This entry was originally posted on January 5, 2006 at the old Brandstory blog (link available for a limited time).
Last week my local paper reprinted an article from the AP wire about Krispy Kreme’s new chief executive Stephen Cooper. (You can also read it here.) The article focuses on Cooper’s status as a turnaround specialist and shares some of his philosophy for fixing what’s wrong with Krispy Kreme. Here’s a sample of his thinking:
“You can’t rely on word of mouth to keep expanding the circuit of very loyal customers… You have to be able to make the transition from being a word-of-mouth, kind of myth-driven marketing company into one that has a much more structured, objective-driven sales marketing program.”
Setting aside arguments about whether or not a company can grow by word-of-mouth, Cooper may want to rethink his approach. The problem with Krispy Kreme (okay, there are many) isn’t that the company has relied too heavily on myth or story-driven marketing, it is that the company has removed the story (and experience) from its product as it expanded into new markets.
No brand story = no reason to buy Krispy Kreme donuts. Let me explain:
Six or seven years ago, the nearest Krispy Kreme to my home was a seven-hour drive to Las Vegas. Whenever you were there, you made sure to stop by the Henderson store, waited in a long line watching the donuts fry, and enjoyed a hot original glazed right off the rack, while you selected your donuts. It was something worth bragging about. People begged you to bring them one. An underground of donut smugglers emerged, bringing these delicious delicacies home.
The company expanded. Two stores were opened just 15-30 minutes away. Lines were still long. The donuts were still hot and fun to watch. Going to a Krispy Kreme store was something my kids begged to do. And I was always happy to indulge that desire.
Then Krispy Kreme started selling dounts in grocery stores and gas stations even closer to home. Now there was no need to go all the way to the Krispy Kreme store, wait in line, watch the donuts fry, enjoy a hot, free sample, and place my order. They were available at Albertsons, less than five minutes away. So that’s where we went.
The only problem was, the new Krispy Kreme experience lacked the story and experience that we enjoyed at the donut store. The donuts at Albertson’s were a day old or more. We didn’t see them fry and pass through the froster. The kids didn’t get a free hat. There was no free sample. And frankly, the donuts weren’t that good cold. So why would I pay $1.40 more for six Krispy Kremes than I would for six Hostess donuts? Why not save even more buying the house brand? Customers caught on.
What’s worse, the experience at the Krispy Kreme store was still there, but no one has a reason to go because they know they can get the same donuts at the corner market. As a result, the store experience has changed from a line of donut in-crowders, to a trickle of customers who don’t shop at Albertsons. Visiting Krispy Kreme is no longer an event.
Rather than moving away from a story-driven marketing plan, the turn-around specialists should reconsider what made Krispy Kreme special, and worth talking about, in the first place (Hint: it’s not the donut, it’s the S-T-O-R-Y).
Note: Yes, I know there are other problems for Cooper to solve at Krispy Kreme as well (accounting, pricing, new product development). Great. Do it. Just don’t forget the brand story is a crucial part of the marketing mix.