Panera CMO on Strategy and Careers in Marketing
By Megan Petitti '15 | october, 2013, Issue 2
Michael Simon, CMO of Panera Bread, describes the customer-specific marketing of the company. (Photo courtesy of Kilts Center for Marketing)
The Kilts Center for Marketing offered two programs for its Fall Premiere: A presentation by Michael Simon '85 of Panera Bread Company and Luiz Edmond of Anheuser-Busch InBev (see related article). The Kilts Center provides students with the opportunity to interact with prominent alumni. Through its programs, students can learn how to create marketplace value, as well as integrate, align and motivate across organizations and disciplines.
As part of the Kilts Center for Marketing's Fall Premiere, Michael Simon, CMO of Panera Bread, was on hand Monday, Oct. 14 to talk to students about the company's marketing strategy and business philosophy, promoting awareness of careers in marketing.
As part of this hour and a half Panera-catered presentation, he touched on the current issues in the macro landscape and company's response. According to Mr. Simon, an increasing lack of consumer trust in brands has driven company focus on brand differentiation, represented in part by their new slogan "live consciously, eat deliciously." As the best performing restaurant stock over the last decade, the company maintains this differentiation by upholding a company higher purpose, outside of sales, marketing or the product itself. With companies like Wendy's and McDonalds closing the differentiation gap via similar product offerings and restaurant décor, ensuring customers maintain their affiliation through other ties is critical.
Part of the company strategy is still executed through targeted customer-specific marketing. Through use of the MyPanera card, a free subscription rewards program, the company has access to fifteen million members and their purchase history. This is used to send unique customized journals with an open and click through rate of two to five times the industry average. Additionally, when customers sign up for the program they are periodically rewarded with free items, although the timing and products are unknown to the customer. Ninety percent of rewards are offered based on purchase history, with a few additional offerings made to help extend purchase behavior. Furthermore, the life cycle of the customer can be managed by tracking those in "hazard mode" with long lengths of time between visits, whereby additional promotions and incentives are offered.
Outside of these more direct marketing techniques, the company still maintains a higher purpose platform. Per Mr. Simon, having a purpose provides a filter for decision making with respect to the company, its culture and differentiation. However, it is not to be confused with an advertised social responsibility. A defined purpose goes deeper than that; the more good a company puts in, the better the outcome will be. This circular input model, with one conscious decision leading to another, illustrates itself in the company's most recent commercial spots, screened for the audience, in which a Rube Goldberg device moved food from morning preparation to the end of day donation. These donations are just one part of the company's awareness campaign in the broken food system, where they aspire to be a change agent through various outlets.
Another outlet is the Panera Cares program, where cafés of shared responsibility are operated with help from the community and payment for purchases is requested but not required. There have been five Panera Cares cafés opened in the last two years, with one in the Chicago area. Expanding on this, single product launches are being tested in the St. Louis market along the lines of the Panera Cares philosophy, where the customer will pay what they can of a suggested donation for a specific offered item. Media coverage over events like the SNAP participation by the CEO and other employees draw attention to the purpose as well. As part of this initiative, participants ate for a week on a daily budget of $4.50, the same amount of money provided by the SNAP program, formerly known as the Food Stamps program.
Mr. Simon is a Booth graduate (GSB '85) who originally recruited for investment banking. However, the de-emphasis of team work and creativity in that role lead him to explore other options through marketing courses at Booth, where he discovered the analytical side of the profession. He asserted that good marketers are good strategists, clarifying that tactics do not provide long-term results; well thought out data and a tested strategy do. Taking the data and identifying its relationship to customers allows one to have measurable impact, and he has looked for three things in all his employers: a great brand, a great culture and the ability to make a difference. Panera's goal to transition customer affiliation from preference to love through a variety of outlets is just one reflection of that.
More information on the Kilts Center for Marketing can be found here.