Marketing in a post-covid-19 world - Listen to our free podcast series with industry leading CMOs

Marketing Post-COVID: Michelle Farabaugh, Former CMO at Harry & David and BevMo

Brian Erickson:
Thanks for joining the Cardwell Beach Marketing Podcast. My name is Brian Erickson, Chief Strategy Officer and partner at Cardwell Beach. In this series, we’re interviewing senior marketers across industries to develop perspective of what marketing will look like in a post-COVID-19 world. Today’s guest is Michelle Farabaugh, who most recently served as Chief Marketing Officer for Harry & David, a gourmet food gifts service that is owned by 1-800-Flowers. Prior to joining Harry & David, Michelle was the chief marketing officer at BevMo, a West Coast-based alcohol retailer, and Galls, a Kentucky-based public safety equipment manufacturer. Michelle, thanks so much for joining us today.

Michelle Farabaugh:
Thanks for having me.

Brian Erickson:
Just to kick things off here talking about weathering the storm and hopefully, we’re at least through some of the initial storm here. Who knows how long this is going to continue on over the longterm, but shelter in place orders and other restrictions have been both a benefit and hindrance to gift delivery brands like Harry & David. I would be curious, how are you seeing gift delivery brands, whether it’s established players like Harry & David or dueling startups based around subscription boxes, changing their marketing strategies to meet the moment?

Michelle Farabaugh:
Well, all brands, whether they’re gifting brands, subscription brands, or general merchandising brands, have had to change their marketing strategies and really pivot multiple times in this ever-changing environment. As we’ve seen consumer behavior needs change overnight with COVID-19, it’s important for brands to reassess their marketing programs and focus on the bottom of the funnel. That’s really performance marketing. So marketing budgets for the top of the funnel activities or brand marketing have either been cut completely or redirected to performance marketing, retargeting, and activities around driving customer loyalty.

Now’s a critical time to build loyalty for both long-standing customers, as well as new customers purchasing from you for the first time. A lot of consumers are trying new brands right now at a much higher rate than we’ve ever seen before either because their typical go-to brand was sold out, not in business, they didn’t have their favorite product or they’re trying a new retailer because they’re closer to home as they’re sheltering in place. Focusing on customer behavior over the past 90 days will be much more indicative of the current immediate future behavior than looking back a year, which is what most retailers have done.

From a gifting perspective and point of view, staying connected to those you love but can’t physically be with is a lofty task. Without that human touch, small unexpected surprises can go a really long way. So a lot of people are sending gifts to bring that touch of joy to their family and loved ones since they can’t see them in person. Sending that gift to let them know they’re missed to let them know the sender cares, whether it’s food, which is much needed and greatly appreciated right now, to flowers and houseplants, which make for a nice surprise, to kids educational fun items. Gifting is still taking place, and in some cases, even more so since you can’t travel and see those people in-person.

Subscription box business brands have been fairly resistant to the impact of COVID-19. As consumers shelter in place, subscription boxes can be very helpful and appreciated, especially those around food, household supplies, children, pets. From a marketing perspective, subscription businesses are really focused on preventing churn and finding new ways to offer innovative value to the customer, trying to make sure that the contents of that monthly box is something that’s relevant to their needs at this time.

Brian Erickson:
So you talked about industry shakeups, and obviously, Harry & David is a heritage brand in a fast-changing industry. It’s been around for a long time. How can other long-lasting companies maintain brand equity and customer loyalty at a time where we’re seeing widespread industry shakeups?

Michelle Farabaugh:
Brands in general should never be stagnant. They need to evolve over time to remain relevant to consumers. Brand positioning and the resulting equity is all about the way the company does business, from its core purpose, to delivery of goods and services, to the responsibility, to its employees, the community it serves, and even the environment. So you want to build a brand that people trust, believe in and really rely on all with the aim of earning profits that are sustainable over time. So think about how you bring your brand to life through engaging content. Consumers want to be entertained right now. So you need to make sure it’s still relevant to your brand positioning in your unique value proposition, but it brings your brand to life in a way that really is relevant today. It’s critical of how you’re positioning the brand and communicating your offer. Now is not the time to be tone deaf in messaging. And it’s no simple task as consumers are looking for that entertainment as well as guidance and information.

When COVID-19 first started, we really wanted to make sure we were communicating and ensuring that customers and employees knew that their health and wellbeing and safety were top priorities. One gifting company included a message in all of their packaging in a handwritten-style font that said, “Thank you for your order, made with love and gloves.” And that was a really nice sentiment.

Brian Erickson:
I like that.

Michelle Farabaugh:
And really timely. We’ve shared our empathy with we’re all in this together messaging, with highlights of products that make this time more bearable, showcasing charitable efforts that many of the retailers and brands are doing right now. So think about adjusting your messaging by geography as well as customer segments. So as we start to open up, not all areas are opening at the same rate, not all retail experiences will be the same. So be thoughtful and sensitive to that as opposed to doing typical national communication. Focus on the customer and delivering the best service possible. It’s not always perfect service right now as companies struggle with work from home call centers and customer service teams, supply chains that are challenged and operational teams that are strained and working in safe conditions which doesn’t allow for the same throughput or performance metrics. When the pandemic passes, you want your brand to be known as the one that really supported and helped and respected its customers.

Brian Erickson:
So let’s talk about what comes next, right? And you alluded to some of this just now, but one of your key accomplishments at Harry & David was moving the marketing mindset from tactical to strategic. And there are definitely some tactical shifts that have happened just to respond to the current situation to triage things. Moving to a strategic mindset is difficult shift for any marketer to make, but it’s even more difficult to remain calm and focused during a global crisis. So as we come out of this and things get again change, as COVID-19 forever leaves its mark on marketing, how would you advise other marketing teams to begin to make that shift as we enter this new reality post-COVID-19?

Michelle Farabaugh:
Well, none of us really knew what the new reality will look like, but the most successful companies thus far have been those that have been nimble and agile, and those are both characteristics that will be required and helpful long into the future. So right now, all retailers have had to be fairly tactical. While your team focuses on how they need to adjust today or this week, it is important for the leadership team to focus on the future and what will be needed.

COVID-19 has made it more clear than ever that a strong e-commerce strategy will be required to survive. E-commerce as a percentage of retail sales was just 5.1% in 2007, it increased to 16% in 2019, and when we see Q2 reports, it’ll likely be 20% plus of retail sales. So now’s the time to create that strategic roadmap of what you’ll need to focus on to build out that e-commerce and multichannel offering from personalization to order online and pick up in store, or better yet, curbside pickup.

Digital marketing and content marketing is more important than ever. So thinking about how your team or your agency is equipped to handle the increased demands in that area and really watching the business to understand when the right time is to pull those strategic levers to move to that next stage of investment.

Brian Erickson:
I guess just some tactics sprinkled into there obviously: in terms of e-commerce marketing over the long term on a tactical level, earlier, you mentioned just moving to more of a bottom funnel focus. Do you envision that marketing budgets are going to be allocated in a substantially different way moving forward or for a protracted period of time or do you think that’s a short-term shift?

Michelle Farabaugh:
Exactly as you just said, in the near term, marketing teams have shifted that budget from top of the funnel and brand advertising to the bottom of the funnel and performance marketing. It won’t last forever, but it will be important to understand the current consumer behavior to know when to start shifting and pivoting back. And we don’t know that that’s going to be this fall or if it’s going to be sometime next year. Digital marketing and content marketing, we’ll see an increase, as well as retargeting and loyalty marketing to new customers, as well as the existing customers. As more people are home and watching television, programmatic television advertising has seen an increase though there are challenges right now to really creating those spots if you don’t have prior footage or B roll that you can use. So more spend will be targeted on driving e-commerce and driving immediate results. And I would say new tests or big gambles will likely be harder to get approved in the budgeting process for the foreseeable future. Again, none of this will last forever, but it could likely be into sometime in 2021 before that really changes.

Brian Erickson:
So as the tactical mix changes, obviously the skillsets of marketing teams have to adapt to meet the moment. So, as we near 20% unemployment, many marketers are going to need to market themselves. What advice would you give folks in our profession who find themselves as free agents right now? How can they position themselves and their skillsets for this moment?

Michelle Farabaugh:
Sure. I would say, first of all, this is a great time to learn a new skill. So take an online class, attend webinars, make sure you’re staying up to date on the current industry trends. This will be important as you go back to work and tells a great story of your initiative and your learning skillset while you were off. So look at the industry where it’s going, make sure your background and skillsets are relevant to where the marketing plans will be, and that’s where you can add certification or even volunteer with the company to keep those skillsets relevant. I’d also say due to stretching budgets, more companies than ever will be conducting internal searches as opposed to paying a recruiter fees to fill their positions. So it’s critical that your LinkedIn profile is up to date and that you’re really leveraging your network. It’s a great time to catch up with friends and former colleagues because these are quite honestly, probably the best source of where you’ll learn about that next great job.

Brian Erickson:
For sure. If you could give one piece of advice to mid-market and SMB gift delivery and subscription box marketers right now, what would you say from a high level is something really important to be focused on?

Michelle Farabaugh:
Just to keep revisiting your clients. Things are changing on a daily and weekly basis and someone that didn’t respond last time may respond this time. But don’t pitch a hard sell. Pitch to their needs and let them know you care. When you call your clients, current and former clients, just check in on them, see how they’re doing, have an empathetic ear and show them that you care. And this is when your messaging needs to be really spot-on. People are sending gifts and they want to send something special with meaning. They’re sending more gifts than ever to employees to show their appreciation of everything they’re doing to help the business during this challenging time.

Companies know it’s hard for everyone, so care packages are really popular. So think about when you’re featuring product and you’re calling out those products, they are sending gifts, but they’re really sending them to the client’s home. So they’re not looking for large gifts that are typically shared with the whole department and all of their teammates. And this is something that needs to be relevant and useful to more of an individual or a family. This fall will be more uncertain than ever. Election years are always tough on retail due to uncertainty of who will lead the country. We don’t know if companies will still have budgets to spend. Some industries have been thriving and others really suffering. So target your marketing and your messaging accordingly. And I would say be conservative. Don’t create unachievable goals and don’t make risky investments and decisions right now. Focus on your active customers and reach out to your customers that you haven’t heard from in a while.

Brian Erickson:
The age old principle of retaining customers is a lot less expensive than acquiring new ones, right?

Michelle Farabaugh:
And a lot easier.

Brian Erickson:
Yes, certainly. And everybody could use a little bit of a break. It’s a little bit easier. On a personal note, what’s been your favorite quarantine hobby?

Michelle Farabaugh:
Well, I’m a foodie, so we have gotten more and more creative as you can’t run to the store for an egg or an ingredient. So I’ve been having a lot of fun cooking really interesting meals.

Brian Erickson:
Playing the pantry game. Always a fun one.

Michelle Farabaugh:
Exactly.

Brian Erickson:
Awesome. Well, Michelle, thank you so much for taking the time to talk with us today.

Michelle Farabaugh:
Well, you’re welcome. And if any of your viewers need help, don’t hesitate to reach out to me. You can find me on LinkedIn or email me at michelle@tibbits.net, and I’d be happy to help you or give you advice.

Brian Erickson:
Awesome. Well, very generous offer. Hope folks take you up on it. This is Brian Erickson with Cardwell Beach. Thanks again for listening, and please make sure to check back for more senior marketers sharing their perspectives on what marketing will look like in a post COVID-19 world.

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