By Dan Monheit, Orginally shared on Inside Retail 13.10.20
In a year categorised by all-out doom and gloom, we all need some light to brighten up our lives. The world is primed for optimism and in desperate need to hear some good news stories, making it the perfect time for retailers to enact a halo effect initiative to accelerate post-pandemic growth rates.
In challenging times, it’s natural for businesses to look for ways to rationalise, and it’s understandable that many will be seeking to cut anything from the budget that is not deemed absolutely essential. However, if you’re looking at anything but the shortest, most immediate horizon, then big brand initiatives are the last thing a business should be cutting. Brands that have halos endure.
Right now, brands have an unprecedented opportunity to capitalise on doubling down on a big statement piece because customers are discovering and rediscovering brands at an unprecedented rate. Both with the boost in e-commerce and with the imminent return to large-scale physical retail, it’s time for brands to turn their halos on.
In behavioural economics terms, the “halo effect” is a cognitive bias that causes us to take an initial, positive impression of a person, product or brand and apply it broadly to encompass their entire being. As we slide into 2021, the scope now for first impressions is gigantic.
Research into the halo effect was pioneered by psychologist Edward Thorndike in 1920. His study surveyed military officers, asking them to rate their subordinates on a range of characteristics, including intelligence, physique, leadership, technical ability and character. The results demonstrated a strong correlation between unrelated positive and negative traits. If a serviceman was taller and thought to be more physically attractive, he was also more likely to be considered intelligent and a better soldier.
Thorndike deduced that people take a single characteristic (a halo) and apply that to a person’s entire personality. In other words, we all judge books by their covers.
Translating the halo effect into commercial terms, if a brand makes an incredible impression in one area, it influences consumers’ positive opinions of the brand across the board. Figuratively, a halo forms and casts a favourable glow over everything else that the brand subsequently does.
And it’s a shine that doesn’t easily rub off. The initial positive evaluation becomes overarching, making consumers more likely to invest further in its product offerings, even if there is very little correlation between what created the halo and the product that they end up buying.
Nike’s ugly shoe still a slam dunk
I first witnessed this paradox in action while working at Nike in the very early stages of my career. In 2000, Nike released Shox — a collection of shoes with a revolutionary cushioning system. The hype machine went into overdrive: 16 years in the making, hundreds of millions of dollars in research and development, and an advertising campaign that saw a particularly hideous-looking sports shoe grace the feet of the most famous Nike-sponsored athletes.
The shoe was expensive — eye-wateringly so. The $260 price point in the year 2000 is the equivalent of around $400 today. The price, the hype, the tech, the story, all should have added up to a slam dunk, but the shoe sold abominably.
Despite this, it was far from a dismal failure for Nike. While sales were negligible, the statement Nike made with Shox was a slam dunk. The campaign amplified the brand’s reputation for advancing technology, pushing the boundaries of what’s humanly possible, and daring to dream. Sure, sales of Shox were in the doldrums, but the halo they cast caused a remarkable increase in revenue from Nike’s more affordable range of runners and cross-trainers.
As brands, we need to recognise that what we sell and what consumers buy are rarely the same thing. Every successful business, from banks to creative agencies to fashion labels and supermarkets, has projects for show and projects for dough. Essentially, these are projects we do purely to create interest and appeal, as distinct from the workhorse products that keep the doors open, the lights on and the cash coming in.
It pays to be deliberate about when we’re working on one versus the other. Halo projects set the North Star and are the embodiment of the brand values that the business wants to project into the world. More often than not, halo projects don’t generate immediate revenue. They need a much longer lead time to prove themselves financially, especially when compared with more immediate ROI-generating projects for dough.
However, halo projects can be incredibly effective. It was this kind of aspiration-building exercise that saw Tiffany and Co create a $10 million diamond ring, epitomising the brand’s elite image, and in doing so, moving billions of dollars’ worth of sterling silver bracelets and charms.
While we know we shouldn’t judge a book by its cover, inherently, that is exactly what we do. The halo effect offers brands a compelling reason to invest in — and a huge opportunity to benefit from — developing one hell of a cover. If this year’s budget doesn’t leave room for a $10 million diamond ring, here are some more affordable options to beam out your brand’s goodness.
An effective strategy to cast a halo over your brand is incorporating memorable hospitality moments into your retail store experience. In thinking about where to go over and above in customer service, consider the unique expertise or personality of the store and its staff.
At the high end, we see luxury cosmetic retailer Mecca’s $120 makeover service, which has all but achieved cult status with the brand’s legions of adoring fans. At the other end of the spectrum, the Five Guys burger chain has made a name for itself by over-delivering with super-generous servings of fries. Who doesn’t love free fries?
Retailers can play into the halo effect by offering stand-out pieces in their front window to draw traffic in. Using the shopfront as a high-impact billboard, merchandised specifically for driving in-store and online traffic is a perfect project for show. There’s no need to be pragmatic here. Let the customer dream — you can always sell them basics once they’ve walked in the door.
Australian department store Myer has taken this to the extreme over the years with their elaborate Christmas windows, but you don’t need to be a national retailer to stop traffic in its tracks.
Social media, content and websites are now more important than ever in creating a halo for a brand. The shift of customers to online, and the rise of omnichannel/multichannel retailing, means that an outstanding in-store experience can create a halo that translates to subsequent higher-margin, online sales.
The opposite is also true, especially as our first interactions with new brands are increasingly happening through our phones and laptops. One way of executing the “digital touchpoint as a halo” strategy is through large-scale technology and personalisation. A leading example of this is Kogan.com, which has mastered the art of tailoring emails based on interest and browsing habits. Another way to shine online is with a personality and tone that’s highly distinctive for the category. Classic examples include Frank Body in beauty and White Fox in real estate.
While it may be a well-worn path for sneaker brands, high fashion houses and department stores alike, the infinite rise of collabs between celebrities and brands is still one of the quickest routes to a halo.
Seeking out like-minded and sometimes downright unlikely partners to develop product lines can catapult brands into the spotlight and make them suddenly relevant to new audiences. Just think of the unlikely pairing of John Paul Gaultier and Target, or the Sportsgirl and Vexta collab. Vexta, a street artist, added psychedelic artwork and unrivalled street cred to a well-loved mainstream fashion brand.
Dan Monheit is a behavioural science expert and a cofounder and strategy director of creative agency Hardhat. His behavioural economics podcast, Bad Decisions, attracts many thousands of listeners in over 90 countries.