How Lack Of Loyalty KO'd Borders


Even as bookstore fans are lamenting the liquidation of Borders, marketing experts are dissecting what went wrong in the very slow death of the Ann Arbor, Mich.-based retailer.

Marketing Daily asked Robert Passikoff, founder and president of Brand Keys, which measures customer loyalty, for his take.

Q: So what do you think ultimately caused this chain, which was once a bright light in the book world, to fail?

A: It's been said that a good book tells the truth about its hero, and a bad book tells the truth about its author. But the liquidation of this 40-year-old chain ultimately tells the truth about the brand and how it was managed. It's been more than half a decade since Borders declared an actual profit, and has lost a billion-plus dollars since. That's occasional shopping, not the kind of customer loyalty that drives profitability.



Q: Why?

A: For one thing, Borders was egregiously bad at identifying consumer product and lifestyle trends, introducing candles and stationery, CDs and DVDs at a time when consumers were moving in other directions.

Q: You mention you've been analyzing the email Borders sent their customers to explain the liquidation, and inviting them to shop at close-out locations. Are there more clues there?

A: Yes. Take this part: "We had worked very hard toward a different outcome. The fact is that Borders has been facing headwinds for quite some time, including a rapidly changing book industry, the e-Reader revolution, and a turbulent economy."

This is like Krispy Kreme blaming the Atkins diet on its brand-positioning blunders. It's true that the book industry has changed, and the economy has been wonky -- but volumes of competitors, from Barnes & Noble to Wal-Mart, have managed to take away market share and customers from Borders in that same economic environment. Borders was late to the Web and late bringing e-tailing into their marketing mix. In fact, despite their "very hard work," Borders actually contracted out their e-commerce business to -- it drove customers to an actual competitor.

Q: Many people are seeing this as a loss to communities, where Borders was sometimes the only bookstore.

A: They weren't adding much to communities, at least not recently. If you're a retailer, loyal and engaged customers are six times more likely to visit your locations. Consumers are looking to be delighted, and only real brands that can engage customers can do that. Loyal customers follow "The Rule of Six": they're six times more likely to rebuff competitive offers, and six times more likely to invest in your company. In 2008 Border's stock was 35¢ a share. Last year it was still under a dollar. Amazon's shares were being traded at $215.

Q: So it won't be missed?

A: No. The email also said: "My sincerest hope is that we remain in the hearts of readers for years to come." But this brand is bankrupt in funds and bankrupt in meaning. How many consumer hearts today beat wildly for the likes of Caldor, Spiegel, Bennigan's or WashingtonMutual?

1 comment about "How Lack Of Loyalty KO'd Borders ".
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  1. Theresa m. Moore from Antellus, July 27, 2011 at 3:09 p.m.

    It's too bad Borders was too restrictive of its book offerings. I tried contacting them for distribution of my titles and their canned reply was "we only deal with Baker & Taylor". They had many opportunities to beat out Amazon by offering all books instead of only a few, but they missed them. Yes, their management was awful, and while they had an interesting and eclectic mix already, I noticed that people preferred to read the books for free on site, then walk out of the store without buying. No doubt they copied down ISBNs and then went to Amazon to buy for less. No bookstore can compete with that.

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