wrote a post about their CEO Mike Jeffries treating their potential customers with huge disrespect, so I have to say whilst I’m laughing at their misfortune, I’m also reminding myself that you simply cannot ridicule your own customers.

Seven quarterly losses in a row tell quite how bad it is for them. This will eventually kill the brand, just like it did for Gerald Ratner.

Oops.

The risks in Social Media – Direct Line style

It’s easy to be lulled into a false sense of security with social media.

We’ve lured a world famous actor to come and be our ‘face’ and recreate the look of Pulp Fiction’s Winston Wolfe.

We’ve produced a great series of TV ads with our new character ‘Mr Wolf’. They are genuinely different ads for the space in which Direct Line operate.

And then they throw it to the real wolves by using sponsored posts all over Facebook and their existing customers get hold of it.

Direct Line Harvey Keitel Mr Wolf. Social Media is more difficult to handle than you think

 

 

 

 

 

 

 

 

 

 

 

 

There are have been 224 comments in the first 14 hours and as far as I can see, every single one of them retells a story of how they have been badly treated by Direct Line or commenting on Harvey Keitel’s decision to work in the insurance market.

For me, this can be nothing but bad for the Direct Line brand. Assuming most people have 250 friends on Facebook, these negative comments have already been seen by at least 50,000 people with a negative endorsement. If you add the 223 shares, this problem could be much worse than it first looks.

Compare this to the number of views on YouTube (only 3,573 after eight days) and you can see that the negative power has been at least FIFTEEN times more effective at reaching people. It may have gone viral, but hardly the type of viral they were hoping for.

One week on and only 3,573 views for the Harvey Keitel ad on YouTube for Direct Line
One week on and only 3,573 views for the Harvey Keitel ad on YouTube for Direct Line

Social media is both friend and foe. If you open yourself up to comments and feedback on such a public platform you need to be 100% sure you can cope with the responses. The old adage of ‘never asking a question you don’t already know the answer to’ may have been a prudent way of thinking before they ran this campaign.

I suspect a few people in the team at Saatchi (who produced the campaign) will be getting an ear bashing for their decision to try and amplify the positive effect of their advertising spend by engaging with Facebook and REAL customers.

 

The truth about Paypal – Can you really trust them?

We all love Paypal don’t we? They are friendly, quirky, simple and make all of our lives easier. The ad says so.

Or so they claim.

As a seller they have a brilliant seller protection programme, that protects you from chargebacks. So far so good.Paypal Seller protection Programme

But it happened to me on my data business that I recently sold. A person in the US paid £799 for a copy of my full business database, added all of the checks and balances required to pay with a credit card online. My system sent them the email with the download code and they duly downloaded it – even to the area of the city the card was registered in.

And two hours later they started a claim for a chargeback.

It’s okay i’m protected by Paypal’s first class cheeky, chirpy seller protection programme aren’t I?

But no. I’m not. Because I didn’t POST them a disk with the data on it.

So Paypal, a business that has grown entirely to serve the digital economy in which we trade, does not protect sales of items that can be paid for and transferred digitally.

It’s all clearly explained in paragraph 11.6 on page 12 of their 31 page terms and conditions that we’ve all read. Right?

Paypal Seller protection is worthless shit

 

How can they get away with it?

Well, apparently as the goods I sold weren’t ‘tangible’ they had no value.

Any brand that has a truth which is that far from a users reality will soon get found out. It’s an untrustworthy, rotten way to do business.

So be warned. If you are selling a service, a download a digital file or anything that won’t go in a good old fashioned letter box, then maybe Paypal isn’t for you. I’m not using them for my next business, I think i’ll give Sage Pay a try instead.

 

Speaking at Blooloop Live

This was a little talk that my good friend Simon Egan and myself delivered at Blooloop Live – the best Industry event for themed attractions across the world. Whilst there is a bit of messing about in it, there’s lots of sensible points hidden in there too.