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SBJ/September 12-18, 2011/Marketing and Sponsorship
Lowe's winning partnership with Johnson rolls on
Published September 12, 2011, Page 1
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His Lowe’s No. 31 car, driven by Mike Skinner, hadn’t so much as sniffed victory lane, and he wanted a change. He asked his head of sports marketing at the time, Dean Kessel, to find the company a new team and a new driver. He made his objective clear.
“As a company, we win on Wall Street and win on Main Street,” Tillman said. “I want to win on the racetrack. Go find me a winner.”
Jimmie Johnson, driver of the Lowe’s No. 48 car
This week, Johnson will begin his run at a sixth consecutive Chase for the NASCAR Sprint Cup championship. His success has given Lowe’s more than a mere winner. He’s also provided a high profile and consistent marketing platform that allowed the company to build a database of more than 1 million fans, amass more than $130 million in media exposure in just four years and run a series of signature promotions that helped Lowe’s launch its own line of tools and evolve from a regional retailer to a national chain.
“Brands go into a sponsorship looking at it from a lot of perspectives: external relationships with retail customers, business-to-business opportunities with corporate customers and as a rallying point for employees,” said Mike Mooney, a motorsports marketing executive at The Marketing Arm. “Lowe’s has gotten all of that and more with Jimmie.”
NASCAR’s chief marketer Steve Phelps agreed, adding, “To have a brand be synonymous with a driver as much as [Lowe’s] has and to be as successful a partnership as they have had happens very infrequently in sports. Jimmie Johnson and the Lowe’s 48 team rolls off the tongue. It’s fantastic that they have supported each other to the degree that they have.”
What looks like a marketing coup today was far from that in 2001 when Tillman charged Kessel with finding Lowe’s a new driver. At the time, the sponsorship landscape in NASCAR was robust and most of the top drivers were locked up in long-term deals.
“All the teams said no,” said Todd Moore, Martin Truex Jr.’s business manager and a former executive with the Cotter Group, a motorsports marketing agency that led the search on Lowe’s behalf. “We didn’t really have a lot of options.”
Only one opportunity was available, and it was with a new team Hendrick Motorsports planned to start. The good news about the team was that Jeff Gordon would co-own it, and it would be part of an organization with a track record of winning. The bad news was that it would not only be a new team, but it would feature an unproven driver from California named Jimmie Johnson.
“I looked at Jimmie’s performance,” Moore said. “He had done very little at the Nationwide level. I couldn’t figure it out. I said, ‘There’s no way. They want someone who can beat Tony Stewart.’”
Kessel’s reaction wasn’t much different. He took one look at Johnson’s Nationwide (then Busch) Series results from 1999 and 2000 — no wins, no top-five finishes and only seven top-10 finishes in 36 races — and told Moore that if he took Johnson’s name to Tillman the Lowe’s CEO would probably fire him.
The Lowe’s logo has been on Johnson’s car through five championship seasons.
The deal would give Lowe’s a full-time primary sponsorship of Johnson and an associate sponsorship of Gordon. That would allow Lowe’s to use Gordon in its retail promotions and soften the blow if Johnson didn’t develop the way Hendrick expected.
The deal intrigued Lowe’s marketers enough that they took it to Tillman, and he attended a subsequent meeting at Hendrick Motorsports. The Lowe’s team showed up at 4 p.m. for what was supposed to be an hour and a half meeting, but the meeting wound up lasting six hours.
The Lowe’s executives were there so long that Gordon called Johnson and told him to come join the meeting. When he arrived, Tillman asked Hendrick, Gordon and his team of executives to leave the room, and the CEO spoke to Johnson for an hour.
“I wanted to know about his commitment and inspiration and his motivation,” Tillman said. “Most importantly, I said, ‘I want to know one thing from you: Can you win? Because I have no intention of running a car around the track in last place.’ Jimmie stepped back for a moment and then said, ‘I can win.’ I shook his hand and that was it.”
Lowe’s agreed to the deal that night, but there was still uncertainty among the Lowe’s ranks about what the future would hold.
“Here we’d gone from Brett Bodine to Mike Skinner to a complete unknown,” Kessel said. “It happened quick, and it was a total high-risk, high-reward deal.”
Lowe’s early marketing efforts focused on Gordon as much, if not more than, Johnson. The company developed a television ad that featured both drivers, and they showcased Gordon at retail and had him make appearances at employee gatherings.
The most important thing to Tillman continued to be winning on the track. He wanted his employees at Lowe’s who were working hard to win business at local stores to be able to watch the race on Sunday and know the No. 48 team was winning in NASCAR.
To jump-start that process, Lowe’s agreed to pay each crew member $480 every time they won a race and offered the pit crew $480 every time they turned in a pit stop under a specified time, Tillman said. The company even agreed to give crew chief Chad Knaus a Porsche for the team’s first top-five finish and Johnson a power boat for his first victory, Tillman said.
Knaus and Johnson earned those quickly. During the first half of the 2002 season, Johnson won two races and ran up front consistently. His profile rose quickly and Lowe’s profile rose with him.
As Johnson became more recognizable, the company began to incorporate him into its marketing more. It launched a patriotic campaign in 2001 after 9/11 known as the Power of Pride to raise funds for relief organizations supporting U.S. military, police officers and firefighters, and it promoted the initiative with a special paint scheme on the No. 48 car that showed the American flag on the rear quarter panel.
The initiative raised more than $6 million and resulted in millions of “Power of Pride” bumper stickers being placed on cars across the country.
“You still see those bumper stickers and see fans wearing Power of Pride shirts today,” said Pat Perkins, Hendrick Motorsports’ vice president of marketing. “It wasn’t tied to an offer, but it created a brand connection with people.”
Lowe’s ran perhaps its most unusual promotion in 2003. The company cut a special agreement that year with the paint company Valspar that saw it launch a line of paint colors inspired by Nickelodeon characters. To promote it, Lowe’s featured SpongeBob SquarePants on Johnson’s No. 48 car during Daytona’s summer race.
“It brought a lot of recognition to the product and Lowe’s,” said a marketing consultant who worked on the effort but declined to speak on the record because he no longer works with Lowe’s. “The die-cast and T-shirts were huge sellers.”
In 2006, Johnson won his first championship, and his profile began to rise. As it did, Lowe’s began to make him more of a centerpiece in its NASCAR efforts.
In 2009, it dropped its naming-rights agreement with Charlotte Motor Speedway, believing that its brand awareness was strong enough that it could lean on Johnson for exposure in the sport, and it changed the name and concept of its hospitality program from the “Lowe’s Zone” to “Jimmie Jams.”
The “Lowe’s Zone” served as a place where the company could entertain 5,000 customers and give them all an opportunity to hear Johnson speak. But “Jimmie Jams” gave local employees, commercial customers and prospective customers a chance to not only attend an event with Johnson but also hear a concert from an artist like Eddie Money or Blues Traveler.
One of the company’s most continuous and successful programs around Johnson has been its Team Lowe’s Racing Fan Club, which it says has more than 1 million members. It pushed a Lowe’s racing credit card across that database and provided fan club members with a quarterly publication about the team. It then gave customers a reason to get the card and cheer for Johnson by offering them in-store discounts when they used the card after Johnson won.
“That database they have has provided them with great value to measure the impact of the program,” said Jeff Elliott, a former sports marketing executive at Bank of America and the current chief operating officer of Breaking Limits, a Charlotte-area motorsports marketing agency. “They can see the lift and the impact they have at retail and customer loyalty.”
Lowe’s declined to make a current executive available to talk about the value of the company’s sponsorship of the No. 48 car, but the company’s actions suggest it remains pleased with the results of the sponsorship.
In 2009, it signed a three-year renewal with Johnson and maintained its position as primary sponsor for 36 races. It did so at a time when NASCAR ratings had declined by more than 20 percent during a four-year period, attendance had dropped considerably and many of its peers were decreasing their commitment to 23 or 17 races as a primary sponsor.
Since signing the deal, Lowe’s increasingly has made its Kobalt Tools brand the focus of its efforts around Johnson and the No. 48 car. It made the brand’s logo the primary image for eight races in 2010 and has given it primary exposure in 11 races this year.
The No. 48 crew helped redesign the Kobalt tools, which they had used in practice and competition. The crew was highly critical of some of the tools and that led Lowe’s to redevelop the tools and relaunch the brand.
“We created that Kobalt tool line and built it around NASCAR, Jimmie Johnson and his endorsement of it, and it’s been a home run,” Tillman said. “It’s probably the most successful tool program today.”
Using Johnson and the No. 48 car to promote Kobalt is expected to increase in the coming years. Lowe’s, which so desperately wanted to have a winner in 2001 to raise the profile of its brand, no longer needs one. The $18.8 billion in annual sales and 576 stores it had when it signed Johnson in 2000 has ballooned to $47 billion in sales and 1,725 stores.
Lowe’s name and its brand have become ubiquitous. Kobalt, on the other hand, hasn’t, and the company will be looking to Johnson, the winner it discovered nearly a decade ago, to change that.
Things have changed a lot for Lowe’s since Tillman took Johnson’s word a decade ago that he could be a winner. The blue and silver No. 48 car with the Lowe’s logo now runs out front in most NASCAR races and sat in first place going into the final race before the Chase for the NASCAR Sprint Cup championship.
The Home Depot No. 20 car, on the other hand, is winless in 80 races and most races finishes back in the pack. In the last three years, it has collected just one win, and its results have been so poor that reports surfaced during the summer that Joe Gibbs Racing was looking to replace the current driver of The Home Depot car, Joey Logano, with a proven winner, Carl Edwards.
Tillman, who retired in 2005 after 42 years at Lowe’s, can only sit back, watch and enjoy how things have changed.
“We just happened to get lucky and get the right team owner, the right driver and the right crew chief, and it’s been magic,” Tillman said. “It’s been magic for a long time now, and that doesn’t happen too often.”