Managing Through Changing Consumer Behavior

What do banking and golf have in common? Without torturing the analogy too much, we can cite one clear similarity: a struggle to win the allegiance of the younger generation. Just as banks ponder how to bring in the technology-savvy Millennials as customers, the golfing industry needs to attract young people who find little appeal in spending half the day on 18-hole courses.

“The golfing industry was constructed to attract people like me,” says Mark King, president of Adidas Group North America and chairman of its TaylorMade Golf Co subsidiary. “I grew up playing golf, I’m still a pretty good player and it’s been part of my life, a big part of who I am. The problem is that young people today grow up with so many more alternatives.”

King, who as CEO engineered TaylorMade’s rise to top status in golf equipment from 2002 to 2013, will appear at BAI Retail Delivery 2014 on November 13 to discuss the lessons he learned trying to guide the golfing industry through a period of shifting consumer behavior similar to the one banking now faces. Here, in a pre-conference interview, are some highlights from what he is likely to say in Chicago:

Q: In the golf industry, you’ve been dealing with a shift in consumer behavior as fewer young people take up the sport. Something similar is occurring in banking, where customers have been migrating from branch transactions to digital ones, leaving bankers wondering how they should reconfigure or close their branches. What general advice can you provide bankers about how they should reconnect with their customers?

King: My fiancée happens to be a district manager for a large bank – she manages 12 branches – so I’m hearing about banking challenges every night.

In almost any industry, consumer behaviors are changing. People have less time and the interaction between customer and company is more about technology, less about connectivity. The problem for retail banks is less branch traffic so there’s less opportunity to sell products. You need to enhance the sales experience to restore that connectivity.

Apple is a company that has mastered this challenge. There are more reasons to go to an Apple store than just to buy a product, which you can do elsewhere. Apple has enhanced the buying experience in their stores.

I’m 55 years old and I still go into the branch, since I do all my transactions manually. The bankers should want me to do that but their marketing isn’t at the level required to encourage people to come into the branch. Industries and companies that have been structured based on the way the world used to operate are really going to struggle going forward.

To create an emotional connection with consumers, you’re going to have to use technology but it needs to be an omnichannel approach. No matter how you’re touching that consumer, whether it’s online or in the store, you need to provide the same type of experience. And in the bank branches, there needs to be something that brings people in other than just transactions.

Q: It’s interesting that you used the term “omnichannel.” Bankers are very much focused on how to make the customer experience the same whether you’re in a branch, on the cell phone, at the ATM or whatever. How do you have an omnichannel experience in golf or other sports?

King: Honestly, all industries use the term “omnichannel,” although only a vertical organization like a bank can actually do it; banks have an advantage in that they control all channels. At Adidas, we’re multi-channel because we have our own retail stores, but mostly we’re dealing with third-party retailers where we don’t control the consumer experience as much as we would like to.

But we do what we can in the way of consistent branding. In the old days, about a decade ago, our retailers would use different displays or different messages for our product. We’ve switched a lot of our marketing money from big media to point of sale so the message is the same, whether the customer is online, in one of our stores or in an independent store.

I still think the key is to restore that emotional connection for customers by improving the experience in the stores. For example, if you had walked into a Dick’s Sporting Goods store 10 years ago to buy TaylorMade golf clubs, you would have seen the product arranged on the floor with a price. Nowadays, you’ll find instead large hitting nets with PGA professionals available to fit your clubs and deliver them customized overnight. That gives you a lot more reason to go into a Dick’s Sporting Goods today than just to buy a product.

Employee engagement is a big part of this, by the way. You need employees who aren’t simply conducting transactions but taking responsibility for establishing a deeper bond with the customer when they have the opportunity.

Q: And how can you get that level of engagement out of your employees?

King: That’s easy to talk about but hard to execute. You have to transform the work environment. I’ve been working for thirty-five years. When I started, it was a privilege to work for a great company like Adidas. The mindset was that if you work for Adidas, you should be loyal to the company and its mission because you are fortunate to be there.

Well, Millennials are not interested in that kind of environment. They want to use their creativity and have input into solving problems. They want to use their intelligence. If you can create that environment, you’re going to attract and retain top talent.

Q: What about attracting young people as customers? I understand that golf is struggling with that issue just like banks. What’s the problem there?

King: The golfing industry was constructed to attract people like me. I grew up playing golf, I’m still a pretty good player and it’s been part of my life, a big part of who I am. The problem is that young people today grow up with so many more alternatives. Look at gyms today. It’s no longer about an individual running on a treadmill; it’s about ways to get together and socialize, to meet other people. I could see banks organizing workshops for young people to come in to learn how to invest, how to get a loan, etc. One of the things that industries have to do is find a way to bring people together.

Bowling provides a good example. Back in the 1990s, the bowling industry was really in bad shape. That’s because bowling was really constructed around leagues – you were on a team, you bowled at night and on weekends and it was all about team play. Now, when you go into a bowling alley it’s all strobe lights and music. They have totally transformed the experience to bring back the young people. It’s all about the behavior of the new generation and how we construct an experience that’s attractive to them.

Mr. Cline is managing editor of BAI Banking Strategies and can be reached at [email protected].