Last week the Wall St. Journal featured a story on Tiffany & Co’s “midlife crisis.” The piece highlighted the jewellery brand’s struggle to regain its “cool” and improve recently tepid sales and profits. A few days later they announced the hiring of a new CEO.
Tiffany is hardly the only brand that is going through such a crisis. There is a lesson that all of us can learn from the experience of Tiffany and to a certain extent, even JC Penny. Steve Dennis on his blog talks about the customer trapeze. The customer trapeze is the idea of a brand hoping to reach a new, highly desirable set of customers while at the same time letting go of those with less favourable characteristics. Most often we see it at play when brands see that their most profitable demographic is ageing and at some point in the near future will start reducing their spends.
Knowing this, brands want to re-invent themselves to become more relevant to the new generation by becoming more hip or trendy.
The challenge comes when they want to entice the new younger generation to engage with the brand, while at the same time do not want to alienate their existing client base, which is still generating most of their profits for them. This is a true catch-22 situation for brands. But is it?
Tiffnay has tried almost every trick that brands have in their sleeves – becoming more fashion forward, introduce less expensive items in their portfolio or attaching themselves to celebrities that appeal to the new demographic that they want to attract. What they are trying to do is to find the perfect moment when they can let go of their existing customers and take on the new ones. In Tiffany’s case, over the years they have introduced less expensive items and expanded their assortments in an attempt to widen their appeal to the new generation of shoppers. They have even taken on Lady Gaga and Elle Fanning as spokespeople and launched a new, more youthful ad campaign.
What could Tiffany’s Do?
I believe that this is a false dichotomy. I also believe that there is a simpler and a more easier way for brands to transition from one set of customers to another.
Create a new brand for the new customer segment. Let the old brand age with the ageing population cohort.
History reveals that very few established brands are able to successfully execute a dramatic re-configuration of their customer base–at least quickly. There is a significant risk in pursuing this strategy because, irrespective of what the brand does to do this switch, they will not be able to become attractive to both the ageing and the young cohort. In the process of trying this, they only alienate both the customer base, which ends up not so well with the brand and the brand dies a very slow and a painful death.
What is needed here is a mindset shift. What happens if companies create new brands for a new cohort of potential customers and continue to use the existing brand for their existing cohorts of customers. The existing brand can continue to remain relevant to their existing customers and even look at other things that the brand can do for the customers, keeping their brand values intact. In this case, in addition to creating beautiful jewellery, Tiffany’s could also look to create other items that an aging population needs – embellished walking sticks, reading glasses for the old. You get the flow.
What this approach does is allows a brand to live and stay relevant to a specific cohort of customers with their sensibilities. It is ok to allow a brand to age with their customers who grew old loving the brand.
The second answer is a bit more difficult.
Instead of trying to win the younger generation by themselves, allow their existing customers to do that for them.
What I mean here is the following: Instead of the brand trying to woo the next generation of customers and win them over, allow their existing customers (ageing population) do that for them. Then the question becomes what can the brand do for their existing customers so they can win their daughters and grand-daughters to their brand. This allows for two things to happen at the same time:
- Strengthen their relationship with their existing cohort of ageing customers
- Build a bridge for the new young customers to start engaging with the brand
This also means that the entire brand needs to go for a make-over and if done well, this can give the brand a new lease of life. The risk here is that if done badly, this could also very much fast track the death of the brand.
In conclusion, I will only say the following: how Tiffany’s and other brands in the similar situation handle it can have a profound impact on the brand – one way or other.