Don’t be JCPenney

As usual, last holiday season I put off my Christmas shopping until the last minute.  This time, I witnessed something that holds a lesson for non-profits everywhere.

As I dashed into the supermall nearest my home, I was shocked to see one of the big anchor tenants closed for business.

The doors of the huge JCPenney store were locked.  Its windows were papered over.

I almost couldn’t believe it.  Here it was the day before Christmas (I said I was a last-minute shopper!), and the store was closed.  It had been a cornerstone of this particular mall for 55 years.

This closing was just the latest indignity suffered by JCPenney, which had been a great and proud cataloger and retailer since 1902.  To be sure, it had been struggling in recent years, trying to respond to increased competition and changes in the retail landscape brought about by the Internet.

But JCPenney made a couple of huge missteps in 2011 — moves that nearly drove a self-inflicted stake through its own heart.

First, it dropped its paper catalog.

Second, it hired Ron Johnson as CEO.

Johnson came to JCPenney from Apple, where he had spearheaded that company’s highly successful move into retail with its Apple Stores.  Before that he had pulled off a major coup by managing to make Target hip.

He quickly made strategic shifts designed to radically reinvent the brand, and bring some of the Apple “Cool” factor to JCPenney.  In short order, he:

  • Eliminated sale pricing
  • Dropped discount coupons
  • Established an everyday “fair price” strategy
  • Reconfigured stores to be smaller-branded “boutiques within the store”
  • Updated the look and feel of the retail space and removed checkout counters

When it was suggested to Johnson that, perhaps, it would be wise to test some of these changes before rolling them out, Johnson was famously quoted as saying, “Test?  We never tested at Apple!”

The cumulative effect of all these changes was disastrous.  2012’s fourth quarter sales were off 28.4%.  Same-store sales were down 32%.

I’m not saying that branding isn’t important. It is (in fact, see one of our recent posts on brand). I’m simply saying, any brand project must consider its core customers.

JCPenney had effectively fired its customers.  It turns out that JCPenney customers did not embrace the Apple “Cool” that Johnson had attempted to force-feed them.

On April 8, 2013, Johnson, himself, was fired after only 17 months with the company.

So, what does this have to do with fundraising?

Beware of the savior who comes riding in with wholesale changes.  You might want to test some of those changes or you could wind up firing your donors.

I can’t tell you the number of times I have heard non-profit staff members say things like:

  • “We need to drop direct mail and move everything online.”
  • “Stop using all those fundraising tactics. They’re off-brand.”
  • “I don’t see why you need to be so emotional, just give people the facts.”
  • “Our look is outdated.”
  • “We need to refresh our brand.”
  • “I don’t care if people respond to matching grants, they’re just a gimmick.”
  • “We do so much more than … [insert any simple and concrete mission, such as ‘feed children,’ ‘provide clean drinking water,’ ‘distribute Bibles,’ ‘provide meals,’ ‘send kids to camp,’ and on and on].”
  • “We need to educate our donors.”

When you hear yourself saying things like this, do yourself a favor and take a deep breath.  Ask yourself why you want to do these things.

Do you think there is something wrong with your donors?  Do you feel that you somehow need to improve their understanding of the complexity of all that you do?  Do you need to correct their motivation?

Ron Johnson’s changes demonstrated that he really didn’t like JCPenney customers or respect the venerable JCPenney brand.

When shoppers did not react well when he eliminated sales and coupons, Johnson compared these old marketing techniques to drugs that the customer needed to be weaned from.

He refused to see the plunge in sales as a sign there might be something wrong with his new strategy. Instead, he said customers needed to be “educated” about how the new pricing policy worked.

If you find yourself in this position, you could be perilously close to firing your donors. 

Your donor file is a precious asset.  With proper care and good stewardship, it could yield perpetual benefits to your organization.

But sudden, dramatic shifts in fundraising strategy could have the same effect as a sudden and dramatic change in climate.  Your donors could start “dying off,” leaving you and your organization bereft of the vital lifeblood of donor support.

And that would be very bad for the future of your organization, and for you professionally.

P.S.  As I was writing this blog post, a news alert appeared on my cell phone reporting that JCPenney will be bringing back its print catalog.  It remains to be seen if this latest course reversal comes in time to save the company.

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