#9 – Can Sears save its brand, how did Dominos outgrow Google, and has HP’s reputation blown up?
Subscribe: Google Play | iTunes | RSS
One company is rebranding, one faces a reputation crisis, and another is a surprising success story.
Each week, we’ll take a look at the most interesting reputation management stories, answer your questions, and share valuable ORM tactics. In this week’s episode:
- Erin Jones of Social Ink joins me as co-host.
- Sears hopes to save its brand with a new initiative focused on connected technology.
- Dominos has done a fantastic job of rebuilding its reputation. We explain how they did it.
- Why HP can’t afford to have its batteries catching fire.
- Oh, and Steve Harvey is back in the news.
If you have a question you would like us to tackle, please leave a comment below or on my Facebook Page.
Transcript (forgive us for any typos):
Andy Beal: Welcome, welcome. We’re back with another episode. We got a good one this week, lots of cool stuff to talk about, and Erin Jones joins me again this week. Hi Erin.
Erin Jones: Hello, hello.
Andy Beal: How are you?
Erin Jones: I’m doing well. How are you?
Andy Beal: I am doing good. It is a beautiful day here. We got up to about 70 degrees today.
Erin Jones: What? It’s 18 here right now.
Andy Beal: Although Facebook reminded me … It’s like your timeline in history. I looked back through it, and on this day like one year, I was talking about being outside and grilling. Then another year, I was talking about a snowstorm. That’s pretty much what you get in January in North Carolina.
Erin Jones: Yup. Colorado is a lot similar. One thing that made me really sad today, speaking of Facebook timelines, is I think about five or six years ago, we were getting ready to go on a trip to Hawaii. Now we are not doing that this spring, so that bums me out a little bit.
Andy Beal: Well, we won’t get into that, because you know better than anybody that my wife is a Hawaii travel writer and we generally don’t have that problem. We get to go quite often, and everybody hates me for it, so let’s move on quickly before we kind of get into that. You actually have a story for this week about Sears that you’ve been following. Tell us about that.
Erin Jones: I do. I found it really interesting, just with some of the things we’ve been talking about lately about brands staying relevant and keeping up with the times and smart devices. Sears has taken three of its best-known product brands, Kenmore, Craftsman, and DieHard, so appliances, tools, and batteries, and they’re morphing them into a new brand to connect them. They’re going to be calling it KCD, which I’m not sure how I feel about, but anyways, they’re going to be making smart devices through this brand umbrella. I thought it was really interesting, because these brands have been around definitely as long as I can remember, and I know the Sears catalog has been around since branding was a thing. They’re kind of trying to figure out how to keep up with the changing technologies and the changing way that we live. It sounds like they might have a good thing going.
Andy Beal: Yeah. At this point, they’re losing so much money. Sears is projected to lose $2 billion again this year. It almost is like they need to … It’s a 100 and whatever, 30, 150 year old company needs to pivot, because they’re just struggling against online retailers. This is kind of almost, from what I can see, almost a Hail Mary shot, because I don’t know about you, but I don’t think of Sears when I think of smart home and technology like that. I think of Google or Amazon.
Erin Jones: Absolutely. To be honest, I don’t use their website, because I don’t care for it at all. They pull in so many third party sellers that I don’t really know who I’m buying from.
Andy Beal: I think that’s part of the problem with Sears. Now I’m a transplant for those of you that aren’t familiar. I moved to the US from England in 2000, so I didn’t grow up with the Sears brand, but I do appreciate that it’s a historic brand. The problem is I don’t associate Sears with anything other than being historic. I don’t think of them as a technology leader. I don’t think of them as a great, cool, fun place to shop. I just think of them as an outdated department store. Now they have great brands like Kenmore, Craftsman, and DieHard which do have a brand identity. When you hear those names, it conjures up an image in your mind. Maybe I’m wrong, but for Sears itself, I just think, “Oh, it’s a really old catalog company that’s still trying to stay in existence.”
Erin Jones: I completely agree. I know growing up, Kenmore, I always heard my mom and my grandmother and everybody got excited to be able to get Kenmore appliances because of the reliability and the trust. But definitely as a brand, I think that when Sears merged with Kmart, they went more of the way of Kmart than bringing Kmart up to the Sears level as far as reputation goes.
Andy Beal: Mm-hmm (affirmative). I think that maybe for Sears to exist, it needs to … It almost needs to morph into the background, because they were already going to be closing a lot of stores. Kind of almost just be the overarching brand, and then focus on the brands of these individual products and product lines, and make those popular. The KCD, which by the way, it took me more than a couple minutes to realize that was just basically the first letters of Kenmore, Craftsman, and DieHard. I admit that went totally over my head to start with, but the KCD brand, I think it’s a gamble.
Now it could pay off, but they are late to the market. They’ve got this smart assistant which is basically just a shopping thing right now. It looks a little bit like an Amazon Echo, but it’s called Alfie. They’re going to make that even smarter so that it will work with the smart technology products in the KCD brand. They’ve at least got a strategy, but maybe it’s just time to retire or to let the Sears brand just kind of fade away a little bit and close the stores and just focus on the product line brands that they’ve got that continue to remain strong.
Erin Jones: I agree, and I think they’re going to have to be really careful with Alfie here to make sure that they are actually doing what they’re saying they’re going to do and making things easier for consumers, making it easier to troubleshoot and fix appliances when people have a problem, and not use this to push sales, because I feel like if people think this is a sales engine, they’re going to be really put off.
Andy Beal: Yeah. It’s one thing to create a brand and be the new cool kid, but you’ve got to have a product that actually adds value and actually has got some investment behind it. Otherwise, people are not going to use it, like if Amazon just kind of launched the Alexa and then … Oh, I said her name. Hopefully she won’t chime in on the conversation here. If they just launched that and just left her as she was when she was first launched and never invested, never expanded it, didn’t create an API to tap into it, then it wouldn’t have taken off, but that was their bet. They went big with that technology, and Sears has to do the same here. They can’t just kind of throw their hat into the ring and then hope that it’s going to be the answer to all their prayers.
Erin Jones: Right. It does seem like they’re a little bit behind here, so they’re going to have to do it and they’re going to have to do it well. I already have a washing machine that if I call tech support, they can connect to it and get the error codes straight to them. I don’t have to do anything but push a button. It’s already out there. I think if they can capitalize on their history, that they might be able to make it work, because a lot of people do still love those brands. But I think it’s going to be dicey.
Andy Beal: Now let’s move on to a company that has done a really good job of repositioning their brand. I saw a story this week about this tremendous success that Domino’s has had, the pizza chain. Well, it’s not just pizza anymore, and that’s part of their success. They’ve expanded their product line. If you recall back in 2009, 2010, people hated the pizza. The employees were busted doing viral videos where they were tainting the ingredients. Domino’s was just in really bad shape.
They got a new CEO in 2010, and they kind of focused on a couple things. One is they admitted, “Hey, we suck, and you hate us, and we’re listening, and we’re making better pizza now, and we’re, um, inve-, you know, better ingredients and, um, you know, just investing in the stores and training.” They also kind of became … They went down that smart path because they focused on their online efforts. Now I saw a chart that shows that they’ve outgrown Google in the past six years.
Erin Jones: Yeah, I love this story. I love that they went out there and just said, “Hey, we did it wrong. Tell us what you want us to do to make it right, and we’re going to do it,” and that they actually followed up and have made an effort to do that. You can see the results in their share prices.
Andy Beal: I think one of the cool things they did is they took a two-pronged approach here. They didn’t just say, “Hey, we’re going to make better pizza now,” because Papa John’s already makes really good pizza, I think. If they had just come out and said, “Hey, we’re going to make better pizza,” people would have said, “Well, we’ve already got that.” What they did is they actually tried to make themselves the cool pizza company. They were the first to do drone delivery. It was just a gimmick, but they did it. You can order a Domino’s pizza by just sending them the pizza emoji.
They did some cool stuff to appeal to, it’s a little bit overused but, millennials and people that are tech-savvy, and kind of created … They reinvented their brand that, instead of just being Domino’s Pizza that is average, now it’s Domino’s, an experience, a brand that people can get behind and follow. That’s a really key thing when you’re selling something like pizza where you can buy it in the grocery store or you can order Pizza Hut or Papa John’s. Now you’ve got an option that’s actually cool and trendy.
Erin Jones: Right, and they made it easy. They’re appealing to the millennials, but they’re also appealing to people who didn’t grow up with technology. My mom can hop on their website and order a pizza. My six year old loves that you can type a note to your delivery driver and watch the status bar show you your pizza’s being made. They’re putting the cheese on top. Oh, it’s going into a box. They made it a little bit easier and a little bit more fun.
Andy Beal: You think there’s a lesson here also for Chipotle? We talked about Chipotle. Their reputation has been tainted with all the issues they’ve got going on. Do you think there’s a similar pattern that they could follow for reinventing themselves? Because if Domino’s can do it with just pizza, then maybe there’s hope for Chipotle.
Erin Jones: I would love to see them do this. I am a huge fan of people owning up when they make a mistake. The effort of them trying to make right is just … That sells it to me in itself, to know that they care enough what I think that they’re going to try to revamp things. I know it’s about profit in the end, but it’s really nice for them to go out and talk to the community and say, “Hey, we, we blew it. How … Here’s what we’re going to do to make it better. What do you want to see too?” I think Chipotle could learn a lot from that.
Andy Beal: In both of the books, Radically Transparent and Repped, I talk about three words to remember when your company’s facing a crisis. That’s sincerity, transparency, and consistency. If you want to learn from this, then you need to be sincere. You have to own it. You have to apologize and let people know, “Hey, we admit we screwed up, and we let you down.” Then you need to be transparent in terms of here’s what went wrong. Here’s what we’ve identified that needs to be fixed. Earn a little bit of trust that, hey, you’re not just apologizing and sweeping it under the rug.
Then the last thing is that consistency. When you’ve made the mistake and you’ve apologized and explained what happened, you have to then be super consistent in the products or service you provide, but then also in just delivering on whatever promises you’ve made to fix things. Chipotle hasn’t done that yet, but Domino’s certainly has done that. In fact, when I was researching and just kind of going through this story, I almost had forgotten about the viral videos of Domino’s from their 2009-2010 period, because Domino’s had done such a great job of changing that narrative but then also following through to where I can’t really remember any major issues they’ve had in the last few years.
Erin Jones: No, and I do. I think they did a good job. Even if it was an expensive endeavor, saying that their shares went from under $9 a share to over $160.
Andy Beal: Yeah, wow.
Erin Jones: That’s a success story. If people don’t care about the warm, fuzzy part of it, the bottom line definitely went up too.
Andy Beal: Yeah. Sheila and I have been joking about how sometimes social media can just be a case of everybody trying to be friendly. We often say, “Kumbaya, y’all.” It’s like-
Erin Jones: Yes.
Andy Beal: But what does that mean to the bottom line? Domino’s has gone beyond just trying to be friendly and social to actually, hey, this is what really matters if you’re a company and that is improving the bottom line. Those results speak for themselves. If you can make your customers happy, if you could make a great product, if you can build a brand that people want to be part of, then, hey, you’re going to see those kinds of returns. You’re going to see that kind of revenue increase.
Erin Jones: Yeah, and I love seeing that companies are starting to figure out that the kumbaya y’all can lead to profit if they do it well.
Andy Beal: Right. Right. A company that’s not doing it well is HP. They recently announced that they’re recalling 101,000 laptop batteries due to a fire hazard. Now it’s 2017. Battery technology has been around for a long time. You’d think we’d be at the point by now where we didn’t have to worry about batteries blowing up on us.
Erin Jones: Yes, especially with a company like HP. They’re kind of for me right now in the Sears category. They’ve been around forever. They helped build and develop this technology, and now we’re not getting it right?
Andy Beal: Yeah. My theory is, if you think about the battery, even retail, the battery is like a $50 to maybe $80 component. It’s also hidden, right? It’s supposed to just do its job. It’s not a sexy feature compared to screen resolution, memory, chip processor speed, all that kind of stuff. You’ve got companies like HP, and we saw it with Samsung, that are focusing on making things smarter, faster, brighter, more intelligent, because that’s what they can sell, but we’re still using the same old crappy batteries for the last few years. We’ve not solved this problem of them blowing up, because that’s a small component and they can’t really … Nobody ever buys a laptop because, hey, this has got a battery that won’t blow up on you. I never see a commercial with that feature being highlighted.
Erin Jones: It may be soon if these companies can’t get things under control. Although a battery is not sexy, I can tell you, if I have a laptop battery that lasts me six hours, I will tell anyone who will listen about it. Not catching on fire is a big perk to me. None of the sexy features are going to work if the battery’s not doing its job.
Andy Beal: Right. This is an issue that’s with batteries. In Radically Transparent, I interviewed one of the executives at Lenovo. This was 2007, and we were having issues with batteries and affecting reputations back then. We’ve still not learned that lesson, so it’s time for companies to look at the entire product, not just the sexy front-facing features, but look at the entire product and say, “Hey, you know, the, the casing.” Look at Apple with the Antennagate, right? They had issues with just the antenna not working. They’re great phones, but you couldn’t get a signal.
Companies need to look at their product as a whole, and put the same amount of investment into it, because if you have one weak link in the chain, the entire chain’s going to break. If it’s a battery, it’s terminal. It’s not like it’s just a dead pixel. It’s like, hey, the entire product is not going to work unless you spend time investing in the batteries. I think you’re right, Erin. We may actually see, when Samsung finally announces its next phone, it may well be that a big part of that announcement is here’s the investment we put into the batteries, because I think a lot of people are going to ask that question.
Erin Jones: I think so too. I think that part of this could be too, I know technology companies are always trying to get costs down and use less expensive parts. Maybe there’s a point where cheap is too cheap.
Andy Beal: Right.
Erin Jones: This may not be an area to cut corners on. I don’t think HP has been doing wonderful things for their brand for a while now. I think that they do really well on the enterprise side, but the user experience has … I don’t know. I think that this could be a big problem for them.
Andy Beal: I think your point earlier is right. They’re kind of like a Sears. HP again is a brand that I think of as just being a brand that’s been around for a long time. There’s no positive feelings that come with it, like when I think of the Apple brand or when I think of Pepsi or something like that. There is just no cool factor to it. There’s nothing I can resonate with or feel like sharing. When you’ve got a stale brand like that, it’s harder to get through these issues, because your customer base is not going to be as forgiving.
When Apple has a problem with one of its products, all the Apple fanboys and all the fans, and me myself included, we kind of tend to be a little bit more forgiving because we really love our Apple products. We want to be brand evangelists for them, and we’re willing to let this slide. But when you’ve got a company like HP where probably a vast majority of their sales is just some executive that puts in a bulk order with CDW and people are just like, “Here. Here’s your HP laptop. It will get the job done,” but I don’t think anybody feels like it’s a great day when corporate hands them their new HP laptop.
Erin Jones: No. I think part of having the fanboys behind you is they encourage other people to wait a second and give the brand a chance and give it another shot, where HP’s kind of an island right now. I don’t hear a lot of people shouting from the rooftops, “They’re going to take care of it. It’s going to be great.” It’s kind of like, “Oh. That’s too bad.”
Andy Beal: HP makes it on to the reputation roadkill list for 2017. Still on that list is our Mr. Steve Harvey. We don’t have time to go into the story. We’ll put it on the show notes, but he’s being sued for comments that he has made. Check that out. We were hoping that he would just lay low and stay out of the media, but that’s back. We’ll put that on the show notes. If you have any questions about reputation management, any stories that you see you’d like us to cover, then head over to our Facebook page which is Facebook.com/AndyBealORM, or go to andybeal.com. Find the latest episode and just leave a comment there. We’ll be happy to answer any questions we have about your reputation or the reputation for your friend. We’ll be back next week. Erin, I hope you’ll be able to join me again next week.
Erin Jones: Absolutely.
Andy Beal: Thank you for joining me this week as always.
Erin Jones: Thank you so much for having me.
Andy Beal: All right, guys. Thank you for listening. We hope you’ll join us next week. Bye bye.