About seven years ago, Mark Hanna and his team at Richline Group devised a unique strategy for improving their business model that called for thinking small in order to think big. In the interview below (arranged by the folks at The CMO Club), Hanna explains how his company went from a “one size fits all” product approach to having over 40 retailer-specific jewelry lines. Though this approach meant a lot more work for the Richline marketing team, it fulfilled Hanna’s desire to dramatically reshape its relationship with its customers, an effort that has paid huge dividends both in terms of higher customer satisfaction and increased sales. Hanna reminds us all that ultimately, the fundamental role of marketing is to build customer trust and without trust, there is no brand.
Can you talk a bit about the structure of Richline and your role at the company?
We have four independent divisions or business units within our larger company. These include Richline Brands, Inverness Corporation, Rio Grande, and LeachGarner. There are synergies among them but they are very independent of each other and since I’m corporate, they all fall within my purview.
I’ve been CMO of Richline for 8 years and see myself as chief business catalyst, which means that I carry the marketing responsibilities for everything from outbound to services. I also carry the social responsibilities in terms of ecology and social responsibility issues and I have tremendous influence on our operations.
Does each division have its own marketing budget?
Each division has a marketing team, which reports to me, and each of those divisional Presidents develops their actual numbers for the division budgets. So each division has its own marketing mandate based on that division head’s objectives, as they each have very different markets, and I manage each of those four individual marketing departments.
Since you work in a more advisory capacity on the corporate level, how do you rationalize success? Since you’re not responsible for each of the four divisions from a line standpoint.
I think there are two ways to answer that. First, we’re a little textbook in terms of goals, strategies and tactics. And that’s done at the division level but those also roll up to the corporate level. At the corporate level, those goals and tactics are the collaboration among all the separate divisions. It’s about one group’s ability to greatly influence the direction of another group. For example, our Brand Group has a good feel for the market and where it’s headed and informs our fabricated division in terms of what they should be making. Our division that works with the hobbyists, are all over the current trends and interpreting them in different ways, so there’s a big synergy among the divisions created by the consumer market. If you work back from the consumer to our divisions, they really do all influence each other very much. I personally manage the strategic planning process for each one of the divisions.
So that includes a lot of troubleshooting and making sure they set clear objectives, right? Do you also handle budgetary allocation among the divisions?
Yes, definitely on the objectives. And there are really two specifics that we run everything through: one is called “moats,” and the other used to be called collaborative benefits but I now refer to it “return on relationship,” in deference to Ted Rubin. The term “moats” I took from Warren Buffet, and it refers to services, products, and abilities that we own that no one else does. These are our corporate differentiations, our product differentiations, our service differentiations and it’s the single most important strategy we emphasize throughout the divisions, this creation and maintenance of moats.
What are some of your moats?
We’d really have to look at it division by division. But if we start at the fabrication level, their really strong moats are the ability to create precious metals in pretty much any format or any composition, strength, and consistency depending on the product. We have 100 variations of 14k gold, for instance, and our investment in tech is second to no one else’s. So the moat there, at the initial stage, is our precision and knowledge base.
How do you measure your own success as the corporate CMO?
This is where our discussion will get into talking about return on relationship, because all of my goals are based on the growth of our business and the growth of our profitability. My goal is that we become the biggest go-to company among retailers. It’s like life insurance – you’re investing premiums and they continue to appreciate. We see our investments in these and “return on relationships” as the same thing. Growth of business over time is really about how strong our relationships are, how strong the trust is. Improving that trust every year is my single most important goal.
Have there been any specific marketing initiatives that you can point to as having really helped build those relationships?
In 2009 we identified our biggest weakness as not having control of the consumer touch points. We were pretty much a company presenting our wares to a buyer and had very little influence over how things were packaged, how things were displayed, how they were advertised. So from 2009 onwards, we made it our priority to gain that control. We identified 20 key customer touch points for each of our brands. And it became the single best focus that we ever made and the most important strategy we’ve developed over the last few years.
The first thing we did was look at our market, look at our customers, which are the major national jewelry chains, shopping networks, mass merchants and department stores. If we sell something to one of them, we can’t sell it to another. So the strategy became going from national label to private label and creating very specific multiple private labels within that category of products. In karat gold for example, we have 14 retailers carrying assortments of products within a reasonably small range of innovation all under different names. And what that did for us was take away channel conflict. It multiplied the marketing stress because we had to create everything from brand guides to color guides for 14 instead of one. But it absolutely shot our sales through the roof because we took away channel conflict and allowed each retailer to create their own margins and positioning. It got us on this track of being very in control of this vast number of private label collections of which we now have 42.
How do you keep things straight and get down to who controls what between both of your marketing department and the marketing departments of the retailers?
We’re very careful, and it’s all proprietary. Everything is done on a project basis together with the internal sales and product teams of the store we’re working with. Most of our customers have a single sales team associated with them. So we can keep it pretty straight. Collaboration, at all levels with the retailer, follow the same path.
How do you manage, since you’re dealing with four divisions and 42 different brands in retail, how do you set the big picture for these folks since you obviously can’t be involved in the day to day sales?
First, you come back to the word moat, and the idea of customized reality testing versus the differentiation that we’re providing. Secondly, it’s not all on the marketing department as each of those brands is associated with a retailer and that retailer has an internal team, a product development team, an operations team, a customer service team so that ultimately, we become the organizer of that team and the catalyst for that team to walk in the customer’s shoes. And there might be occasional conflicts but for the most part, everyone is focused and it’s a lot of work but the system seems to work quite well. At one point in time everyone is focused on one brand and one customer. We honestly have so few sales and marketing conflicts; we work side by side with the sales teams at these companies and it creates a bond, not an antagonism.
The world is about trust and transparency. At some point in time there’ll be a day where we can say, we’re Richline, these are all our brands and you can trust them. And to do that we need to be socially conscious, we have to be absolutely able to live in a glass house. That’s why improving customer trust has always been my single most important goal.
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