This interview is part of the Marketer’s Toolkit 2020. Download the summary report here.
In this exclusive interview for WARC’s annual Marketer’s Toolkit, Tariq Hassan – Chief Marketing Officer of US pet specialty chain Petco – speaks to WARC’s Catharine P. Taylor about what it’s like taking major risks in the name of brand purpose, the difference between a purpose and taking a stand, and how to differentiate in a highly competitive online and offline retail environment.
WARC: How is taking a stand different to you than having a brand purpose?
Hassan: I’m not sure I would say you can actually take a stand unless you have a purpose these days. … I think there was a time when brands could take a stand on a particular issue, but if you peeled back the layers of that entire brand - if the purpose was weak and didn’t actually reflect its own strength - I don’t think you could be as successful. Today, I think, the brands that are winning are both those who have purpose, and the ones who are being successful when they take a stand. … You can’t go and make the ads that Nike has made in the last couple of years, where you’re taking vehement stands on issues, and not have a strong brand purpose. You might take credit at best, but you don’t get the long-game benefit of what you’ve decided to do.
We are doing everything in our ability [to be] known as the company which is making decisions on the basis of what will create a better quality of life for a pet and a better relationship and support [for] that pet parent. We think that, as a retailer, the things that will differentiate us from the so-called algorithm scales on Amazon is our ability to ensure that that purpose is strong, that that relationship is even stronger with those pet parents, that they all understand the decisions we're making are not being made on sort of the rational point of price and offering, but rather commitment and purpose.
WARC: How important is the retail experience to building your brand?Hassan: Experience is everything. You’re going to continue to see us either morph or outright change our store experience to deliver on that. It starts with not only the experience inside the store, but the offering of what is in that experience, so our most significant investment over the next few years will be in the area of adding veterinarian services to our stores. We understand the importance of getting to that health and wellness connection to pet parents.
We also understand that the notion of accessibility and affordability in pet healthcare is actually critical, and not always easy. So, there will be elements [in our stores] that feel incredibly functional like a medical environment. If you’re anywhere near our Union Square [New York City] store, we now have a relationship with JustFoodForDogs. [It’s] our first of many that will come forward in the future, a kitchen that is inside that store … that makes human-grade food fresh in that store, and it dramatically changes the experience of the store – to having grooming and training services, to right down to the positioning, the pivoting that we’re doing with the employees in our store. It started a year ago with this new first nutrition stance.
[We’re] really beginning to help our employees move from a “sell-this” mentality to a “know-this-customer” mentality, through their own engagement with the customer – but increasingly through the use of technology and data – to intuit and anticipate the knowledge of that customer, [for example,] if they have a rewards cards with us, the profile of what [the customer’s] pet is, how old they are.
If [a pet] happens to be within our veterinarian system, we’ll get a view towards your medical [record]. Today, we can already look at things like food and other elements on a handheld, and really reposition … from what is it our vendors want us to sell to a conversation around what it is that you actually, as a pet parent, need to give that pet a better quality of life. A better, healthy, happy life. That, we think, is absolutely magical and is an absolute differentiation, and we don’t think that can be commoditised by any analog.
We're also looking at [pet] insurance. We’re currently in-market testing a membership program for our direct-to-customer program, where customers get access to bundling the benefits of veterinarian services, our grooming services, training services, and then, some of the nutrition, supplies and products. When we did that work, the most significant priority [was] for customers to lead the way on the development of any of those products.
WARC: What is your approach to media at this point? What excites you?Hassan: We think it’s a pretty exciting time … We definitely are more digitally-led in terms of where our investment is. But having said that, it depends on the objectives that we’re dealing with. This year, we spent a more disproportionate amount of money than we have in previous years on broadcast – traditional broadcast TV – because we had a very broad-based awareness message to get out. Let TV do what TV is actually meant to do. But I will tell you, well north of 50% of our investment is in [the] digital space.
We are fortunate and actively working on very robust first-party data, and we have a very active database to do that with. Roughly 85% of all of our transactions take place on our rewards card, so we have tremendous, tremendous engagement to get that data and understand the transaction behaviour. So the question becomes, “how do you start to use that data …?”
The breakthroughs for us have been increasingly looking at opportunities within social commerce this year, in particular, starting to innovate with new platforms like MikMak, where you’re doing direct commerce through video. It’s an incredibly powerful outcome for us. And, major breakthroughs in terms of the money that we’re starting to spend within Facebook and seeing a conversion to direct sales. More recently, very significant trials [have seen] success in Google Local.
[We’re also excited] about the continued convergence between media and the email and loyalty sides of our business. It's really starting to leverage the CRM, the tech stack for our CRM and really understanding very specific customer cohort data through first-party data. [We’re] getting really much more targeted in terms of what we do with our paid search and our SEO.
WARC: How are you balancing short-term vs. long-term goals?Hassan: I'm a marketer who doesn't believe that you can do brand marketing without ensuring it's driving performance, and I'm also a marketer that believes you shouldn't be doing performance marketing that doesn't drive your brand. … It starts with viewing the word brand building as well beyond how we think about just what marketing does, but rather [about] being a brand culture as an organisation.
Just to show you the commitment to that: we have for the first time this year, spent more in our history on our active marketing communication. We also spent significant money in the same year repositioning this brand, making sure the DNA was clearly understood.
WARC: How do you manage differentiating against, for instance, PetSmart [Petco’s major competitor]?Hassan: The single hardest thing that I have to do as a leader of the organisation is fully differentiate this brand. One of the most significant things we've done is start to lead the business through that mindset of what's best for the pet. Taking an action like we did last November in removing $100 million worth of inventory, which no longer met our new ingredient standards, from our stores because we believe it's the right thing to do for your pet was huge… The most significant feedback we got both from the industry and from consumers was around differentiation - that this differentiated us as a company, that our motivations were different.
WARC: How much concern was there internally that customers would leave because they were no longer going to be able to get their favourite brand?Hassan: As it comes to the customer level, of course, you always worry. You never want to fire a customer. in our case, we set a goal of 70% retention, And we achieved slightly over 80%.
I think we also learned something in the process, which is sometimes in your industry you create your own beliefs. One of the most significant beliefs in our category is you cannot convince a pet owner to switch foods. You actually can help customers understand that there is a new reality, and the way you do it is by helping them understand the benefit and the benefit provided to their pet.
WARC: How should the industry respond to all the power in the online marketplace that Facebook and Google have?
Hassan: First thing I would do is I would separate the two, and I’d be very clear as to what we think the role of both of those platforms are as partners and ask ourselves, “What do we benefit from them? What do our customers benefit from how we use them?” I don’t have the negative view that some carry on [the consolidation] because I think that’d be like me getting up tomorrow and complaining that Amazon was here. It’s not going anywhere in its current form, at least anywhere in the immediate future.
I think in Google’s case, for all the concerns of power, I would say they’re an active partner where we are working with them as directly on business problems as we are from a search and commerce outcome. I also think that they have a very different philosophy, both for retailers and for consumer brands, and they have a very interesting philosophy on how those two work together, how they can coexist, and the role that they can play in doing that. I think that [Google is] starting to talk about innovation in a way that both search offerings and the shopping offerings can be complementary to one another.
On Facebook, in many ways, I feel like some of our social commerce platforms are still very much in our early days. At the same time, I also find them incredibly compelling. It takes our customisation opportunity to a very different place. It allows me to create relevant content for that customer. I think, if I’m honest about it … some of the challenges at a smaller company level would become pretty challenging. If you can’t quite get into the right CPM level on some of those, you can get buried.
My jury’s still a little bit out in terms of what I would define as the power that Facebook has had. It’s always had it. We now have tried to step into the world to try and take advantage of what we couldn’t before. I think it depends on how you’re going to use it.
I guess that’s a short answer for: you may not like it, but you better figure out how to live within the universe you live in.