Explore how brands can drive emotional connectivity with consumers, retailers’ public stances on social and political issues, and The North Face’s innovation and sustainability initiatives.

Our guest is Dan Goldman, Global Head of Strategy at The North Face. Dan leads The North Face’s global strategy team – overseeing brand strategy, consumer insights, new business models and sustainability. Prior to his current role, Dan was a consultant in consumer/retail strategy and private equity practice at McKinsey and Kurt Salmon, brand manager at Proctor and Gamble, and marketing strategy consultant.

Join us as we explore how brands can drive emotional connectivity with consumers, retailers’ public stances on social and political issues, and The North Face’s innovation and sustainability initiatives.

Episode 24 of RETHINK Retail was recorded on August 9, 2019

TRANSCRIPTION

Julia Raymond:
Hi, and thanks for tuning in. Our guest today has a global role with a well known active wear and outdoor gear brand. In fact, it’s been around for over 50 years, and from adventure seekers to college students, the North Face is widely popular for its mix of functionality and iconic style. Our guest today is Dan Goldman, the Global Head of Strategy for the North Face where he is responsible for global strategy, business development, consumer insights, new growth platforms and sustainability. Dan brings nearly 20 years of consumer industry experience, and that spans apparel, consumer goods and services. And he’s been working for and with Fortune 500 companies, private equity investors, and entrepreneurial startups. Dan, will you first tell us a little bit about yourself and your role with North Face.

Dan Goldman:
Yeah, absolutely, Julia. And first of all, thanks for inviting me today. Really excited to be here and get a chance to speak with you.

Julia Raymond:
Yeah, happy to have you on the show.

Dan Goldman:
As you mentioned, in my current role at North Face, I head up our global strategy team where I oversee both our three year brand strategy as well as consumer insights, what we call new growth platforms, which is really thinking about new business models, as well as sustainability. Prior to joining North Face, as you mentioned, I was a consultant both at McKinsey and Kurt Salmon, which is a smaller consulting firm. And prior to that I worked in brand management at Proctor and Gamble and did marketing strategy consulting. So kind of a mix of both the industry side and the consulting side. But if you take a little bit more of a holistic view of kind of my career, my passion areas, I describe myself a bit as a consumer and strategy geek. My passion area is really at the intersection of consumer psychology and growth strategy, so more specifically working with brands to build a strong emotional connection with its consumers to unlock that longterm growth and he notion of this emotional connectivity as a key ingredient.
I actually started really thinking about that and working on that during my 10 years in consulting. In that capacity I spent about half my time over a decade working with private equity investors who are interested in buying consumer retail companies. A lot of that work was geared around helping them assess if their investment target would make a good investment or a bad investment, as well as thinking about when they were ready to sell those portfolio companies, how to maximize their return. I don’t know if you’ve worked with PE investors that much, but they all have several different metrics of brand health. Probably the most famous one that most people who would be familiar with is something called net promoter score.
It’s one of those metrics that everybody looks at as a sign of are you a good brand, bad brand, in terms of your brand health. But fewer people can actually articulate what does it take to actually build a strong brand that has a strong net promoter score, and if you’re buying a business or running a business, how do you actually drive that net promoter score and ultimately that brand love higher? I know we’ll talk more about that, but ultimately getting to the heart of that really led me to think about this notion of emotional connectivity, which really is for me that intersection of strategy and that consumer psychology that really gets me excited.

Julia Raymond:
That’s something that you were chatting about last time, is just the emotional connectivity with brands, how important that is. Would you say that directly relates to net promoter score, how likely people are to refer you to their friend, or are there separate metrics that you use to measure that? Because it is so qualitative.

Dan Goldman:
I think the net promoter score is a great indicator of emotional connection and the notion of why would somebody want to recommend a brand to their friend or family. Usually it has more to do with a deeper emotional connection than it does to, hey, the products performed adequately. Right now we can talk a little bit more about how I define emotional connection and a recipe to building it. There’s so many options for consumers now. There’s so many brands and so many products that do the same thing. Ultimately getting consumers to rise above and recognize you more than those, it takes a little bit more than it did in historic times. So that’s really what this is all about, and that’s why the net promoter score, I think, is a good indicator of it. There are probably other metrics, but more importantly than the metrics themselves is what are the things that are required to really drive it.

Julia Raymond:
Yeah. You mentioned something about a competitive moat and a framework that you had. So I just wanted to know if you’d walk us through that because it is something that probably not a lot of people have such expertise in. So how do you create that emotional connection? Is time important? Is the community that they’re in important? What are the factors?

Dan Goldman:
Yeah, I’ve boiled it down to three core things. I’ll describe each of these in a little bit more detail. But to drive really strong emotional connection, I really believe that one, a brand needs a really strong competitive moat, and I’ll come back and explain what that is. Two, they need to be consumer obsessed. And third, they have to have a really good control over how they manage their marketplace. So, in terms of creating a competitive moat, first let me define what competitive moat means. It’s actually a term that a lot of the private equity investors think about, but it really is what is your unique competitive advantage or point of difference that your competitors can’t copy?
It used to be, if you go back 20 years or so, it used to be you could win on delivering strong functional benefits to the consumer, and that you could have a superior claim on a functional level to consumers. But the marketplace has really evolved. And with that there’s far fewer barriers to entry and more product commoditization in the marketplace. It used to be that consumers had two brands or three brands of denim to choose from. Now there’s hundreds of jean brands. And you go into supermarkets and you see all these different options for even ketchup today, not just good old fashioned regular Heinz ketchup.
As you think about a competitive moat, in my mind, there’s really two ways to build something that really can stand the test of time. If you think about kind of the notion of the rise of private label, and all the retailers talking about how do you Amazon-proof yourself, two ways in my mind that you can do it. One notion is you could be a superhero brand, and the other notion is you could be a very human brand. The notion of superhero means that from a functional level or an operational efficiency level, you’re far superior to your competitors and you’re able to carve out a niche. That means you can do things cheaper, or your product has patents and is protected, and you can really deliver a better benefit to the consumer. That, in my mind, is becoming harder and harder, especially as you look at the rise of really a few big titans in the industry. And I’ll talk more about that in a second.
The other way is being a very human brand, and human brands go the opposite direction. If you close your eyes and you have a strong vivid image of what does the brand stand for, and more on the aspiration side. It’s brands that can really define what their role is for their consumers, why they matter, not just to the consumers, to the world around them. They tend to be brands that are very purpose and values driven and really win with the heart with consumers versus the functional operational benefits of the superheroes.

Julia Raymond:
Like a Toms Shoes comes to mind.

Dan Goldman:
Exactly Toms Shoes. North Face is … we’re moving in this direction. But if you think about the industry, if you go back really far when it was a bunch of mom and pop small stores, there was a really strong human connection because often you knew the person running the business and they knew the community. They might not have been creating the best product, but there was a strong human connection with the store or with the brand. Then came the rise of chains, which they had a clear scale advantage. And then the super chain with really big efficiencies and you could drive down prices. And you saw the mom and pop bookstores get taken out by the Borders and the Barnes and Nobles.
But the challenge with those brands is then Amazon came along. They were even more superhero, if you will, and the challenge of being a superhero brand is it’s just a matter of time until there’s another superhero that’s bigger and stronger than you. Whereas on the human side it’s much harder to copy driving a really strong emotional connection with your consumer in a way that’s really authentic and really unique.

Julia Raymond:
Yeah, so are you saying it kind of flipped, right? It used to be small. I mean, 20, 30, 40 years ago it was the smaller brands, a lot of community-based small businesses, and it was strong human connection, and then we see the rise of of the big boxes and the chains. And then it kind of … There’s a few superheroes that come out, and Walmart, Amazon, they rise to the top, and then the human brands faded out. But now we’re seeing maybe that come back a bit more.

Dan Goldman:
I think that’s well said. I think because of how easily it was to grow for a lot of the retailers and brands, while chain distribution was growing in the 80s, 90s, early 2000s, it was easy to focus on growth through having the right partners or the right distribution strategy, that if you’re a consumer package good, getting in the right supermarket chains and having them expand worked really well, or if you were a wholesale apparel company, having really strong relationships with department stores was super important for your growth. It didn’t necessarily require having the best brand or the most human brand, but there was a big scale advantage if you could develop the right partnerships and deliver the right costs.
Because of that and because now those channels and those superhero chains have got eaten up by bigger superheroes, if you will, with the Amazons and the Walmarts that you called out, there’s fewer winners there, and if you’re not a winner there and you can’t invest and operate at the scale, then like you said, going back and doing it ultra human is really a potential pathway forward for growth in a way that you can compete and carve out really what I call a strong competitive moat.

Julia Raymond:
It sounds … There’s a human element, but then there’s also, I think, a marketing element that has become really strong just from social media.

Dan Goldman:
Absolutely, and I think if you think about … It starts with really understanding from a purpose and values, why do you exist as a brand, what role are you going to play, and bringing your purpose and values to life in a really authentic way. How you bring that to life, it’s got to be through both your product, your marketing, and all your consumer touch points like social. So for example, for brands, your product design is critical. What materials you’re being made from is critical. If you talk about certain brands that really have gotten big in terms of sustainability in recycled materials, that is an important part of their identity. Equally important is how you communicate and market that and market your brand in an authentic way, and then how you show up, like you said, in social and other more community building channels.
So it all has to be connected. But the idea of kind of the humanity of the brand has to shine through. To be a human brand it’s okay to have flaws, but people want brands that have the personalities that stand for something. It’s better to for something even if it alienates some consumers, than stand for nothing and be generic, because then essentially all you are is a product. And with the commoditization of the marketplace to many levels, will consumers pay more for your logo? The only way to justify that is to really add intrinsic value above and beyond just the product, and that connects back to having a really human brand.

Julia Raymond:
Yeah. Kind of like a $5 Starbucks cup of coffee versus one you make at home that’s 50 cents. But-

Dan Goldman:
Absolutely.

Julia Raymond:
It’s the experience and the connection that they provide through the baristas and everything they do there.

Dan Goldman:
Absolutely. And to be honest, the logo on the cup, and you walking around with that cup, and people associating that brand with you, and you associating yourself with that brand. It says something about who you are, and it represents a small piece of you as a consumer.

Julia Raymond:
Yeah. I read recently, I think it was an Episerver report, it said that two thirds of specifically American consumers, they say it’s important for them that a brand takes a public stand on social and political issues. Nike’s Colin Kaepernick ad, and then also late last year, I think it was Gillette’s campaign on toxic masculinity, asking them to be better. So do you think that these are good campaigns, even if there’s risk of becoming polarizing?

Dan Goldman:
Yeah. I won’t comment on what specifically the other brands did, but I think it is important for brands to be true to who they are and to take stands that reinforce their values. I do think it’s okay if you’re doing that authentically, that it sometimes means that you’re going to alienate your consumers. I do think it’s important that it really comes from a true and authentic place in the brand and you’re not trying to do it as a commercial campaign or a commercial oriented campaign in order just to sell products. It’s got to be as a way to enhance your brand’s value system in communicating that in an authentic way.

Julia Raymond:
Yeah. So not just capitalizing on current buzz, but having it be embedded in your strategy maybe.

Dan Goldman:
Exactly, exactly. I think that authenticity is super important. So if you look at how brands are showing up that do it authentically, they’re not just saying the words, they’re backing it up with actions. So it’s not just a PR campaign, a one and done, but there’s real content, real investment, whether it’s through their product or through what else they’re doing in the community. So for example, at North Face, some of our big social and political issues that we’re really driving around, building inclusive communities and public land advocacy. One of our bigger efforts has been around what we call our Walls Are Made For Climbing campaign. There’s really a statement around through what we call our Explore Fund, which is around getting more people access to the outdoors and access to climbing that may have been underrepresented in the past.
While we came out with a statement around Walls Are Made For Climbing, which, for political reasons with what’s going on, for obvious reasons, really with the work that we’re doing and focused on is less the political side, but we’re actually working to build climbing structures and parks in inner cities, giving grants to organizations so they can get a diverse mix of young explorers out to experience climbing and other outdoor activities, in addition to all the great work that we’re doing on the public land advocacy.
So again, the notion of it’s not just words, that what we’re choosing to really get behind our causes, they’re deep in our roots, and places that we’ve always authentically played, and now we’re taking that and we’re investing in accelerating that in a little bit more public way than we may have done in the past. But we’re not doing something that feels outside of our brand or inauthentic to us.

Julia Raymond:
Yeah. And you know, it feels authentic because your brand is so well known, and people that are not necessarily outdoorsy, or rock climbers, or whatever it may be are sporting the brand because they like it. And so it’s not like you’re putting these climbing spaces into maybe an inner city where there aren’t opportunities to do that to reach new markets, because your market is already so large. It’s just an authentic way to build community. So I really liked that.

Dan Goldman:
Yeah, absolutely. And so the notion of being a really human brand, it definitely means connecting with consumers in their communities. It definitely means bringing to life your authenticity, not just through traditional marketing, but again, back through your product, back through these types of efforts so that it is real and it feels authentic, and not just like a marketing slogan.

Julia Raymond:
Yeah. It’s funny because I know it’s … This is just one example. This was just a story that a friend was telling me the other day. But there’s a really, really small mom and pop brand. They have one store. I think it’s called like Melanzana or something, and it’s in Colorado, and it’s up the mountain. They have a website but you can’t purchase anything from their website. You have to physically go to the store. And they have people in their store that actually sew the clothing right then and there. If you go in and they’re out of your size, then it’s too bad and you have to come back.
But they have a line out the door, apparently, like every day. People are really grabbing onto the concept and it’s just … It’s interesting. I think it would be maybe more of a challenge for big brands to roll out these strategies globally just because of how large they are compared to a smaller brand like this mom and pop shop that’s creating huge demand just based on how small they are, really, and the exclusivity of it.

Dan Goldman:
Yeah, I think the notion … What really resonates with that story that you gave is the notion that consumers want something authentic and they want something unique, and to be honest, the role social media has played in changing consumer behavior, and the thirst for a lot of consumers to have content that they can share with their social media networks and their friends in real life as well. Where the example you just gave and where big brands can play a role is bringing to life the stories behind the product that show the value, show how it was made, give the transparency and the uniqueness so that they have the content, in many ways, and the social currency to go share with their friends.
That’s also a reason why over the last several years you’ve heard about, I’m sure, in the news, and you’ve likely seen in some of the trends a shift, especially in younger consumers, in terms of spending money on experiences versus physical products. There’s plenty of consumers still buying products, but a lot of that dollars have shifted to products that actually enable an experience, which is obviously, the outdoor industry is one of those. But really what’s driving that interest and experience in many ways, again, is that notion of wanting connection with their friends, but also wanting social currency to share on social media in many ways, in my opinion.

Julia Raymond:
That’s so true, and it’s such a huge topic. Social currency is really changing the way that a lot of brands are approaching the market. You know? People want experiences, but they also want to be able to share those experiences on their feeds. So I can totally see how that relates. And it comes back a little bit maybe with sustainability, being transparent, and how products are made. Is that something you see becoming more important over the coming years?

Dan Goldman:
Yeah, without a doubt. You see a whole host of big brands and brands that you may not have thought historically as having a thick interest in sustainability jumping in, which is awesome. I think the brands in the outdoor industry, it’s always been a critical topic, and protecting the planet is huge part of our purpose and our mission, so it’s great to see other brands continue to push that. I think it really resonates with consumers for a lot of reasons, and I think they’re growing awareness in a growing marketplace, and really growing consumer expectation that brands are just going to be doing the right thing.

Julia Raymond:
Yeah. Actually, it reminds me of a story I saw at a conference that someone was presenting about Water.org and how social media has helped change the nonprofit industry, because Water.org, once they were able to show people where exactly their money was being spent, like this is where the water filtration system or whatever it is is installed, and your dollar went towards this, they saw huge … I mean it was a crazy number of donations after that coming in. So definitely a lot of stories out there. I think it affects all brands, but especially ones like yours, like outdoor focused, kind of like Patagonia as well. Just the whole mission.

Dan Goldman:
Yeah, absolutely. I think some brands, their whole reason for being is around whether it’s sustainability or other causes, the way we’ve approached it is that is a critical component of our brand, and our purpose, and our values. We also play a big role for consumers probably about helping them explore, which means helping people push their limits and raise curiosity to try new things. Sustainability is an important aspect without a doubt, and it’s going to be critical to how we go forward and how the industry goes forward. I think the more we can come together as an industry … The apparel industry has historically been a big polluter, so a lot of apparel ends up in landfills. We’ve been piloting what we called North Face Renewed, which is a recommerce platform where we take products and fix it up, clean it up, and get it out, back out there to keep exploring more.

Julia Raymond:
Oh that’s awesome.

Dan Goldman:
So it kind of all comes 360.

Julia Raymond:
Yeah. And you said this is a pilot program?

Dan Goldman:
Yeah, we’ve been working on it for the last year, so consumers can go check it out, but it’s not a finished product by any means in terms of what we’re doing and where we’re going with it. But North Face has had a lifetime warranty program for a long time, and a lot of that is we make high quality product and we want it to be useful. We want it to be out in the world enabling explorers to get out there, and this North Face Renewed recommerce platform is just another way to enable that, just with a different owner.

Julia Raymond:
Yeah, definitely. What tech or innovation excites you the most for the coming years? That could be specific to retail, or consumer goods, or just the world at large, really.

Dan Goldman:
Yeah, absolutely. I’ll probably talk just quickly about two things. First, I think we’re, as a brand, very excited about our latest innovation. It’s called Future Light. It’s going to help really reinvent the waterproof breathable category in outerwear. North Face has always been at the forefront of innovation and category disruption in our industry from when we brought the geodesic tent to market, to making backpacking more accessible through lighter frame backpacks, to a lot of our icons, whether it’s our mountain jacket, Denali, our Nuptse jackets, and now Future Light’s really that next innovation which will offer consumers waterproof protection, but really much more breathable performance that will allow people to really enjoy and go further when they’re out there enjoying the great outdoors. So we’re really excited about that.
But if you broaden out your question to technology in general outside of just product technology, what I’m most excited about, again, going back to my passion area, is the notion about the ability to be more consumer obsessed, the technology that will enable more personalization and one on one interactions. Because obviously that circles back to our conversation on emotional connection earlier. And the notion of really being able to understand consumers’ behaviors in the past with their psychographic reasons why they’re doing those behaviors, and really enable that and empower that as an engine for brands will allow consumers to really connect with brands in new and different ways that will really drive that emotional connection in the longterm.

Julia Raymond:
Definitely. I’m excited for that too, Dan, I enjoyed having you on the today. Thank you so much for joining, and I hope to see you maybe at some future events or at some point run into you.

Dan Goldman:
Thanks, Julia. It was a pleasure. Really enjoyed the conversation.

Julia Raymond:
All right, thanks.