Shopper Culture

Banks as stores

Walking along East 49th Street in New York these days you come across a fairly new retail concept from ING Direct Bank. A hybrid bank branch, coffee shop, meeting place.

According to the guys in this store, the bank now has 5 such outlets that combine a coffee shop within the bank environment.

While that concept is nothing new (Abbey in the UK has had Costa Coffee shops in it’s branches for sometime) it struck us as interesting for two reasons:

1) Because it is from a direct banking brand, which by previous definitions meant not having a retail presence.

2) For the staff and the environment.  The staff call themselves bankaristas, and they were what you would expect from a high end coffee shop.  Not necessarily what you would expect from a bank.  They can sell you a latte and a loan, a shot of espresso and a savings account. They were bright, energetic, clearly having fun and very engaging. 

From a link at the American Library Association (ALA), we found a post and overview of a similar store near their headquarters in Chicago.  In the Chicago store you can find:

- Full coffee/espresso drink menu, a decent variety of pastries, prepackaged sandwiches, and juices, all at low prices
- Staff equally trained in pulling espresso and helping you with your on-line banking
- A seminar room that’s free for public use (by reservation) when not occupied by the occasional ING presentation
- Free wireless
- 10 terminals
- Free newspapers and financial magazines for use on site
- 6 flat-screen TVs (all on CNN, all muted)
- Branded merchandise (duffel bags, computer bags, portfolios, travel mugs, etc.) and a few financial tools (books, mechanical savings bank for kids) for sale
- Strong return visit incentive: buy four coffee drinks and the fifth is free

One of the points the ALA makes is that the store could be mistaken for a library (and we're big fans of library's here at Integer)

The guys in NY we spoke to let on that their store is doing very well in attracting new deposits and bank business was brisk.  You could see why.  It was inviting, welcoming and useful from a shopper point of view.  If I lived in NY and were I to be shopping around for a savings account I’d have opened one there and then. I will also be telling everyone about it simply because it is cool.

In addition to the space as a coffee shop, meeting place, bank, they were also retailing ING branded merchandise (much of it linked to their F1 sponsorship).  This was discretely merchandised and a nice additional use of the retail space. 

They’re also using promotions to good effect  As well as the five for four given in the Chicago store, when you make a deposit into your savings account you receive a free brew of your choice.  Great use of incentives to keep you coming back regularly and maintaining good financial habits. And the place was buzzing. 

We thought it was a nice disruption in the category that provides real value to customers and shoppers alike in the urban environment.

What will the next such innovation in the category be? 

Will we see more embracing of cross-over retail environments from this category? 

Who will be first to really capitalize on the retail footprint of a bank network and converge the offering with something of equal or greater value to shoppers? Or apply other retail principles?

And do you see this going on anywhere else in the world?

 

Conventional wisdom and coupons

I found this piece the other day on busting some conventional thinking in the world of coupons. It is based on an analysis of redemption trends that ICOM has undertaken on their rather large, 20 year old redemption database.

The analysis is based on the redemption of coupons issued in direct mail rather than any other medium. The base for analysis was over 6,300 DM programs that have been undertaken and the 425 million coupons they have issued in the US and Canada.

The myths as they tell it are:

Myth #1: Short-term expirations drive immediate sales.
Finding: Consumers need more time. A short expiry often cuts redemption far more than any increase in value can make up.

Myth #2: Higher value always equals higher redemption.
Finding: Value alone isn’t enough. Maximum redemption comes from an optimal value-expiration swet spot.

Myth #3: Store brand users aren’t worth pursuing with target coupon offers.
Finding: As store brands upgrade their quality, fewer store brand consumers will be price-centric and more will be quality and feature conscious. They’ll often redeem targeted offers at rates as high as other competitive users.

Myth #4: Targeting the most loyal users of a competitor’s product yields the best return on a coupon program.
Finding: Light to moderately loyal competitive users are more likely to try a new product and will do so on a lower-value coupon offer.

Myth #5: The presence of a sample is a requisite for driving high redemption rates.
Finding: There are other factors much more likely to drive redemption rates. Some of those include expiration, value, current vs. competitive user, and frequent vs. infrequent coupon user.

Myth #6: The current users of a product don’t need long expirations to get them to redeem a coupon offer.
Finding: Even for current users, to gain more than two-thirds of potential redemptions, offers must be six months at minimum, and in the 10-12 month range for personal care categories like skin and beauty products.

Myth #7: Coupon clutter is pervasive in all delivery strategies.
Finding: Escalated volume is not a factor in targeted coupons mailed directly to homes. Notably, targeted promotion redemption rates are up in this sector for household products and pet products.

Myth #8: Coupon offers on frequently purchased items are redeemed quickly, so an expiration of less than six months will do.
Finding: Targeted offers with expirations shorter than six months in general have only half as many redemptions as longer term offers.

Myth #9: Current and competitive product users need the same coupon value to be motivated.
Finding: In any product sector, current users typically require much less offer value to drive them to purchase. Sectors vary, but it often takes 40% less value to move a current user than a competitive user.

Myth #10: Americans and Canadians share the same coupon redemption behavior.
Finding: There are shared traits, but the difference in absolute redemption rate is substantial. Americans receive 10 times more mail than Canadians and are less likely to respond to offers. Canadians favor contemplation over quick action and require longer expiration terms. The net result: the decline in overall coupon redemption rates is steeper in the United States.

I think most of these are probably intuitive, but some are interesting. Particulalry the difference across the boarder.

This kind of analysis, based on actual bevhaiour, is incredibly useful and another example of the need for longitudinal approaches. Understanding the impact of time, for example, on the rate of redemption is powerrful from a campaign plannig perspective and the strategy you use for your coupons. Being able to understand the time/value trade off makes for some interesting potential changes to strategy.