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Alex Barseghian is the author of Localmotion and the group vice president of sales and marketing for United States retail at Black Hawk Networks. He actually—true story—had to reschedule this recording of our podcast because he was on the Ellen Show talking about Happy Cards.
Alex has an amazing background as an entrepreneur. He founded Samba Connects, which became the fastest growing company in the United Kingdom and was a top 50 fastest growing company in Canada two years in a row. He is responsible for driving over 15 billion dollars in revenue for products and services through retail and digital channels. Before that, he headed up original content for Black Hawk, where he was in charge of new products and launched Happy Cards in over 50,000 retail locations.
Today, we’re going to be talking about how technology is personalizing the global market place and the lessons that Alex has learned in his career.
Alex believes that the global marketplace is booming and as it grows, brands that are aligned to the individual needs in community thinking will be the biggest winners in the future. Whether you’re in an industry from food or tech or healthcare, the bottom line is that customers just want high quality products in personalized experiences rather than one size fits all solutions. If you’re in a traditional company, and you know that you need to stay afloat in this rapidly changing landscape, this is the episode for you.
Get Alex’s new book Localmotion on Amazon.
Alex Barseghian: About 10 years ago, when my wife and I were pregnant, we wanted to move from Montreal back to Toronto to have the baby with the family. This was in 2008, which was probably the worst time to launch a business because of the financial crisis. We moved from Montreal to Toronto to start Samba, which was my new business at the time.
It was difficult because I had no clue what I was getting myself into.
It was like a diver looking at a bottomless ocean that never ends—that’s how it felt in the beginning. I was worried, when I have a baby coming to life in a few months, I’m launching a business that probably wouldn’t be the right time to do it. That was the mindset.
Looking into what it is today, I am so glad for many different reasons, I did it.
Charlie Hoehn: Why were you glad you launched Samba during that time?
Alex Barseghian: Well, for a bunch of different reasons, the biggest one is that, I love to test myself just to try something new, whether it’s jumping off planes or going to a new country that I’ve never been to, putting myself in awkward situations. I think that’s how you learn a lot about yourself.
Doing a new business from scratch, not knowing the business at all, was for me the ultimate test of, “Can I actually do this?”
It’s a great thing to do because you get to know yourself, you get to know who really supports you and who doesn’t.
I’m not just talking about family, I’m talking about friends and, more importantly, to bring an idea to life. Kind of like this book.
The New Underdogs
Charlie Hoehn: What happened after you launched Samba? What happened in your career?
Alex Barseghian: We grew this company to go from about zero to just under 50 million dollars in six years. We launched in the UK as well—we were the fastest growing company in the UK. A couple of things that really came out of this, I love rooting for the underdogs. I think a lot of people do, and I was an underdog at the time.
We had a lot of competition in the space, and we were competing with companies that had a lot deeper wallets than I did, much bigger than I did.
For me, just cutting through the clutter to get to where we are, to the point that it got sold seven years after it launched is pretty cool. That business taught me a lot about Localmotion. It taught me that the new underdogs are not what we think of as a small guy who has little funding.
To me, underdogs are traditional companies.
The General Motors, the Fords and Honey Wells and Budweiser and McDonalds. You would intuitively think, they can’t be the underdogs, they’re the big dogs. Who else is bigger than McDonalds? To me, these are the folks who are getting so disrupted, they probably would have never thought about how to even define Uber or Netflix or Tesla or Airbnb. These are the new companies, not the underdogs.
For me, I almost feel for the traditional companies. My book hopefully will try to help those businesses that are disrupting the landscape, but also the traditional companies who kind of have to pull up their socks because they’re getting redefined daily on what’s going on.
Creating Personalized Experiences
Charlie Hoehn: How did you decide on launching Samba? How did you know you wanted to get into gift experiences?
Alex Barseghian: When people are buying gifts, I felt that you have to give it more of a meaningful gift, right? When you give a gift or either giving a sweater or some kind of physical item…you’re a little unsure, or you give cash, where people don’t give cash anymore. Or you give a gift card.
I believe that people want to leave an impression.
When you’re actually giving a gift, you want to give something that they’ll remember and use. More importantly, the secret in Samba or any kind of gift experiences is, it’s sharable. When you think about all the things you’ve done that you remember, it’s usually not with yourself, it’s with somebody else.
You share that moment, whether it’s as simple as a perfect steak dinner or seeing a really scary movie with somebody, it amplifies that.
Samba’s whole philosophy was, don’t just give a regular gift, a physical gift, give something that is meaningful and memorable for the couple or to loved ones. That’s the whole premise.
Just after that—we’ll get to the key premises of the book—but personalization and something that is unique is so important to Samba.
Everybody dances to their own beat.
Samba is the only dance in the world that doesn’t really have any steps. You kind of dance to the rhythm however you want.
That was my whole philosophy. You’re going to give a gift to somebody, and everybody has their own rhythm. Somebody might not like wine, somebody might like jumping off planes or white water rafting. We want to create a business that they can gift something that’s meaningful for that individual. That’s very important.
The Individual First
Charlie Hoehn: All right, let’s talk about Localmotion. The book is divided into three parts, you talk about the individual, the community is part two, and then part three is the technology. Let’s start with the individual. Why does it matter to them?
Alex Barseghian: As soon as you use the word local, everybody thinks of locally sourced foods, the hundred mile diet. That is important within a local dogma out there. It’s much more than that, right?
Local is about personalization. It’s about giving relevant product and services to the individual. When we think about traditional businesses versus business that are new and upcoming, the more personalized you are, the more relevant you are to that person, the more successful you will be.
Again, I’ll just talk about a simple thing that we did at Samba. Samba in itself is a gift card. What we did is we put it in a box and took almost like postcards about the experiences into this box, so when you’re giving it to somebody, they actually feel something tangible. It’s not just a gift card.
Then, when we did this digitally, people buy things online, we were one of the first companies to ever adopt this notion of a digital gift.
The reason why I did it was not just because it’s easier and I don’t have to worry about fulfillment, is really so you can personalize it. You can actually put somebody’s name and address on it.
Companies who have embraced local on that level have succeeded, and the ones that have not have failed. We always think about Amazon as one of the ideal candidates, but Amazon has taken this notion of putting the individual consumer in the center of every single thing that they do, and it’s transformed their business and how we consume ecommerce so much so that now, whenever we have an ecommerce experience, we compare it to Amazon without even knowing. The shopping experience, the purchase path, the way it recommends products—so when companies do this, it goes a long way.
Another great example is Pandora. For the folks who subscribe to Pandora, they spent a few years doing the DNA, music DNA. They took thousands and thousands of songs and pieced them together to see what the matching code was.
When a person sat down and said, “I like flamenco guitar,” it would actually find flamenco guitar songs, and with time, the AI would pick up, he likes flamenco songs but guess what, they’re not from Spain, they’re from Israel or from Morocco.
That type of personalization for companies like Pandora, really work well. We see it all the time with Netflix as well, getting the recommendations on movies that you’ve seen before.
I Don’t Wanna Grow Up
Charlie Hoehn: Could you give an example of a company that you see that’s not doing this? I want the listener to get a clear picture of what the failure looks like or what the problem really is when you don’t do it.
Alex Barseghian: Yeah, let me set the stage. This is important. Traditional companies typically grow the same way, and these are the big Fords, Honey Well, Budweiser. They grow by either opening more locations, launching a new version of the same product, or buying to acquisition to get market share.
They’re not innovating at all, and this is not sustainable.
This is a fairly large blanket statement, but if you think of mid-market retail in the US, they are failing in a big way because they are doing what they were doing before and then not thinking about the individual or community and how they stay relevant.
You know, we saw what happened with Toys R Us going bust. There are others on the horizon like JCPenney, Sears is going bust. By the way, one of the things, this is very important is that it’s not that you have to be relevant to millennials. Millennials have nothing to do with this, right?
It’s about understanding your audience, first and foremost.
Speaking to them in a language they understand and getting more personal and understanding which groups they work with. There’s probably a list of a hundred companies I could just think of some in my head in various different industries that, if they don’t think about growing and not in a traditional way, they’re going to hit a wall. There are very few companies around that have lasted long periods of time.
Charlie Hoehn: Let’s use Toys R Us as an example—how would you have maybe applied Localmotion to them? What were they missing that Localmotion could have served them?
Alex Barseghian: Yeah, there is nothing more fun than being in the toy business I would imagine, right? You’re there marketing products that both adults remember and love and kids love. It’s about putting a smile on people’s face.
Localmotion has two key premises. One is it needs to be around the individual, so they have to understand who the customer is and what they do on a daily basis and how can you provide relevant offers to the individual. They didn’t do that.
They would put a discount to drive traffic and volume fairly randomly, or selected by the actual company who wants to do the promotion but not targeted to the individuals. Emails would go out, and it would be mass to everybody and not targeted to me on the content that I would want.
They should know how my child is, they should know who I’m buying it for, is it a niece or not… There’s a purchase path there. They were just opening more and more stores as an answer to that problem. That’s what they were trying to do.
The second biggest miss in my opinion is, toys all revolve around a community, and there is no bigger community or endearing community than parents. Or just moms. I think tapping in to a community in which they could be part of the dialogue, asserting themselves in a positive way to not just sell products but be part of the conversation, they missed that completely.
There’s nothing more endearing than a new parent, and they were absent. Other people took that on their own.
Amazon did a beautiful job speaking to their audience, and if they’re not talking to their audience, somebody else is. That’s exactly what happened to them. Another retailer that did a pretty good job was Target.
Target has got a pretty good initiative in getting local and community into that world. They’ve really stepped up.
What Toys R Us couldn’t do, Target is doing and Amazon is doing.
Target, Amazon, and Costco
Charlie Hoehn: Sorry to interrupt again but just, could we paint more of a picture of what Target and Amazon are doing well because on the surface, it sounds like they just know more about their customers, they know more the data, they know more the specifics so they can target them with relevant messages better. Is that what you’re saying, or is it deeper than that?
Alex Barseghian: It is. Another good company is Costco. I’ll use that as an example because this is what Costco, Target and Amazon are doing. On the digital side, it’s very easy to customize product, right? If I’m in Cincinnati or if I’m in Toronto, if there’s no relevant product around me, I don’t have to show it, or if there’s no local product, I don’t have to display it.
It’s very easy to, on a digital world, curate something that some people want. In the physical world, it’s much more difficult. You have a chain of stores, you’ve got to get the product out, the logistics of creating a variety of different products in each store is very difficult.
Target does that, and so does Costco. They have a really strong local-minded plan. You can go to a Costco, they know the demographics of the city, they know how many kids there are. They will bring in toys and baby food in one store while in another store, they will not because the demographics aren’t there.
They get that amount of nitty gritty detail to drive sales.
They have access to better data, they can communicate better, but really, it’s trying to curate that store or merchandise that store so it works really, really well.
By the way, that is the success of the US Target. Target, when they came to Canada, did none of the above. They came in, they said, “Okay, Canadians are just like Americans. We will have American product and the pricing will be a little bit more.” So they missed the boat on that completely.
When you enter a market like Canada, you can’t assume it is the 51st state. That is what Target did.
Target in their own plane, in their own background of the US, did a great job at understanding the sensitivities between California and New York, but completely missed the bus on Canada. They assumed it was just like New York.
Who Needs Localmotion
Charlie Hoehn: So Alex I am curious, what is the impact you’re hoping that this book really has? What would be a dream come true for you if certain companies applied this?
Alex Barseghian: You know I would say that if companies don’t change, they are going to be forced to change. They are going to get eaten up, and they’re going to get eaten up by the likes of Amazon or the likes of Netflix. So what I am trying to do is create a spark.
Companies who feel that they’re traditional, that they are going to do what they are doing and keep on going with that exact same path, are going to be doomed.
Not to be a naysayer and be sad about it, but it is the reality that these traditional companies have to move very quickly to understand how you personalize something to the individual, how you communicate to a group of likeminded people that are in their community.
Coke is a traditional company, new Coke was probably not a great new product but it was them trying to grab market share and create a new product.
The most revolutionary thing they’ve done is having Coke with your name on it.
The personalization of Coke that has been so successful because, for me, they have embraced Localmotion with a notion of personalization. That is a great brand to say they’ve been around for a long time. We know what it is, it’s not good for people, but what they have done is make it much more human, much more personable with just getting the ability to put their name on something as iconic as a Coke bottle.
Charlie Hoehn: What is your maybe favorite traditional business that you would most want to get this message to?
Alex Barseghian: I think that there’s some of them that are hearing it. I think when Budweiser and the beer companies heard that they sell more craft beer than they do the traditional beers, I think they woke up.
I would say retail is the biggest one. Retail currently, I would say, needs the most amount of help.
Charlie Hoehn: Which of the retail stores would you most want to work with in an ideal world and help them with this?
Alex Barseghian: Yeah, so within that vertical of retail is just so big. There are two that I would think would be phenomenal. One was in grocery, so I consider that within the retail. So grocery channels in itself, there is going to be no middle ground. You are either going to be a big whale like the Krogers of the world, or you are going to be very small.
Unless you’re sitting in this middle, where there’s a lot of regional players as you know in the US and around the world for that matter, you have to be able to understand what data is doing, you have to be able to understand what food delivery is doing. You need to understand the dynamics that renting kit meals are doing, and you have to do that very quick.
You can’t wait, because customers will decide for themselves.
I am not saying they’re fickle. They are loyal, but they are loyal to price, they are loyal to convenience. They are loyal to their friends and family, which is their community, and they are loyal to themselves.
Case Studies in Convenience Food
Charlie Hoehn: So let’s pick an example here of let’s say 7-Eleven would they be a good example of a company that needs to apply this or are they doing a good job?
Alex Barseghian: No, I think 7-Eleven is actually a good example. With that being said on a global level, 7-Eleven are so different. So 7-Eleven Japan or Korea is so different than 7-Eleven in Canada and the US, right?
So what 7-Eleven has done well is applied their local mentality to in country. So 7-Eleven in Japan, it is like a mini supermarket and you can actually buy a whole load of different types of food not just Big Gulp Slurpees. I think in the US they have not changed with the times.
So although they are ahead in Japan, in the US the opportunity for them is not just to go after big sugary drinks. It’s to really adapt to what customers are doing.
There’s people who go there in terms of frequency quite a bit. Are they targeting them properly or well? I don’t believe so.
If they introduce new products like a dollar store, yes. Could they not just to rely on one product on sugary drinks to sell? Yes. So I think there is a lot of opportunity for them.
Now here, talking about 7-Eleven, there’s KFC. You go to KFC, the notion of the American franchise system has been to replicate something to the tee, and that’s the success of any franchise organization. We’re going from McDonalds, to KFC, to Pizza Hut—it is the same exact taste, flavor, the full stop. So that worked, but I think that is not as relevant as it used to be. And it’s not about McDonalds having a Royale with cheese in France to make it French right? It’s totally different.
Restaurant chains that are more locally minded, flavor minded are going to be much more successful.
McDonalds is successful because of the sheer size, but when you think of burgers, you might think of McDonalds. But you don’t think it is the best burgers. They should be serving the best burgers. So what it did was allowed the burger movement to happen.
There are hordes now. There are probably more independent burger shops serving local communities than there are McDonalds now if you add them all up. Why? Because it is the local chef, the local butcher, locally sourced meat, no hormones.
The whole local food movement really impacted that business considerably. McDonalds is not going anywhere. They’re trying to adapt. But you know, it is not easy.
Business Who’ve Gotten It Right
Charlie Hoehn: How do businesses go about building a community, creating an experience and creating a tribe of customers?
Alex Barseghian: Fashion brands have done a really good job at this, good and bad, right? So you think of brands like Supreme, which is a street wear brand that is seen as a cool brand. Why? Because it is limited edition. It speaks to an audience that wants scarcity. So their stuff doesn’t go on sale that often. There are line ups to get the products. So they have created a ritual around Supreme.
There are always line ups on a Thursday morning because that is when they release new products. They have created this interesting following on Supreme products that is pretty amazing, because now at Supreme fashion brand, street wear brand, it still has the street credibility because of the scarcity but they have translated that brand to other businesses.
So Louise Vuitton will do a Supreme product. They will have Supreme luggage distributed on a very limited basis. Not available for a long period of time. So that scarcity they have done a great job in doing, and you can get anything from a Supreme toothpaste to toothbrush to comb, hat, even a car.
It is always limited.
Louise Vuitton is another on the other end of the spectrum, working with their one of the most traditional products.
Their pattern hasn’t changed for decades, but what they have done is taken that pattern, elevated it, and work with local artists to paint a pattern or unique pattern on their bags.
Another example is a Japanese brand Uniqlo, which is like the Gap of Japan just entering into the market. Gap is an example of one who hasn’t adopted community or local at all. Uniqlo is probably the same size.
What they have done is whenever they go to market, they have the staple products like the t-shirts and jeans, but they work with a local designer or pattern. So when they launched in the UK, Uniqlo went and worked with the fabric company called Liberties, and they created limited edition products with Liberties of London shirts, tops, and pants. So they’ve got an increased following whenever Uniqlo store opens up.
It is not going to be the same everywhere. It is going to be different in that local environment, which is pretty astonishing when you think about a company of that size doing something so well, like reaching the community and adapting to the local environment.
Connect with Alex Barseghian
Charlie Hoehn: Alex, what is the best way for people to either follow you or get in touch with you?
Alex Barseghian: LinkedIn is probably the best right now.
Charlie Hoehn: The final question I have for you is what is one thing that listeners can do from your book this week that will have a positive impact? Give them a challenge.
Alex Barseghian: I think part of it is the 101 of marketing, but it is to think about the customer first and to bring the consumer within their world. Test to see if they are actually servicing them as best as they can.
The best companies in the world who have done a good job at doing this have been Apple and the new disruptors, because they think the customer journey is first.
Airbnb shouldn’t exist if giants like Marriott are around. Tesla shouldn’t exist if there’s Mercedes-Benz around, but they put the customer first. So that is what I would challenge a reader to think about.
What are we doing the most? It could be as simple as if I am an app developer, do I have the best customer journey on that app? Or if I am an IT person working at IBM, at the end of the day they are servicing something for the customer—am I doing the most I can for that customer?
Charlie Hoehn: So revisiting the customer journey and seeing if it really is the best possible for your customer.
Alex Barseghian: And this is an age old truism but people forget it, right? The guys who focus on the customer always win.
Get Alex’s new book Localmotion on Amazon.
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