Peter Horst, Senior Vice President, Brand Marketing, Capital One

Interview by CMO Council

Peter Horst is a 20-year marketing veteran with experience spanning products, services and technology at Capital One, Ameritrade, General Mills and US WEST. As Senior Vice President of Brand Marketing at Capital One, Peter supports Capital One's diversified businesses in branch and Internet banking, home loans, small business and personal lending, auto finance and international markets. His team is responsible for driving integrated marketing, new product development, and market research, and led the rebranding of Hibernia Bank and the launch of Capital One into branch banking.

Q: How would you describe your view of the customer?
A: I view one of the most important aspects of my role to being sort of an internal consumer advocate, champion, voice of, so that its our job, as marketers, to thoroughly deeply understand the customer, the consumer, the market and be the provocative, sometimes irritating pebble in the shoe of the organization to make sure that that's being appropriately reflective in the development of value proposition and the defining of the customer experience. It's the ongoing lifecycle management of the customer, and as much as possible, to think very holistically about that customer as the center point in an organization where we have multiple different lines of business that are not structured around the customer.

From the organization perspective, I think we've actually come a long way in terms of how we are able to view the customer and we've made a massive investment in technology and infrastructure over the last couple of years that will enable us to be much more holistic in terms of how we track, analyze and view a customer coming from a world where we had vertical products silo'd, so to speak, where we now have an integrated view of the customer which will enable a much more holistic approach to that customer.

Q: What are the particular challenges in improving customer retention for your organization and your industry, as a whole?
A: Well, one is that the nature of the customer relationship is such that it's for a lot of these categories, switching costs are essentially zero, so people being getting back the credit card industry, bombarded with offers all the time and its absolutely painless and easy to just stop using one card and adopt another, with the exception of perhaps loss of some mild chief buildup are required of thresholds of purchases or something. Other than that, it's a pretty easy one.

Now, on the other extreme, is banking, which is incredibly sticky so the challenge there is less retention, is more acquisition and how do you shake someone loose from an inertial relationship with a bank that’s been there for ten years and people just don’t move the bank relationship that much. So, the retention challenge varies, certainly by category. One of the challenges with retention is we have to balance being financial prudent with how we manage credit risk and putting money into people’s hands with an individual customer’s desire to have an increased credit line or be able to spend more.

And in some cases, other credit card companies or other lenders will extend more credit and take perhaps a different risk profile than we are willing to and that can be frustrating to the customer. So, we have to make sure that they see the value of what they’re getting and that we’ve crafted the right offer for them but also make sure we’re protecting our shareholders. So, in a money based category like that, that can be a tricky balance that you have to get right because we’ve certainly seen plenty of credit card companies and other lenders blow up over the years.

Q: In terms of banking, you said it's very sticky, people rarely change banks. What do you do to get them, to acquire them, to come to your company?
A: Well, you have to do the best you can in developing a distinctive offering that's both your brand as well as the product, mousetrap that you're offering and how much can you highlight points of difference that are meaningful and find those people who are prone to, open to, and at the moment of switching. That's a very hard thing to predict. Generally, people leave a bank because they’re annoyed at some service breakdown or some issue, so less lured away than they are driven away.

So, you just have to be very mindful of how to invest in the right places at the right levels so that you're not overspending against inertial audience that won’t be responsive but that you’re making sure that you're getting more than your fair share of people in motion and that you are doing whatever you can to leverage interesting product offers, you’ve got to shake people loose

Q: How does Capital One specifically get the brand and its offerings out there?
A: In banking we use a number of channels, probably more channels than the other. We do television, radio, print, online, outdoor, events, sponsorships of various sorts, really a very full gambit of marketing vehicles, from the broad DNA level down to the very, very localized, where we’re doing programs just in the very immediate trade area radius around given branches.

WHAT CONSUMERS THINK WHEN THEY THINK ABOUT HEALTH AND WELLNESS
By Denise Lee Yohn
Exclusive to Marketing Magnified

The food and beverage industry is undergoing a seismic change. Whether on the shelf or on restaurant-lined streets, health and wellness is all the rage.

17,038 new beverage products launched worldwide in 2006 with strong growth seen in fortified beverages, reports Beverage World magazine – among them were 58 beverages containing Omega-3 fatty acids, 85 with a weight control claim, and 130 featuring prebiotics and probiotics.

Many companies want to tap the exploding consumer demand, but it's not as simple as adding some healthy-sounding ingredient to an existing formulation or re-branding your product.

To stand out among the myriad of choices and make meaningful connections with customers that lead to purchase and loyalty, marketers must understand and navigate through the numerous and widely-differing health and wellness mindsets among consumers.

To today's consumer, wellness is more than just lack of illness. It means different things to different people. Here are 4 perspectives on "wellness" that have arisen in my research.

Wellness as proactive life management.

People of this mindset want to ward off the fallout of their 24/7 always-on lifestyles. They know they put their health at risk everyday and they desire products and services that enable them to maintain a sense of control and stability.

They respond to brands that help them prepare for the unexpected and make wise choices on the spot. Re-sealable and/or portable packaging and shelf-stable products that can be prepared on-the-go, like Lipton To Go iced teas, are good directions for packaged foods marketers.

Restaurants can provide services that give customers information and make them feel more confident in their decisions. For example, with Diet.com’s Nutrition on the Go service, people can use their cell phones to text "diet1", the name of a restaurant, and menu item and within seconds they get a reply listing the nutritional profile in the requested item. It's the perfect tool to serve those seeking to proactively manage their lives.

Wellness as permission to enjoy food.

This mindset is shared by people who want to experience more pleasure, less guilt. They believe having a "healthy" perspective on food and eating is more important to their well-being than is counting every calorie. And they are looking for brands that share this understanding.

Marketers like Hershey's have learned that tapping into this mindset is more effective than touting health benefits. They recently launched Bliss, a line of treats "for those who appreciate the everyday joys of chocolate." Hershey's previous efforts tried appealing to consumers by promoting a product's antioxidant composition but they fell short in making an emotional connection.

By positioning their new product line as an everyday indulgence and serving it up in individually wrapped bite-sized pieces, Hershey's appeals to customers who relate to wellness along more psychological lines.

Wellness as the ability to use your body.

This mindset is about feeling good physically and being ready for whatever they want to do in life. These people are motivated by food's functional benefits.

To appeal to this group, the smoothie chain Jamba Juice overhauled their menu, adding new products, changing existing ones, and organizing their offerings by consumer benefit. They satisfy the growing – in number and variety – demand for health and performance benefits with smoothies ranging from the 3G Energizer for more energy and the Coldbuster to combat feeling under the weather.

It's important to note fitness may mean the ability to run the Boston marathon, while wellness may mean simply running the everyday marathon of life.

Wellness as holistic care.

Those who relate to their world more holistically tend to adopt this mindset. Wellness isn't just about taking care of themselves; it's about promoting balance, integrity, and peace in their world. They want to buy from companies that share these values.

Products and services that help parents care for their children are effective with this group. Clif Bar & Company provides an example. They have 3 different lines of products for kids and, using the acronym LUNCH, they offer simple and easy-to-remember tips for parents looking to pack healthier lunchboxes (e.g., the "U" stands for "Use variety – Keep it interesting and fun with shapes, colors, textures and flavors.")

Frito-Lay recently introduced a new platform for its Sun Chips snacks, "Healthier Planet. Healthier You." It highlights the company's solar energy efforts and encourages consumers to take their own steps to live "a brighter life." By incorporating the power of the sun in everything from advertising to producing the product, Frito-Lay is facilitating a powerful connection with people who see wellness as holistic care.

Beyond these 4 perspectives are many others ranging a full spectrum of consumer needs and wants. Smart marketers like those mentioned above have investigated the consumer demand landscape, identified a specific mindset to target, and tailored their offering accordingly.

The old adage "beauty is in the eye of the beholder" might now have a corollary in "wellness is in the mind of the consumer."

Denise Lee Yohn is a "brand as business" consulting partner who has helped companies like Frito-Lay, Jamba Juice, and Road Runner Sports operationalize their brands to grow their businesses. She can be reached at mail@deniseleeyohn.com.