They created a promotion intended to change behaviour, and then were surprised when behaviour changed. It reminded me of the infamous Hoover debacle of the 1990s, which nearly bankrupted them. People don’t buy vacuum cleaners often, and Hoover’s stock was piling up. So they came up with a cunning plan: you could claim two free return flights when you buy one of their products. The terms and conditions were supposed to make it hard to redeem, and to generate some income to cover the costs. Lots of consumer promotions are never redeemed.  Big brands can print 50p money-off coupons on boxes of cornflakes or laundry detergent knowing most of them will end up in the recycling. But maybe the data relating to 50p coupons can’t be extrapolated to flights worth hundreds of pounds. It generated the kind of market stimulus central banks dream of: vacuum cleaner sales went through the roof. Rapidly followed by a glut of as-new Hoovers on the 1990s equivalent of ebay.

Both these companies estimated promotional uptake based on past behaviour. Reasonable, but insufficient. This is the sort of “black swan” that Nicholas Nassim Taleb advises companies to consider when they do their risk analysis. It’s not the small effects that matter. It’s the unlikely but huge ones that do the damage.

There’s a parallel here with covid modelling, though that has more positive results (no pun intended). Every time SAGE or alt-SAGE or whoever announces the latest scary extrapolation, some people change their behaviour. For every rebel who responds by going out more, or claims they do, there’ll be more who become more cautious. The modelling is instantly rendered wrong by voluntary behaviour change. The modellers are, in due course, ridiculed for their doomsday predictions. But what a marketing success: to get significant behaviour change without spending any money or political capital. The price is of course the modellers’ reputations, and the resulting public cynicism about their pronouncements, which weakens the public response over time. Tracking attitudes and claimed behaviour, as well as actual behaviour, helps to reveal the voluntary change and offset the cynicism.

So what’s next for Pret? So far they are sticking with their subscription, though their denials that there’s a problem will not wash with their most loyal customers, whose experience tells them otherwise. It’s time they fronted up. Dealing with reality is surely the most basic of business requirements. Painting a falsely-rosy picture to the media may be tempting, but no one can expect to do it to customers and get away with it.

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How does this happen? It’s easy to be wise in hindsight. Let’s look at the advertising development process to see where it may have gone off the rails, and where it should have been stopped.

The brief from the client at John Lewis to the ad agency was probably ok. Let’s make another lovely ad like Tiny Dancer (in which no damage occurs).

The agency team worked up ideas, turned them into scripts, pitched them to the client, until they found one they agreed on. At this stage, was it clear that the core idea, the ultimate peace of mind that accidental damage cover gives, was not a core benefit of John Lewis home insurance? That’s ok if it’s going to be made crystal clear it’s an add-on.

My guess is that things first went wrong either at script stage, or in pre-production. They got carried away virtue-signalling. Instead of making an ad focused on the brief, they really went to town on the freedom of self-expression. It’s a bit of a leap from accidental damage cover to the ultimate in enlightened parenting, but that’s where they pitched their tent. Hence the mother idly watching while the boy trashes the place. He’s just expressing himself. The laundry brand Persil has a version of this, in a long-running campaign called Dirt is Good. But it’s tightly bound to the product benefit. Play is healthy and developmental, so let the kids play, knowing Persil will help you wash their clothes clean.

The John Lewis idea was similar, but either at script stage or in the boundary-pushing hands of the director, it wandered way beyond letting a child express themselves. It became a demonstration of wanton destruction of other people’s stuff, held together in a camp display that no nine year old has ever performed without adult direction. Little boys do dress up and act as Mummy but unless Mummy does drag or has a serious problem with alcohol it doesn’t look like this.

Then in post-production, they went full Desmond Is Amazing. Post-production is when the raw material is edited, and the music is chosen. That shot of the boy pouting into the camera was dubious. “Edge of Seventeen” left no room for doubt. At that stage, the clients, or the agency account team, should have been saying, is this a bit too sexualised? Is that really reflecting John Lewis values? Eventually the finished ad was signed off as ready to go on air. That also involves multiple people. Always there is a legal or compliance person, who should have said, this misrepresents the product. That’s the official reason the ad’s been pulled. But not before a lot of classic John Lewis target market, middle England, women complained about how inappropriate it was to show a prepubescent boy like this, and to cast his sister and mother in utterly passive roles while he deliberately harms their stuff. Mumsnetters had plenty to say about this. But mostly, John Lewis, we’re just very disappointed in you.

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The BBC reported the case of a fish and chip shop which had offered a click and collect service for years to get people to pre-order, with limited success. Customers just kept rocking up and joining the queue. When reopening after lockdown was allowed, counter service was off the menu. Everyone had to order online, for collection or delivery. Although forced into it, people seemed quite content. Pre-ordering meant no queuing, and the timed pick-up meant they could know exactly when they’d be home with their dinner. Why didn’t they try this before? No particular reason. They just didn’t need to.

Public transport strikes can have the same effect. People are forced to find alternatives to their regular commute. It’s been reported that a decent minority, maybe one in five, discover a better route which they stick with when the strike is over. Why didn’t they try this sooner (they may ask themselves)? No reason.

Habits are convenient and easy. We don’t waste brain effort in making choices every time. We also don’t engage in solving problems we haven’t seen. An acceptable food-ordering process, a reasonable commute, don’t need improving. People generally seek easy, frictionless processes. Innovation often focuses on making good things better. But if something is good enough, we may be unwilling to invest any effort at all in changing to a new way of doing things. We may not even notice. I would guess that lots of those chip shop customers hadn’t even looked at the website and certainly hadn’t weighed up the pros and cons of pre-ordering. It was the chip shop that wanted people to change their approach.

Businesses can persuade customers to adjust in ways that are mutually beneficial, but it may require a different starting point, one that lets you see what’s in it for the customer. It can also be fruitful to look for things that aren’t quite right, and remove the obstacles. That’s why customer dissatisfaction can be a better stimulus to innovation, especially process improvement, than the more celebrated customer satisfaction. Good scores are nice, but they aren’t always that useful.

Of course, legislation can force behaviour change. On 24 July, after months of fence-sitting about whether wearing a face-covering is beneficial in the drive to reduce the spread of Covid-19, it became compulsory to wear one in shops in England. In Scotland it’s been mandatory since 10 July.

The government’s desired outcome is that people will once again go shopping and spend money, for the sake of the economy. So the critical question is, Would wearing a mask make people more likely to go shopping?

In a large-scale survey I saw reported (which I can’t now find), 51% said it would make no difference. 25% said they were more likely to go shopping now that masks are compulsory in shops while 20% said they were less likely to go. A government minister might be encouraged by that. I read it differently. The 51% is the key number. Half of us believe we will not change our behaviour because of mask rules. That tells me there is a big communication task ahead for anyone trying to re-energise high street retail. To solve that problem, they will have to understand what’s stopping us. That 51% includes people who are already doing all the shopping they want, no stimulus needed. But it must be mostly people who aren’t going shopping much, since retail footfall is still well down on its pre-pandemic levels. Still we don’t know what problem to solve. Maybe people are still worried about the virus, and don’t feel masks will make enough difference. But maybe also they’ve discovered just how much you can do online. Maybe they’ve realised that going for a walk can be as enjoyable as a trip to the shopping mall. In either case, they may never return to their pre-Covid shopping habits. Businesses will have to adapt. To do that, they’ll have to dig deeper, to find sources of dissatisfaction they can solve for people, or to find new offerings that are good enough to get our attention and consideration.

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Waitrose had to take action to reclaim the offer for genuine customers, and to cut down footfall that was only cluttering up stores. They declared that you could only have one drink a day, and had to show your loyalty card in order to pick up a cup from the customer service desk.

Roll forward to 2018, and everyone’s feeling bad about single-use plastic and packaging waste. Now the problem is the 1m cups being handed out every week. Another rule change. You can still have your free hot drink but you have to bring your own cup.

That will have cut down both spurious visitors and overall use of the machines. But at a price in management time and customer goodwill. Every change has to be worked through, communicated to stores, implemented and supervised. Disgruntled customers have to be advised that “we don?t do that any more” – or worse, “you can’t have that any more”. This one bright idea has generated at least two subsequent rounds of bad news to be dispensed by email and by unfortunate “partners” instore.

One wonders how this came to be top of their list of ways to reward customers in the first place. Who chooses a grocery store based on getting a free hot drink? Indeed, who wants coffee with their shopping trolley? (There’s nowhere to sit.) If you think about what Waitrose stands for, this feels dissonant and always did. Yes it offers some value, perhaps countering perceptions of being expensive. But value that is peripheral to the core isn’t worth much. If it were, taking it away would be a lot harder.

Three take-aways for brands

1. Prioritise the things your business does which matter most to customers. Paradoxically, we tend not to notice when brands get it right, as Waitrose usually does. It’s more important to deliver the basics well, and consistently, than to offer flashy add-ons. It’s usually harder, though, as it is enterprise-wide, whereas promotions can be dreamed up and delivered from the marketing department. But when the add-on becomes more valuable than the core, trouble follows. Ask Hoover.
2. Check the fit between brand and promotion. Waitrose’s free hot drinks stood out in part because even having an extrinsic rewards scheme feels anomalous for them. Businesses have to keep pace with market expectations, like rewarding loyalty. They don’t have to offer loyalty schemes. Laddering up to higher-order benefits will help identify brand-appropriate ways to deliver rewards. Priority booking is a big draw for arts memberships, yet costs theatres and galleries nothing.
3. Offer added value in ways that are accessible to customers only. Avoid instant rewards, unless linked to spend. Waitrose’s free newspapers are linked to a minimum spend instore, so have never had the profile or the problems of the hot drinks offer. Most retail loyalty schemes, like Boots Advantage or Waterstones plus, offer points that take time to accumulate to a worthwhile level. They’re of dubious value to occasional customers, but they capture share of wallet, and prompt discretionary spend.

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Brands should be used sparingly. They are meaningless unless communicated and supported, and that’s expensive to do. The rationale should be external not internal – necessary for the customer, rather than because the business thinks it can benefit. Creating brands may seem like a smart way to justify different prices, or to signal customisation to a different target market. But if the prospective customer has to work to decode the brands, they’re a hindrance to purchase, not a help. If that decoding reveals that the difference is superficial – or a cover for no meaningful difference at all – the customer is unlikely to be impressed.

Who does this well? The world of fashion, being all about image and branding, uses diffusion lines, or sub-brands, to extend to lower price points without diluting the original. Armani Collezione, Emporio Armani and Armani Exchange are clearly not real Italian high fashion, but real enough to someone who can’t afford Armani black. The prices and the very different retail environments reinforce each other so there’s no chance of confusion. Unlike Tesco, parent Armani is comfortable being the expensive one.

Levi’s is at it too, but it’s confusing. Levi’s used to be simple. Now, even classic Levi’s come in dozens of finishes and colours. The website is a perfect illustration of the paradox of choice. Nothing so mundane as Dark Blue, and to my eye Tumbled Rigid and Yokohama Nights look so similar.

Then there are the multiple brands. I know what Levi Strauss is, but Wellthread, Outerknown and Supima? Yes, all on the same jeans. Diligent research will reveal that Wellthread is the name Levi’s have given to their sustainability initiatives, some of which have their own names too, like Levi’s “Water<Less” fabric. By naming it, however, they create a barrier. Tell me you are adopting good working practices, and I might register the fact. But what is this extra label attached to my jeans? I don’t know and I probably don’t care.

Brands are supposed to simplify choice, by making clear what you can expect. If the brand proposition also guides internal decision-making, expectations will be met and customers will be satisfied. That usually enables a branded product to command a price premium. But it doesn’t work the other way round: branding a thing doesn’t automatically make it worth paying more for. Levi’s are still Levi’s. Tesco is still Tesco. And Jack’s? So far, that’s nothing much.

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Paperchase is a mass market purveyor of stationery and tat. The Daily Mail is a mass market purveyor of news and tittle-tattle. Seems like a pretty good fit to me. The Daily Mail is read by three million people a day. That’s a lot of people who could be popping into one of Paperchase’s 130 stores in the UK to pick up their free gift wrap. Yet Paperchase has now effectively said, we don’t like you if you’re a Daily Mail reader.

The row was orchestrated by a campaign group called Stop Funding Hate, which exists to “change the media” by taking on “the divisive hate campaigns of the Sun, Daily Mail & Daily Express”. Full marks to them for a crystal-clear proposition. It’s foolish of Paperchase to respond as if their customers are synonymous with this campaign group. This is totally different from advertisers pulling campaigns from Google and YouTube where there was no control over what sort of material might appear alongside their ads. Like it or loathe it, the Daily Mail is nothing if not predictable, which is excellent for its own brand value and for advertisers. If a tie-up with the Daily Mail seemed like a good idea beforehand, it probably still is.

If a brand has no standards or values by which to screen its plans in advance, it must live in fear of doing the “wrong” thing and being criticised by the Twitter mob. But criticism per se is not a problem. Brands should care about the company they keep – that includes where they advertise, what issues matter to them, and also what they choose to ignore. Brands have to decide what they stand for, and build it in to their activity in advance. Then they can, and should, stand their ground when someone else tries to lean on them for their own ends.

Campaign groups have always tried to throw their weight around. Twitter lets some punch above their weight. It can seem like a lot of people feel very strongly about an issue. Brands that panic, and seem to cave easily to such single-issue groups, may relieve short term pressure but they won’t earn respect. Most Daily Mail readers won’t boycott Paperchase, any more than Daily Mail-hating Paperchase shoppers were ready to give it up. Most of us are not in either of these groups; we just see a business that issued a grovelling apology for a harmless promotion in a national newspaper some people don’t like.

The irony is that the Daily Mail has long been used in business as a reference point. To assess whether something one says or writes at work could cause negative PR if it got out, I was told to imagine how it would look on the front page of the Daily Mail – that being the epitome of outraged middle-England sensibilities. Write a dodgy email, even as a joke, and it could look bad if taken out of context and blasted across the news-stands in fifty-point type. What strange times we live in, when the words “Free gift wrap” on that front page can be an incendiary issue for a brand.

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A natural disaster presents an obvious business opportunity. Urgency and scarcity remove price sensitivity. It’s not uncommon for petrol stations to limit sales and charge more as people evacuate. In the aftermath, retailers may hike their prices on basic groceries which are in short supply. Classical economic theory says the right price is where demand matches supply, so why not?

Any business that cares about its reputation should ignore economic theory and take a different approach. Social media ensures that those who are perceived to take advantage of people’s distress, or to price-gouge, won’t get away with it. Businesses that do good, especially if they seem to put consumer interests ahead of their own, will be recognised for it.

Contrast the approach of two US airlines as Hurricane Irma approached Florida. Some 6m people were ordered to evacuate. JetBlue capped the price of its flights out of the stricken state just as demand was reaching frenzy levels – undoubtedly leaving money on the table. They added capacity but actually reduced walk-up fares. That’s a real head-scratcher for the economists. Meanwhile, Delta seemed to have left it to the yield management algorithm (if we give them the benefit of the doubt). Fares for their flights out of Miami rose almost six-fold. Twitter ensured that tens of thousands of people got to hear about it, and eventually the mainstream media reported it too. Delta was publicly shamed for seeking to profit from people’s misery.

Some businesses have baked this into their operations. From time to time, US brewery Anheuser-Busch replaces beer with water on the packing line at its Cartersville, Georgia factory. Canned water from a brewery? No good for a p***up but welcome across the southern states after a tropical storm, and distributed free. As part of the normal production schedule, it was ready to go as soon as Harvey and Irma cleared.

Several mobile carriers, including Sprint, AT&T, Verizon and T-Mobile, waived charges for usage in Florida during the hurricane emergency. After Tropical Storm Harvey passed through Texas, Airbnb mobilised its network to offer lodging free of charge to people in need of shelter.

Smaller businesses can punch above their weight at times like this. Google Mattress Mack to see how an independent furniture retailer with three stores in Houston won national approval by providing shelter to hundreds of people displaced by Harvey last month.

There’s a cost to providing emergency relief, and, arguably, an opportunity cost in not taking advantage of the short term conditions to push up prices. But it should be seen as a marketing investment. Short term, there?s plenty of media coverage to be had. Longer term it can do a brand good or harm. For any business that’s mad for social media coverage (and aren’t they all), this is the perfect opportunity to go viral. Just make sure it’s for the right reason.

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Southwold Books in Suffolk, Harpenden Books in Hertfordshire and The Rye Bookshop in East Sussex have simple fascias that make them look like independents. They have a small handwritten sign in the window saying their name is a trading name of Waterstones. Discreet, yes, but in keeping with the style of the store.

The outcry over this move is because it looks disingenuous. Are Waterstones passing off these stores as independent, with all the virtue now associated with that? For although we love the low prices of Amazon and Tesco, we also love to defend the little guy. Independent booksellers have had it very hard in recent years, not just from Amazon, but also from supermarkets selling the high volume blockbusters. For all the professed love for the independent retailer and the individual high street, more people buy books from the big guys more of the time. Remember Borders? That was a specialist book retailer with scale but they still didn’t make it.

Waterstones nearly went under for the same reasons. So now they’re trying to be different. With Southwold Books et al, we’re seeing the adoption in retail of a strategy well-known to the food and drink industry. For years now, big branded businesses across many sectors including soft drinks, beer and spirits, snacks and biscuits, have done this. They seek both to acquire genuine small brands and to create what look like artisanal brands. Sometimes there’s no visible connection, though when Walkers launched the Market Deli range, to compete with premium-priced sharing snacks like Kettle Chips, they found that the quality assurance of the market leader outweighed the virtue signalled by independence. So the packs clearly say “from the makers of Walkers”.

Like Walkers, Waterstones seem to want to play both ends of the market, with the big brand stores and the quirky one-offs. But it’s more than that. Under MD James Daunt who came from the successful independent Daunt Books, they’re trying to adopt some of that independent spirit in every store. Their website claims that “no two Waterstones bookshops are the same, with each shop tailoring its range to reflect the trends and interests of their local market.”

This is novel. The whole point of a brand is to make the experience predictable and consistent – always matching our expectations, so always the same. Daunt says his biggest challenge is to convince his own staff that they have autonomy, in part because under their previous owners HMV and WH Smith they didn’t. Persuading customers won’t be easy either, though the signs are already there instore, with favourites picked by store staff, displays of local authors, and the like.

As for these three little stores, it’s encouraging that a big retailer is willing to open tiny stores in these small towns. Until recently, Rye, Harpenden and Southwold had no book shop (according to Daunt). Search for those places now on the Waterstones shop finder and up they pop – no pretence that they are not part of the group. There is speculation that this “independent” route may be the future for Waterstones. It would be a failure of their mighty brand heritage if they really felt that one-offs had more consumer appeal. There’s a really compelling proposition in here – individuality and local customisation, backed by the buying power of a national chain. That applies as much to Waterstones in Kingston as to The Rye Bookshop. If Waterstones learn how to deliver that in every store, they will have a bright future.

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Specsavers, the UK market leader with over 40% market share, was founded by Mary Perkins and her husband, qualified optometrists who met on their first day at university. I’ve heard it said that she was motivated by seeing family members not being able to afford decent glasses. Whether that’s true or not, the Perkins vision, made possible by industry deregulation, was to make stylish glasses affordable to all. This required a different business model. It has two key elements. First, the high street branches are franchisees of a sort – not so different from the partners of JL. As Dame Mary said, “We would have partners in every shop we started who invest their money with us on a real 50/50 basis. If the shop was a success then we would all prosper.” The second key element is vertical integration – glasses factories in eastern Europe – which creates economies of scale.

This makes a great story, and the ownership model delivers superb service. I asked the chief marketing officer why they don’t tell people about their great customer service scores. Simply because the “Should have gone to Specsavers” and the “Two for one” message work so well. They flirted with changing it and realised there was no need. Besides, the price message matches their core reason for being: to make good glasses affordable.

Quality Solicitors is another professional service on the high street which uses vertical integration and a sort-of franchise model. Their business model looks a lot like Specsavers. It’s about achieving economies of scale through buying as a group, created by bringing independents together under a single brand, the inspiringly-named Quality Solicitors. (We’ll assume they mean good quality.) They launched with a big expensive bang on TV in 2012-13 and then went quiet. On the face of it, Quality Solicitors and Specsavers have much in common, but there’s a fundamental difference. One is driven by the opportunity to generate operational efficiencies. That benefits business owners but doesn’t necessarily offer anything to their customers. The other created those efficiencies out of a drive to make glasses more affordable, a benefit directed entirely and explicitly at the end customer and to which they committed fully. Result: a huge business with very high customer recommendation scores, profit for franchisees and a billion pound fortune for the Perkins family. Meanwhile Quality Solicitors growth seems to have stuttered to a halt. Motivation matters.

Motivation should be reflected in a company’s statement of purpose. Virgin Money’s purpose, “to make Everyone Better Off”, stands out in its simplicity and clarity. Virgin Money’s chief executive, Jayne-Anne Ghadia, encourages people in the business to ask themselves, when considering proposals and decisions, “Is it EBO?” This reminds me of Tesco in its heyday, where it was habitual to start every meeting by thinking about the needs of the customer, and where one of the simple rules to guide decision-making was: if in doubt, let the customer have the benefit.

It is perhaps surprising that the John Lewis Partnership?s stated purpose is about the happiness of its employees through giving them meaningful work – not about the customer at all. Yet we know the motivation of those partners is to do the right thing for us as customers in the short term, knowing it will work out best for them in the long term. The thing about purpose is, it’s not about whether you trumpet it, it’s whether you live by it.

JL’s purpose means they only enter sectors that partners want to work in. John Lewis Opticians will probably do well. But I’d love them more if they’d go where we really need them.

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Now imagine some other possible responses.

The process-driven approach: Please return the item, obtaining a proof of postage, and we will credit your account in fourteen days.

The “rules are rules” approach: I’m afraid we don’t do refunds just because you’ve changed your mind. Maybe you can give the spare one to a friend.

The friendly making-it-up-as-we-go-along approach: Really? What a nuisance! Ah you see, what I do is, I make a note of what I pre-order and then those mistakes don’t happen.

I bet you can think of brands, and sectors, where those sorts of responses are standard. In some cases they are written up as policy. In theory they are all defensible, but if you’re on the receiving end they are all equally self-interested and mostly unhelpful – the opposite of customer-centric. The refund approach seems fine until you think about the hassle and cost for a relatively low-value item. Amazon may well have worked out that it costs them more to return the item to stock than a single CD is worth. There’s also the value of making life easier for the customer, so it’s probably worth taking this magnanimous approach even if it’s at a marginal cost to Amazon. We all know the stats about how these stories are told and retold, the value of which is harder to track and so, in our metrics-driven world, can be totally overlooked.

Think of M&S’s famous policy of always accepting returns even if you had no proof of purchase and no matter how long ago the item had been bought. It shows confidence in their own products, sure, but it also says, we trust our customers not to try it on. Over the years some people must have taken advantage of this, but it has also generated huge goodwill, confidence and trust in M&S among the decent majority who don’t. A business that acts otherwise, as many do, demanding proof of purchase for things with their own brand name on, is a bit like a court that assumes everyone is guilty until proven innocent. Amazon and M&S are willing to let a few guilty people go free for the sake of the innocent majority.

By contrast, there are organisations which make you jump through hoops to prove you are telling the truth, or which won’t take your word for anything. Allowing for money-laundering requirements, identity checking and all the rest, there’s still a culture in some sectors that seems to start from an assumption that all customers making a complaint, asking for a refund or generally doing anything other than handing over money must be small-time con artists and should be treated accordingly. There’s even a name for it, coined to describe the insurance sector’s approach to resisting complaints in the USA: delay deny defend.

Alan certainly felt that Amazon took him at his word, and didn’t make him jump through hoops to get his money back. Of course it’s not just about refunds. Brands can undermine their customer relationships by treating customers with suspicion even when they think they’re just following procedure. I once had the temerity to ask at the executive lounge of a well-known airline whether my two children could come in too. Despite my gold status at the time, I was told it was out of the question, with the firm and very public admonition, “You know the rules!” The clear inference was that I was trying it on and this was TOTALLY UNACCEPTABLE. But really it’s not my job to know the rules. That’s why they’re there. I’d have settled for, “Sorry but the lounge is very busy; that’s why we allow just one guest per member.” Now I have become a non-person with said airline, I fear they’d trample me to get to the emergency exit. I dare say if Alan had asked them for a refund he’d have been given short shrift for his foolish error and told to be more careful in future.

Every brand manager wants their brand to be trusted by its customers. This is such a truism that trust can’t really be a differentiating brand attribute. It’s a necessary but not sufficient part of any successful brand that it can be relied on to keep its promises. But trust is a two-way street. It may not be rational but I find it hard to trust someone who acts like they don’t trust me.

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