You Wouldn’t Download a Car?

…but you might subscribe to one. Volvo recently introduced their new XC40  a mid-sized SUV with one special feature, you can subscribe to its usage. Subscription services have been at the forefront of recent consumer technology advancements and I believe that it will do the same for the automotive industry. To make a true subscription service Volvo has made three key distinctions in their offering when compared to leases:

  1. Insurance – included in the flat monthly fee
  2. Upgradability – after a year on contract you can upgrade your current model
  3. Convince and Service – one fee through one servicer

We have seen the subscription format revolutionized key industries before it. In the music industry, record sales turned into streams, as consumers we were essentially locked into a lifetime of membership to maintain access to our curated collections. When it came to movies and TV we look to both Netflix and Hulu who have destroyed traditional TV, TiVo, Blockbuster, and I would argue RedBox. Not only did this disrupt industries, but it increased the presence Rokus, Smart TVs, and various internet-connected devices into the home. Finally, when it came to cellphones, subscriptions have led to a faster adoption of AR and VR technology through higher performance phones that can function accessories like Google CardboardSamsung Gear VR, and apps like Pokemon Go.

Volvo looks to be the first auto company (others have attempted, but at unreasonable price points) to bring the subscription model to the average customer. Whether you buy or lease a car there is a whirlwind of confusing fees and alternatives that make the whole purchase a confusing ordeal. Volvo solves this problem by combining the insurance, repair fees, and usage fee into a simple $600-a-month fee.

Just as subscriptions evolved their various industries I see the automotive subscription model to serve as a driving (no pun intended) force behind the adoption electric cars. Instead of being attached to a car for 5-7 years subscribers will have the opportunity to upgrade every year and put these emerging technologies to the test. This constant upgrade cycle combined with the only additional cost being fuel (petroleum or otherwise) will motivate drivers and manufacturers to minimize that cost and move toward electric. It may take years, but Volvo is paving the way for automobile usage in the United States and I look forward to see the outcome.

International House of Business Bullshit

IHOb. No it’s not the new Apple device, rather it’s the International House of Pancake’s latest grab for attention and rebranding effort. Most commentators, myself included, assume it’s going to become the International House of Breakfast. Other than breakfast, how many “B” words could it realistically be, no pun intended. Brunch? Bacon? Biscuits? Bullshit? Who really knows. But why I’m commenting on this is less because of the impact it will have on my life (local diners and breakfast eateries are far superior anyways) but because it sheds a light on how boardrooms and consultants can do some stupid shit.

Following Q1 2018 results Wall Street learned that Dine Brands (IHOP’s and Applebee’s parent) outperformed expectations for the 5th straight quarter. The core business is doing well, the economy is doing gang-busters, and other than some minor location closings to make room for a new franchise, there should be nothing to worry about, no box to check. For confirmation I look to Dine Brand’s CEO, Stephen Joyce, for their strategic goals:

  • Evolve strong brands and drive same-restaurant sales growth
  • Facilitate franchisee restaurant development
  • Maintain strong financial discipline

They have achieved many of these goals, same-restaurant sales growth for both Applebees and IHOP has increased, franchisee restaurants have expanded over 25% for IHOP and since 2013 DB has returned over $500 million to shareholders. In addition both Applebees and IHOP have held their spot as the number one restaurant in their category for the 10th year running.

By all accounts IHOP should continue to be the 24 hour safe haven for pancake and breakfast lovers everywhere. But business, and specifically consulting firms often can’t let be what they could instead profit off of. I can see the meeting now…

Consultant: As you can see, your current brand does not align with your name. You offer much more than merely pancakes to your customers. It is off-brand and hinders the potential acquisition of millennial consumers who might be averse to pancakes.

IHOP: But our customers know we serve breakfast, pancakes are only a breakfast food. For over 60 years we’ve had this name and America has continue to make it the #1 in its respective category regardless of name.

Consultant: No, it’s important in the digital era to be consistent with your branding to ensure consumers know what they are getting. Millennials need to be marketed to and we believe this is the best way to do it.

This kind of unnecessary rebranding is a leech on American businesses and represents what gives professionals services such a bad name. I hope this was merely a publicity stunt to encourage last-minute IHOP visits before the name change à la Twinkies. Or maybe IHOP is just pulling a prank and instead wants to remake their twitter account to be as active and clever as Wendy’s. Either way I hate everything this rebranding stands for and hope that businesses can resist the always present pressure to be viral and instead focus on providing quality products and services, that’s how business should be run and in turn how they should be judged by consumers.