Loyal – to what point?

As I write this, I’m sitting about six rows back from where I normally sit on this flight. The space around me feels like it has shrunk – again. They haven’t offered me the nice headphones. I didn’t get a newspaper like I used to.

I’m not grizzling.

After all, they’re such little things aren’t they? And they’re a formula. If you’re a gold flier you get this. If you fly even more frequently than that, you get this.

The thing is that formula of recognition is now well entrenched in my flying experience. I’ve gotten used to it – to the point where I usually don’t even notice when it happens, but I very quickly notice when it doesn’t.

That got me thinking – What happens when your business model clashes with the economics of rewarding your customers? What do you do when it seems like your brand can no longer afford to give people who buy from you the “bonuses” that they are so used to?

First of all, I think it’s important to understand that such a situation constitutes more than just a change of policy. It amounts to a change of buying habit – and habits, as we all know, are infectious and addictive behaviours. If you do need to make a change to a programme, that means you can’t just send out written notice of new measures. You need to seriously think through how you’re going to successfully change the habits for the people affected, and to what.

So many times I’ve watched brands change aspects of a loyalty programme with conflicting results. The pressures on the bottom line might ease (success) but the risk to the topline going forward actually increases (not a success) as people review whether this habit still feels worth it to them.

Given the above, what can you do to adjust the experience so that it delivers as closely as possible to the original feeling, whilst meeting financial targets? To arrive at an answer I sometimes pursue a line of enquiry used in experience design. What do customers feel now, what do we want them to feel, and what can we do/introduce that closes that gap? Focusing on how people feel rather than what they get widens the field for possible answers.

One opportunity that can be overlooked in a change-over are the component elements of the habit itself. Loyalty programme overhauls tend to focus on one feature – qualification for the points system. But the habit around an activity often extends way beyond just what is earned. In facts, points are usually at the end of that process. What people value is how rewarded they feel across the entire experience given the money they have spent. So, on an airline for example, squeezing up seats or making the meals smaller or even using less staff or less experienced staff, can all make customers feel short-changed, regardless of whether the functional aspects of the flight have changed. Even the points system may not have changed, but the experience around earning those points can make people feel they are being economised. The habit as a whole has been adjusted – and that has the potential to shift customers’ perceptions of the whole experience, and therefore potentially compromise their loyalty, regardless of whether or not they get the rewards they’re used to.

So it’s the emotions across all those touchpoints that need to be considered – not just the points themselves. Otherwise you risk reducing your loyalty programme to a policy around entitlements, and at that point, as the Righteous Brothers used to say, you will indeed have lost that lovin’ feeling.

If you do need to make changes, how should you approach it? The temptation is to make cuts across the programme. But there’s a fine line to be negotiated here because one of the clear risks is that you alienate that relatively small percentage of people who transact with you regularly and who can and will take their business elsewhere. On the other hand, if you slash the benefits to those just starting out with you, you risk giving them no incentive to forming and growing the habit of dealing with your brand.

The FlyBuys programme in New Zealand is perhaps the most successful consumer loyalty programme in the world in terms of household penetration. They seem to me to use a successful combination of points, personalisation and customised special offers to make rewards more and more specific to each person over time, as they get to know them. Great approach.

Increasingly, my sense is that brands running rewards programmes will need to abandon “dumb” programmes (buy 9, get one free type programmes – transaction based, no market intelligence gathering, no specific customer insight gathering) in favour of programmes that intelligently offer people experiences/opportunities that feel right to them, within a framework of scarce resources. In terms of maintaining/lifting the perceived quality of rewards that people get for a decreasing budget, that could well mean receiving less rewards but ones that are better tailored to feel just as valuable.

So if, for example, there is a need to take away the headphones from an economic point of view – what did having the headphones telegraph to loyal customers, and is there something else you can now do that sends that same reward message to the brain at less cost to the company?

As always, what people actually get is far less important and influential than what they feel they get.

Oh excellent. The person in front just pushed her seat back.

More reading

• Customer service is worthless
• The business of cloning
• Credentials as comfort food
• This is your captain speaking
• Chemistry or contamination
• Participation versus differentiation

Twinkle, twinkle, twinkle …

Markets today operate in a vicious circle of increasing assumption. The more companies deliver, the more customers expect.

Business as expected is all the things you must do to confirm your place in the crowd. All that effort doesn’t inspire loyalty, it doesn’t even change the relationship, because it doesn’t change the way you’re seen. And yet it’s a critical underpin. If this part isn’t right, nothing works. We could probably debate how important this “constant and consistent improvement” element is, and it probably varies according to sectors, but I’m going to suggest that it constitutes 70 – 85% of a deeply competitive brand.

The remaining 15 – 30% is less predictable. It has to be, because what really alters how much you are valued is what you deliver that’s surprising. Business as unexpected are those things that your customers actually want but may not even have realised they wanted – until they were presented with them. A surprise could be an idea they agree with that no-one else in the sector champions, an attitude that truly engages them, an innovation that they want to make their own, or new ways of working.

Keep surprising. There’s money and market share in “surprises”.

Stone Yamashita have this idea that I keep coming back to – because it’s a concept that I see so much potential in for creating just such surprises. Innovate in the experience, they say, and everything else can follow. That’s because there’s an intersection with what people know about you – and yet there’s a new development that then adds more than people just expected. Logical – and yet surprising, because no-one else had gone there.

Every breakout is a victory. And yet it’s momentary. Because the time lapse between surprising and expected, especially with experiences, shrinks and commoditises quickly. “Big bang” experience innovation is now pretty much a thing of the past. The brands that stay noticed are those that tweak not just what they deliver, but how, continuously rather than looking to revolutionise their experiences in a glorious smash of light. Thank the “upgrade culture” for that. More and more, customers hunt ongoing improvements to what they know.

The lesson for brand owners and managers? Don’t look for one big way to shine. Look for many smaller ways to twinkle.

More reading

• Brands shouldn’t try to make sense
• Posting a profit
• The business of cloning
• You can’t lead as a brand if you follow another brand 
• Participation versus differentiation

The fall of the wall between customers and culture

The context for cultures is changing. In four vital ways.

Firstly – the relationship between customers and companies is shifting as social media dissolves the traditional divide between the parties. Specifically social has shifted the goalposts in terms of familiarity. Facebook, Google and Twitter have brought consumers closer to brands than ever before. And as people shift their relationships with brands, the processes that link customers with brands and their cultures are also changing. Those relationships are becoming much more interactive and increasingly they’re taking place in real time.

Actually, the underlying relationship is changing in an even more fundamental way still. Increasingly brands are transforming from individual purchase decisions to shared belief systems and brands are bonding with their customers on that basis. That shift has major implications for how brands organise and run their cultures. Looking forward, brands cannot expect to simply market products. And a culture cannot simply expect to service that market and the brand’s customers. A brand, its culture and its customers now not only need to concur on a distinctive belief system, but also to interact and build trust and loyalty as a community on that basis.

Secondly, and in parallel with the above, consumers now want to deal with brands that fundamentally understand them and interact with them as human beings. Really, it’s those interactions and the experiences generated by those interactions that increasingly make brands valuable. It’s then that customers decide whether they want to form a relationship with you, or they’re “just looking thanks”. If you’re a high-touch brand, it’s actually the people that make touchpoints magical.

Because of that, the role of the people within a brand is also retrending. Specifically, as quality relationships become the key decider for customers, the emphasis for people inside a culture shifts to establishing and building what they have in common with customers rather than what they are looking to get their customers to do. And as a result, it’s inevitable in my opinion that people working for a brand will transit from makers, guardians and sellers to socialisers and curators.

Thirdly – to help build sustained and close relationships with customers based around shared beliefs,  brands will need to foster a much greater sense of purpose inside their culture. I believe purpose will replace mission and vision. People need a powerful purpose because it takes huge energy to work in the ways outlined above. To inspire that level of motivation, people need something to commit to collectively; something they feel will actually make a difference. An idea that justifies spending the huge amount of time they do at work.

As Walt Disney said, “You can dream, create and build the most wonderful place in the world, but it requires people to make the dream a reality”. When you give your people a deep and rich cause to work for, and a direction in which to take that cause, you give them purpose. When an organisation has a purposeful culture, it has focus. Your purpose is your company’s mindset strategy. It determines the headspace in which your people work together and in which you go to market as a company. Get it right – and you have a cause that is powerful enough for hundreds of people to leap out of bed every weekday morning and get to work. They are quite literally looking to make a change to the world they believe in because, as Hugh MacLeod expressed it so perfectly, “Life is too short not to do something that matters”.

Finally, no change will last if employees themselves don’t value what they are doing and have not made a personal decision to make the changes needed to accomplish all of the above. “We” won’t change until “me” changes. As Paul Stewart says, it’s only at that point that you will see the most important change in a culture: from a basis of compliance to a foundation of commitment that starts and ends with each person working for what the brand means for them.

To do that, brands need to give individuals the actions, attitudes, changes and tools they need to turn the communal idea into something that they each talk about and are excited by. People need to see that there are implications for them in what they do, in what happens, in where that leads and in what the business achieves collectively. That’s why companies need to take the time and invest the resources to make the brand and all it means real for people, no matter where they work in the organisation. You can’t give to a brand, if you don’t live by what it strives to achive. Ultimately, business is becoming much more social and therefore much more personal.

We’ve tended for sometime, quite rightly, to regard the customers and cultures of brands as inter-related. But those groups are becoming integrated and interactive as a community. The walls between the brand inside and the brand outside are falling. In a world of increasing sameness of product, how you as a business intend to change the world, and the story you tell yourselves and others around that intention, is what will galvinise your people and distinguish you as a brand and a competitor from all the other brands around you. To make that happen, you will need people with a purpose to work to, a story that they agree on and a strategy that will help them get to where you know you need to be.

To sell your products effectively, everyone will need to buy the brand. Literally. And/or at least philosophically. After all, if there’s nothing in it for “me”, there can’t possibly be anything in it for “us”, never mind anyone else.

More reading

Is your brand ready for the experience war?
Read the updated article Singing in Your Rain for more details on how to build a sustainably purposeful culture.
Human marketing
Great brands unearth
Sense and Seratonin
The power of being purposeful

Reading the minds of millions

Social markets, just like their financial counterparts, are driven by sentiment and the interactions of many. What’s being said about you now – right now – on Twitter, Facebook et al represents your likeability in real time. Some days you’ll trend up – meaning people generally feel good about you. At other times, the mass of opinion will be negative, impartial or absent. Same for your competitors.

A spike in your Likes does not automatically correspond to a surge in your brand equity. Equally, a hail of comments is not necessarily a condemnation or an endorsement. It is a reaction.

Understanding the sentiments behind these shifts in collective mood, quantifying them and responding to them is important – and yet what you’re seeing through your analytics feeds is often just momentary. They can mean as little as instant celebrity. Your brand is the subject of a meme – and then it’s not. The risk of reading too much into the numbers is that you essentially treat social media as polling booths for your brand strategy, and allow yourselves to be unduly influenced by the flood of comments and opinions ebbing and flowing across the social universe. And yet, at the same time, we can all name brands that have ignored what is being said online and have come to regret it.

So when should you read a lot into people are saying – and when should you not? Here are my four guidelines on how to read what’s happening

1. Is the feedback to an event, a decision or a strategy? That’s important because you need to assess how much information or what developments people are reacting to. Will that change when they learn more? If you are going to release more information and you get caught in a rip or find yourselves riding a nice wave, it makes sense, and it adds credibility, to tell people what further information is coming and when.

2. Can you fix it or capitalise on it? Are people sounding off about something and using your brand to do it, or is the feedback specific to you and something that you have done? If the problem can be fixed, acknowledge, undertake to fix it and thank people for their input. If you have stuffed up, apologise. If the problem is wider, think about starting a conversation about it, using the online buzz to get media interested. But people also engage on an issue because they want something to change – for example, they may want less of it, more of it, or access to it. It can be hugely powerful to agree with a proposed change and take actions to progress it.

3. What are the competitive dynamics? If you trade in a highly competitive environment, you will need to act/react quickly to secure loyalty. If your environment is less competitive, you still need to take notice but you may be able to buy a bit more time to make more considered changes. Either way, you still need to keep people informed and you still need to address what sparked their action/reaction in the first place.

4. Have a trigger. Have an agreed “flash point” at which you agree that a situation has gathered enough momentum to warrant social intervention. That way, you can push the wave up further, or get involved before the situation suddenly worsens. Such a point allows you to use your social resources wisely, engage in conversations appropriately and remain on course and yet responsive.

The key point to remember is that your interactions with people through social media are only likely to increase, and therefore the dynamics of what I refer to as “critical mass” are only going to increase. As Brian Solis observes in this post on Global Web Trends , “Social media is a global phenomenon indeed … The distance between any two people is shrinking as the number of network connections continues to proliferate … According to comScore, numbers show that social networking is the most popular online activity worldwide … Social networks for many, are the hub for their entire online experience. They introduce the need for any organization with a content strategy to rethink what they create, when, where and how.” Mobile devices, he says, will further fuel social addiction.

So expect the market that could react to you to keep growing. Expect the reactions as a consequence to be potentially bigger and therefore more explosive. Expect more volatility in how you are valued online. Expect the patience that consumers have with your reaction times to their opinions to keep falling.

Your ability to interprete what’s being said about your brand as whim, outrage, chatter or opportunity will be tested exponentially as numbers continue to spiral. At the same time, the sheer volume of people engaged in social communities will give social networks extraordinary influence potentially.

What will it do to your strategies and what will happen to your sales funnel as the size of the market that buys continues to shrink in proportion to the size of the market that talks? Logic suggests a tipping point – but to what, and when? Solis suggests in his post that hyperconnected networks (Generation C) will see brands looking to unite people with a global strategy and at the same time using local presence and content to increase relevance, engagement and resonance. Brands, in other words, even the biggest of them, will engage with people at both universal and dialectal levels – meaning in turn that conversations can start and scale from more and more neighbourhoods at so many different points on the globe. And then, they can scale in different ways, to different networks, at different speeds and with different consequences.

If Solis is right, brands will then need to listen even more closely … to understand what they should ignore.

More reading

• Posting a profit
• The business of cloning
• Highs and lows: the new value equation in the social economy?
• The new take on redundancy
• 5 things to do when social media reacts to you. Read the full article.
• Strategy or resource budget?
• Rethinking the response
• Participation versus differentiation
• “What are we going to do?”
• The future of brands: 7 takes from Jim Stengel
• Gazing into the tea leaves

The business of cloning

There has been a carbon copy approach to business for some time, and business schools are  at least partly to blame. Management is now a taught vocation. OK – we all have to learn, but the problem is that everyone’s taught the same things and taught to work in the same ways. Same ideas. Same principles. Same rules.

As Dr Dan Herman observes, “All  those managers who are supposed to compete with one another … are using the same data; they conduct the same focus groups and the same surveys, analyse the data with the same tools, and use the same concepts and approaches in order to create distinctive products and brands. The result? … [they] achieve the same results, simply because they think the same way. In other words, they are MBA clones.”

Today, we teach process rather than the ability to process information. We form models rather than opinions. We rely on frameworks rather than asking people to extrapolate by drawing on experience. In this context, differentiation is a risk.

Too many managers, it seems to me, think they can rely on precedent, risk minimisation and sheer volume and speed of actions to achieve steeper and steeper results. That approach is a black swan bird-strike waiting to happen. Imitation may be the most sincere form of flattery, but looking to produce more of the same than everyone else isn’t the most effective way to compete. It just makes you more and more replaceable.

And in precisely the same way as people in commerce are encouraged to think alike, they are also taught to measure success and relative competitiveness in the same way.

Let me go out on a limb here. I see benchmarking as possibly the most dangerous tool businesses have. Not because comparison is wrong in itself, but because of the way companies use it to yardstick all the wrong things. Instead of referencing what other companies are doing by the numbers, my view is that they should be examining how effectively top performers are thinking. And instead of focusing on just players in their own industry, they should be comparing themselves with other industries – adopting what has been proven elsewhere, and using those learnings to change how they can succeed.

The irony of replication is that once you think alike, look alike, process alike, distibute alike and message alike – there’s nothing left to like. Every ounce of charm has been carefully and methodically ironed out.

More reading

• Twinkle, twinkle, twinkle …
• Reading the minds of millions
• Highs and lows: the new value equation in the social economy?
• The new take on redundancy
• Why women are driving the rethinking of the sales model. Read the blog post summary
• Why women are driving the rethinking of the sales model. Read the full article
• The efficiency debacle
• 5 things to do when social media reacts to you. Read the full article.
• Strategy or resource budget?
• Rethinking the response
• Participation versus differentiation
• “What are we going to do?”
• The future of brands: 7 takes from Jim Stengel
• Gazing into the tea leaves

Credentials as comfort food

How does the fact that I’m travelling on the world’s biggest airline change my travelling experience? Or the world’s biggest cruise liner? How does the fact that I’m working with the world’s biggest professional services firm change what I get from the lawyer, accountant, engineer etc assigned to me? What more do I get from buying a bottle from the world’s biggest winemaker? Or a toy from the world’s biggest department store?

It makes no difference.

And yet brands love to emphasise their size or the number of countries they operate in or the projects that they’ve been involved in. They think it provides reassurance. They think it gives them a storyline. It doesn’t.

It gives them big numbers but in most cases, it says nothing at all. Credentials in my view are much over-used and much over-rated. They don’t add to the excitement that consumers feel. And, given the complexity of most corporate structures, it could be argued that they often don’t ameliorate the risk of dealing with many entities. Credentials might feel important for investors, perhaps even for staff, to know they are part of a  scale-driven entity, but at an individual customer level they are often a meaningless part of any promise and they seldom amount to proof of quality of delivery.

Roger has this phrase that sums up the use of credentials so well. So many companies, he says, are experts at writing to themselves. They find all this scale and proof remarkably comforting. It makes them feel like part of something great. It makes them feel they have something impressive to talk about.

But unless you can specificially show me how all this scale, all this wealth, all this knowledge, all these resources are focused on improving what your customers get in their day to day dealings with you, too often the gizmo presentations and the “About us” pages and the map-packed corporate profiles are just popcorn. Crunchy data – and hot air.

More reading

• Customer service is worthless
• Loyal – to what point?
• The business of cloning
• This is your captain speaking
• Chemistry or contamination
• Gazing into the tea leaves

Highs and lows: the new value equation in the social economy?

The dynamics of customer service are shifting. Not so long enough, the ultimate goal was to deliver customers “high tech, high touch” – a highly digital experience that was nevertheless comforting and personalised.

Increasingly that framework is becoming a paradox I believe as brands sort new economic models for dealing with cross-channel customers. The current trend of sift online, buy offline is unsustainable in so many circumstances. High tech is jeopardising the economics of high touch. It encourages customers to price hunt, and then to bargain down prices in a physical environment using what they’ve found online as a cost index.

The implied “plus” between high tech and high touch doesn’t work. So I think we’re going to increasingly see it change to “or”. And with that shift will come more delineated choices for consumers. Brands will seek to attract customers by experience or by engagement.

In fact, the separation of those two thoughts – engagement (focused on cost conscious availability) and experience (focused on one-on-one immediacy) is interesting because it suggests that rather than trying to integrate their online and offline service offerings, it may make more sense for brands to look to segment consumers according to what’s important to buyers. In other words, we could perhaps expect the on- and off-line markets to radicalise rather than homogenise.

In a post on the dramatic shifts that brand face in the social economy, J Walker Smith refers to a marketplace dynamic in which nothing is worthwhile or valuable unless it is shared with others. He also quotes Ted Levitt’s observation that consumers “don’t buy things, they buy solutions to problems.”

Applied to the discussion over high-tech, high touch, the opportunity for retail brands in particular as I see it is to define in much more precise terms what gets shared, where, how and what perceived problem can be solved as a result.

In a social economy, I think high tech will become increasingly low margin – as organisations move budget-conscious consumers online to cut the cost of service, and then use their technical nous to engage them to cart. No surprises there. Plenty of brands are doing that now. The emphasis will be on the spontaneous. You’ll be able to buy efficiently and at a discount through brand stores online, and much of the communication that you have with the brand will take place across social media, with offers to mobile and plenty of online interaction through blogs and tweets. Fast and fun.

As J Walker Smith points out, “It’s about brands delivering more opportunities for people to have the kinds of conversations they want … Customer service should no longer be based solely on consumers having to engage with brand representatives. People should be able to seek help from other people to fix what’s wrong. In other words, build service around the relationships people have with other people.”

Such interactions are as much about the economics though as they are about the social. Encouraging people to interact amongst themselves online will lower the cost of serve and make the model more viable.

But I also believe that the ability to engage with brand representatives will evolve from a given to an option – one that brands will increasingly ask consumers to pay for. That’s because the high cost end of the market – what we used to call luxury – will revert increasingly to high touch. I’m expecting more and more of these brands to go back to face to face in a bid to match eye contact with margins. I’m also expecting many of those stores to be smaller and much more enjoyable as environments. The value add in those spaces will be the quality, experience and working knowledge of the staff. Pricing will be less flexible but service standards will for the most part be far higher than they are now. Concierge.

So high tech will become increasingly low value, and high touch will be increasingly low tech. Isn’t it interesting how value equations change?

More reading

• Posting a profit
• Reading the minds of millions
• The business of cloning
• The new take on redundancy
• Why women are driving the rethinking of the sales model. Read the blog post summary
• Why women are driving the rethinking of the sales model. Read the full article
• The efficiency debacle
• 5 things to do when social media reacts to you. Read the full article.
• Strategy or resource budget?
• Rethinking the response
• “What are we going to do?”
• The future of brands: 7 takes from Jim Stengel
• Gazing into the tea leaves

The new take on redundancy

In a world where we’ve never been so aware of being watched, everyone wants to “look busy”. Actions are good for that. Actions help everyone look like they’re working hard to get to the answers.

And along the way it’s very easy to believe you are doing things right, and therefore you have a strategy, when in fact you are simply part of what the market’s doing. If the market’s growing, it’s not a strategy to be there for the ride.

A lot of companies told a lot of people over the last decade that they had sound strategies proven over time. They didn’t have a strategy at all. They had actions that had kept them busy over time, and those actions were successful as long as the market rose. The key action was to acquire and revalue assets upwards, and then tell themselves and their shareholders that they were creating wealth.

The answers are not the actions. And plenty of actions don’t necessarily generate the answers. And yet there’s unswerving faith in many quarters that they will. Busyness is the new raindance. The more people do, the more reassured they are that the answers they need will sweep over the horizon and drop market share in their laps.

It’s not hard to do a lot of what you’re familiar with, especially if it keeps your team at the office long after home-time. It’s not hard to convince yourselves that all this hard work must have a pay off. It’s not hard to confuse predilection with productivity. In fact, it’s all very convenient. Because none of these actions requires leaps of faith. All of them all but stipulate continuing with what you and those around you know.

And while you’re busy doing all this, someone somewhere is changing the rules to tilt the market dynamics in their favour. What’s scary is that the people in your office are probably working so hard on what they’ve told themselves they need to get done – they haven’t even noticed.

We’re used to thinking of redundancy as a concept meaning “no longer needed”. In point of fact, the wider take, for brands at least, should probably be “no longer valued”. And one of the biggest contributors to brand redundancy is slavish addiction to action.

By embracing their “to do” lists, brands deceive themselves into believing they are doing more, achieving more, getting ahead – when in fact, often, they are actually eroding their value because they are too busy taking old actions to create new value. In effect, people are staying late, working hard and stressing themselves out so they can make their brand redundant. (Sadly, they also think that by doing these things, they are doing exactly the opposite.)

More reading

• Reading the minds of millions
• The business of cloning
• Highs and lows: the new value equation in the social economy?
• Why women are driving the rethinking of the sales model. Read the blog post summary
• Why women are driving the rethinking of the sales model. Read the full article
• The efficiency debacle
• 5 things to do when social media reacts to you. Read the full article.
• Strategy or resource budget?
• Rethinking the response
• “What are we going to do?”
• The future of brands: 7 takes from Jim Stengel
• Gazing into the tea leaves

Always be branding

Somehow, it just doesn’t feel right. In fact, to some it feels tantamount to suicidal – spending money on your brand at the very point in time when the company feels like it can least afford to invest in “intangibles”. To all those people who’ve thrown that argument at me over the years, you’re right. Well, partly.

At the “wrong” time, it absolutely doesn’t feel right.

But that’s the thing about counter-cyclical decisions. They’re out of sync with the spirit of the times – or more particularly, they’re not aligned with your spirit at the time. And, actually, if you’re honest, the feeling that you have about the futility of branding in bad times is probably the same feeling you have when things are going well. Except then it feels like you don’t need to spend money on your brand.

Whenever anyone asks me, “When’s the right time to spend money on your branding?”, I respond with, “When’s the right time to be competitive?”. I’m not being a smart-ass. There’s never a wrong time.

So many people misunderstand the role of brand. They think it’s a synonym for marketing, and marketing is a synonym for media spend.

A brand tells people who to value and why.

Marketing tells them how the brand is valued, and where to access it.

The purpose of your brand is to use that perceived value to provide you, through marketing,  with sustained sales at a greater level of return than the market is inclined to give you over the longer term.

The objective of every brand should be to to lift what people are prepared to pay, to motivate people to value you more than they would do otherwise. It doesn’t matter whether you’re a discount brand, a scale brand, a luxury brand or a cult brand, that’s the goal. It doesn’t matter whether these are boom times or bust.

If you’re not a brand, you’re a commodity. You are only worth the value that the market assigns. And in good times, many companies are happy with that. They stop spending, ride the commodity wave and bank the organic growth. They allow themselves to believe the increases are all their own doing.

Things turn pear-shaped though when the wave changes direction. When things get tough, the temptation is to hunker down – to cut expenditure and look to ride out the tough times. The myth of cost-cutting is that it makes you a more competitive company. It doesn’t. It does make you a leaner company, a less expensive company, it does provide you with more cashflow. But it doesn’t generate preference. In fact, it doesn’t generate anything.

If you’re a company in trouble, branding is not a magic bullet. It won’t suddenly save you because it probably won’t lift your perceived value fast enough before you hit the wall. It needs to be used in conjunction with a range of other turnaround initiatives, including efficiency gains. But not branding will almost certainly kill you. Without branding you are, quite literally, nothing special, whether your bank account is telling you that or not.

More reading

• Twinkle, twinkle, twinkle …
  
• You can’t lead as a brand if you follow another brand 
• 5 things to do when social media reacts to you. Read the full article
• Participation versus differentiation
• Gazing into the tea leaves

How good are you at saying goodbye?

Brands and customers part company for all sorts of reasons. Relationships are tidal. We outgrow the need for a brand or product, our tastes or priorities shift, we don’t live where we lived or work where we worked or spend our time doing what we used to do all the time, perhaps we decide to pass on the latest upgrade.

And, objectively, that’s a healthy thing. Those ebbs and flows provide markets with movement. They ensure that new players can enter and gain new customers and current players can change their position in a sector as they gain or lose followers.

Most brands have their heads around winning new customers. They seem less certain on how to say goodbye with good grace. But how you do that can, in the longer run, and in the context of your brand, be as important as how you welcome customers in the first place. Wishing them well on the next stage of their journey, and assisting them to start that stage in the best light, may well put you a lot closer to  welcoming them back.

The critical thing is to stay true to who you are and what you stand for, whilst keeping your minds open to opportunities to improve. The key question is, why are they leaving and what can you as a brand learn from that?

• If you lose business on price, that probably means your value equation isn’t clear enough or strong enough. Don’t try to re-negotiate the result by radically repricing. That just makes your whole value structure look arbitrary and untrustworthy. If you honestly can’t afford as a brand to deliver what they want for the price they’re prepared to pay, then don’t. Explain why you can’t accept the arrangement and politely walk away.
• If they’re leaving because of a perceived wrong or shortcoming, that probably means your relationship management and perhaps your problem escalation processes are patchy. Acknowledge that they feel the way they do, and (particularly if they have a point) tell them what you are doing to fix the problem they have identified. At least ask if you can be in touch when you have an answer. That keeps the relationship going and shows good faith in looking to rectify a situation.
• If they’re leaving because they perceive the grass is greener, then you either have lost profile in the marketplace or you have failed to remind your customer of the value you bring. Try to find out what they think your competitor has that you don’t. You could do this through a survey or an interview. The insights gained from this exit poll can be very revealing.
• If they don’t take up your latest offer, or they go somewhere else for it, then you either haven’t provided them with a good enough reason to change, you’ve lost ground as a brand or you’ve simply asked too much of your customers. Take a long hard look at what you’ve been asking them to buy and whether, in the context of what you’re asking them to spend, their priorities and what your competitors are offering, it’s really worth it for them.

Lifetime value is pretty much a thing of the past. You have to assume for the most part that customers have a limited loyalty timeframe. You can’t (and often shouldn’t) fight to keep the business at any cost. But you must always fight to keep your good reputation – because at some point, the customer who left you will be ready once again to move on.

How you said goodbye can have a lot to do with whether they boomerang to you or leapfrog to yet another player. Even more importantly, how ex-customers remember you can have a huge influence on whether new customers embrace you.

More reading

• Brands shouldn’t try to make sense
• Does sponsorship actually work?
• For your information
• Likeable brands: Debating the true value of Likes
• Human marketing
• Gazing into the tea leaves