November 12, 2002
Case Study

Two Tactics Hobart Uses to Defy the Recession: 400 Customer Testimonials and 0% Financing

SUMMARY: This Case Study includes some great ideas on how to set up a workable program to collect and use customer case histories, without too much work on your part.

Plus, it also examines what happens when you test a different offer to a segment of your marketplace. Hobart's 0% offer is unusual for B2B marketing so we were fascinated by the results.
"Our industry has taken a beating this year," admits Dean Landeche, VP Brand Marketing Hobart Corporation.

Founded in 1897, Hobart produces some of the highest quality commercial food equipment in the world. Which can make a marketer's life very difficult during a recession for two reasons:

Reason #1. High quality equals durability. Hobart products remain in good working order for years, sometimes for generations. It is not exactly stuff that cries out for replacement on a regular basis.

Reason #2. Quality costs money. "We're not the cheapest guys in the marketplace. Hobart is the brand you aspire to," says Landeche.

By mid-summer 2001, it was obvious the general recession was going to hurt sales. Then the restaurant and food service industry reeled under the effects of September 11th, and things got worse.

Landeche had to find a way to make an aspirational brand turn into a money-making brand in a tough economy. He came up with two:

"People love Hobart," says Landeche, "we'd get these incredible stories about how a piece of equipment was a member of their family. They'd had it around for so long 20, 30, 40 years, forever."

Customer testimonials and case histories are the strongest sales pitches any product can have, especially when they are expressed in the customer's own words and voice. Landeche decided to launch a campaign to gather as many testimonials as possible for sales reps, resellers and the PR department to use to get more sales in 2001-2002.

First he set up a form on Hobart's Web site that customers could enter their stories into. Although the form was easy to use, it didn't automatically post any stories to the live site. Instead, everything was eyeballed by marketing first.

They planned to remove testimonials from clients such as the US Federal Government who are not allowed to publicly recommend any vendor. (Some large corporations also have this rule.) They also planned to edit very lightly for grammar and spelling, trying not to alter the voice of the piece whatsoever. If the edits went beyond fixing a typo, Landeche's team would always contact the customer for additional final approval. (No customer ever objected.)

Next they devised a way to code incoming testimonials in order to create an easily searchable online library so that Hobart's customers, PR Department and sales reps could find one that matched any specific marketplace niche or product more easily.

With that testimonial collection system set up, Landeche began to promote its use in early September 2001 using a giveaway contest as an incentive for client stories. The winner would get a trip around the world. The contest ran from September 2001 - June 2002, so to keep entries coming in Landeche awarded a set of luggage every month and ran a PR campaign about it.

He quickly learned that he should check with the winner before running an announcement because again some organizations would not allow their employees to accept a gift from a vendor; especially if it was to be publicized.

Aside from asking sales reps and distributors to mention it to customers, Landeche used a two-step campaign to get the contest entries:

Step 1: Trade show promotion
Landeche launched the contest at his industry's biggest annual trade show. He hired local actors to do a live theatrical presentation at his booth featuring trivia questions and getting passers by to tell their Hobart stories. They also directed attendees to enter their stories into Hobart's online form right away on a workstation at the booth, or to take a handout featuring the URL to use later.

Step 2: Email promotion to the house list
Mindful of email filters, Landeche avoided any copy in emailed announcements that would appear to be from a spammer. So instead of saying "win a free vacation" his contest tagline said, "We'd give the world for a great story."

Finally, Landeche began feeding the resulting stories to his distributors, interested journalists, sales reps and customers who visited the site.

Although the campaign was a success, it was not enough to rescue Hobart from sales doldrums brought on by Sept 11th. Landeche knew that the best of marketing pitches can only go so far in a down economy. Sometimes you have to change your offer.

In December 2001 Landeche and Hobart's management team began brainstorming a way they could offer their products at an affordable price, without actually lowering prices or the high brand value associated with them.

Through a partnership with American Express, Hobart decided to offer independent operators and small business accounts (the folks who were the least likely to purchase due to the recession) zero percent financing on Hobart purchases for 30 months.

"It isn't that unusual in cars," Landeche says, "but it's unheard of in food service for durable capital goods. It was different from our traditional leasing program which is for 72 months and has common financial factors [such as interest] built in. It was a lease-to-own program over 30 months and the price was the price of the product divided by 30. There was no limit to who could utilize it, but we eliminated negotiated pricing for chains - much like car makers don't give 0% to fleet purchasers."

Landeche used every media he could think of to get the message across, including:
- PR
- Co-op promotions with Amex to their related list
- Co-op promos with distributors including direct mail, in-store signage, flyers, you name it.
- Email announcements to his house list
- Web site mentions

Being a brand-conscious marketer, rather than just trumpeting the 0% very loudly, all of Landeche's promotional campaigns included a clear brand-benefits message along with the offer. He says, "Outbound communications focused on 'Get industry advice from Hobart on how you can improve your operations and use our 0% financing to help you out financially."

He knew his in-house email list was critical to making the campaign successful, so Landeche conducted focus groups and emailed surveys to find out what sorts of content prospects and customers really yearned for.

Then Landeche used the advice to make sure that the articles on Hobart's e-magazine 'Seasoned Advice' were all must-reads. Example: 'Confessions of a Perp' is an interview with grocery store shoplifter along with tips on how to stop pilferage. Last but not least, his notices for the special offer in the emailed version of the magazine all included hotlinks directly to the appropriate page on the site. He did n'ot strand any click throughs at the main home page.

Landeche was able to gather 400+ usable customer testimonials and case histories during his tour the world promotion, which he used to create a "great database which is a fabulous tool for selling for our distributors. This library includes testimonials from just about every industry segment we are in around the world."

The online library of testimonials is also highly popular with Hobart's site visitors. "We track everything on our site - it's very highly viewed." Plus, the viewable library inspires more customers to send in their testimonials to be added as well without any more inducement.

Yes, customers are perfectly capable of writing great copy without the help of the marketing department. "I pulled up three examples to use at our sales conference, and all three were ones where we didn't touch a word, they were so good."

The zero percent financing offer was even more successful. "We were almost overwhelmed right off the bat with response," says Landeche. "Between March first when we launched and today, we have received about six times the number of applications as we do for our standard leasing program in the course of a full year."

The e-magazine's must-read content contributed to this success. Landeche gets an average of 80% (roughly double the industry average) open rate for his emailed issues, which means more people also click through to learn more about the z^ero percent deal.

He gives kudos to American Express ("They are a phenomenal partner") who approved 80% of all applications, and did so on average within 39 minutes or less.

He also wanted to be sure to mention the great job the HSR agency did on helping with everything from the PR campaigns to coming up with the idea for the monthly contest.

Landeche admits that sometimes no amount of superior marketing can make up for all the sales lost to a shrinking economy. However, he is very optimistic, "We've had some difficult times this year in terms of top-line sales, but we're very positioned for recovery."

Which is smart thinking: Right now it is not just about surviving the downturn, it is about putting systems, relationships, and campaign tests in place so you can bounce into recovery faster the minute the economy allows you to.

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