One of the most interesting marketing developments of this past decade has been watching Chris Anderson’s 2004 concept of the Long Tail play out across retail– specifically companies inviting fans to customize products.

• Recently the Wall Street Journal ran a story about Keds shoe company inviting customers to design their own shoes. Champion has also gotten into the act, but in a more limited way, by running design contests, then producing the winning design, while Nike has been in the customization business for nearly 10 years with NikeID.
• Next year Coca Cola will see a more widespread distribution of its Freestyle soda fountain that invites consumers to mix their own flavors, ultimately offering over a hundred different choices.
• Sweet-toothed consumers can even customize their own M&Ms.
• Here in the Pacific Northwest, the hipsters at Jones soda just launched an iPhone app inviting users to generate a photo for their very own customized Jones six-pack.

Customization of mass marketed goods isn’t new for brands; some would say it started with Burger King in the 70s:

Although this funky version is my favorite:

Four decades later the trend has continued with online businesses like Cafe Press, Zazzle and Threadless letting customers design and even market customized tee shirts, mugs, mouse pads and other tchotchkes. But it’s not just packaged goods makers getting into the game. Global brand Toyota recognizes that customization begets brand loyalty by offering customers the ability to customize a Scion; Ford offered tricked-out cars with the roll out of its new Fiesta at the 2009 Auto Show.

What does retail customization mean for marketing?

Many a brand manager wouldn’t dare undertake a marketing initiative that they couldn’t tie directly back to ROI, but where retail customization is concerned, they’d be missing the point. Mattel fell victim to this thinking when they tried and later sunsetted a build your own Barbie website . One guess about this site’s demise was that people spent a lot of time designing the doll, but it didn’t translate to sales. It probably didn’t help that the Friend of Barbie was only available to fans over 18. But in the end this was a missed opportunity for Mattel. After all, are sales really the point of customization?

Customization retail is really an engagement and customer service tool. It’s about brand loyalty and brand development; it should not necessarily be about sales. (Although, as Amazon could tell you, if they shared sales data, the long tail of retail becomes quite meaningful when as much revenue is derived from obscure single sales as all the best seller titles combined.)

Brands need to see customization for what it is: one more example of a marketing dialogue with customers. Will an individual’s sneaker design drive sales for a global sneaker brand like Keds? Unlikely, but customers taking ownership of a product at that level develops fierce loyalty, creates buzz and bolsters the overall impression of the brand—all of which typically lead to an uptick in sales—eventually. But what if it doesn’t? Is that a bad thing?

If you build it will sales come?

Engagement, not sales, should be the real metric of retail customization. A great case study for brand engagement in the last few years comes from Office Max. Elf Yourself, one of the most popular online viral marketing tactics ever developed, has translated to a 46% recall for the Office Max brand. By its second year online, people had spent nearly 2600 years (combined time) on the site as reported in James Othmer’s book, Adland. Any brand would be giddy over that level of engagement.

Office Max has shown that generating buzz and having customers develop a relationship with and take ownership of your brand is marketing gold. Sales were never the point.

Lose control of your brand.

As anyone familiar with the story of New Coke knows, loyal fans can bring a giant brand to a halt. When one of the most iconic brands in the world messed with its formula, Coke fans revolted. For a more recent example, watch social media circles every time Facebook announces an interface change that users don’t agree with. It’s practically chaos.

But revolt and chaos are not necessarily to be feared in brand marketing. Handled well, a company’s reaction to unpopular decisions, demonstrates a level of care that can foster more brand loyalty than any broadcast marketing campaign. Brands can’t buy loyalty, it has to be earned. As with any other relationship it’s built on trust, respect, and an ongoing dialogue.

The word customer is derived from custom, meaning “habit;” a customer was someone who frequented a particular shop, made it a habit to purchase goods there rather than from its competitors and with whom the shopkeeper maintained a relationship to keep his or her “custom” or, expected purchases in the future.

As part of your 2010 marketing plan, consider retail customization to drive brand engagement with your customers. It may not drive sales but if it helps your customers make your brand a habit and develops a relationship with an engaged clientele, what’s the downside?

Mashable ran a story today highlighting a Netflix agreement with Warner Brothers for new release movies.  Seems, Warner Bros thinks that if they make people wait 28 days to see a new release DVD they’ll be more likely to buy the DVD.  And Netflix?  Who knows what they’re thinking?

This is not a business strategy it’s arrogance. Not releasing content in hopes you’ll shell out $30+ to purchase a DVD is the ultimate attempt at customer coercion and will fail. And what’s in it for Netflix?  Pissed-off customers?

DVD sales have been in the toilet for years so it’s really just one more nail in that coffin but trying to force customers to do anything they don’t want to do is a losing battle.  Hello!?  Warner Bros, haven’t you learned anything in the last few years?  Seems the only strategy is to get out of the DVD business and make it someone else’s fault.

This announcement will be a boon to Warner Bros and Netflix competitors and opens up an opportunity for Blockbuster, Amazon, Hulu, YouTube and others. Holding content in hopes we’ll purchase isn’t going to drive sales and they know it, so in the next breath, both companies say they’ll be adding more instant streaming to Netflix, like we couldn’t see that coming.  It seems likely that the next step is “premium” content from Netflix.  Want this new release?  $9.99 and you can stream it.

These customers may likely go elsewhere, at least initially–RedBox is certainly hoping they will.  Most folks want to stream movies, so what’s next is more exciting than what’s now.  So for now, I’ll hold me breath to see how this pans out.  And, Warner Bros, I’ll wait 28 days to see your new releases.

A quick trip to Trader Joe’s to return an item got me wondering, how could more brands be like Trader Joe’s?  (And what would shopping be like if they were?)  Let’s look at what makes the Trader Joe’s experience so different from your everyday grocery store:

1. TRUST:   They exchanged my item with no questions asked. A company who believes and trusts their customers says a lot without them having to prove anything else.

2.  EASE:  An added benefit of the above scenario was TJ’s willingness to eliminate processes and add a little ease to a situation like a return.  No filling out forms or recording of zip codes.  Just a simple “tell the checker on your way through the line.”  Wow.  Easy.

3. INFORMED/HELPFUL:

Of course on my second trip to TJ’s within hours of one another I decided there were a few other items I should pick up while there.  The stockers not only had a handle on a myriad of products but knew exactly where they were located and what their status was.  (They were sold out, darn it.)

4.  ENGAGING:

I very rarely take the time to read my local grocery circular that comes in the mail or with the newspaper. For some strange reason (well written, fun copy) I read the Trader Joe’s “Fearless Flyer” ad every time it comes to the house.  It renews my faith in the fact that there still are people who appreciate wordsmithing and compelling copywriting.   It doesn’t hurt that, by extension, I feel my copywriter wife’s services will continue to be needed as long as there are companies out there like Trader Joe’s who place a value on the written word.

5.  FUN:  The Yeti

If you’ve never been to a TJ’s they have a stuffed Yeti that they hide somewhere in the store and the kid who finds it gets a prize.  One of the first times I went to TJ’s I missed the age qualifier for the contest and, much to the embarrassment of my wife, practically skipped to the front desk to tell them I had spotted the Yeti.  Dejected when they told me it was a a contest for kids, they directed me to the back of the store for a special prize anyway.  (The coffee sample cart.) I was pretty happy with that solution.

6.  FRIENDLY:  Someone once burst my bubble and told me the checkers at TJ’s are super friendly because it’s required.  Frankly, I don’t care.  Why?  Because, even if it is required, everyone seems to have bought into the idea that a good conversation creates a great environment for the employees and the customers.  Which leads me to my next point.

7.  PACE:   The aforementioned oversations add to the overall experience of shopping at TJ.  I never feel like I’m being ushered through as quickly as possible while the checker works against some unseen productivity quota being looked at by some unseen managerial staffer who really just wants to sell more stuff to more people quicker with less chattiness.  I’ve been in those stores. You know who you are–now, stop it!

8.  SELECTION:  It probably works this way in all grocery businesses, but TJ’s product replenishment loop (based on sales and feedback) is an interesting model that they’ve transparently made work for them.  Products have been tested, tried and are recommended by staff.  It’s like amazon.com reviews for groceries.  There are always new surprises cropping up in the store. Swiss Almond Crunch cookies?  Hmm, never seen these before.

9.  CREATIVE:

Hand drawn signs.  Why take the time and effort to hire a full time artist to draw all their signs?  A commitment to a brand ideal?  A quirk that just stuck?  I have no idea, but like their commitment to compelling copy of the Fearless Flyer mentioned above, it’s a nice touch and something about the TJ’s experience I enjoy.

10:  ENJOYING SALES:  All of the above really serves to do one thing:  Sell products.  They do it unashamedly with an ongoing sampling corner that probably pumps out as much coffee as your local Starbucks as well as nibbles of one type or another.  But Trader Joe’s does it with style.    They make it so that everyone enjoys the process.  And in the end, no one minds being sold to if it’s engaging, fun and informative.

What can your brand do in 2010 to employ some of Trader Joe’s tactics to your marketing?

Here’s a brilliant little post about the cost of the Denny’s promo to feed everyone in America a free breakfast on Tuesday.  Of course he neglected to mention the cost of the superbowl spot.  But it makes for an interesting post!  

http://www.walletpop.com/blog/2009/02/02/math-says-dennys-free-breakfast-a-good-deal-for-the-company-to/

I don’t repeat much that can easily be found on other blogs–for those of you looking for unique content.  But Seth said it today.  And in case you didn’t hear it-here it is!

http://sethgodin.typepad.com/seths_blog/2009/01/easiest-cheap-w.html