Brands Create Customers

Brands have the capability to grow customers, but we often see customer growth occur most dramatically with the advent of new technologies. Technology innovation can deliver immediate value that elevates a customer into a new realm of being and doing. When this happens, the customer resides on a new plane of action, with a new baseline of options and expectations. Once you taste the new freedoms provided, it’s impossible to go back to the old ways. You have evolved to a higher level.

Fred Wilson at A VC touches on this point when he notes his growing preference for his cellphone over his landline.

Take a stately old relic that’s going nowhere and totally change its tune. That’s the name of the game.

Brand remix offers the promise of renewed, recharged life. For countless mummies in a tomb, it’s the only way out.

This is how it’s done.

Thanks to Metafilter.

Going forward, brand teams will need a whole new set of processes. They’ll be creating and growing customers to produce strategic value. That’s a non-trivial challenge. Strategy as Design (pdf) by Jeanne Liedtka addresses some of the key process issues from a general business perspective.

A quote:

Design offers a different approach and suggests processes that are more widely participative, more dialogue-based, issue-rather-than-calendar-driven, conflict-using rather than conflict-avoiding, all aimed at invention and learning, rather than control.

If we were to take design’s lead,we would involve more members of the organization in two-way strategic conversations.We would view the process as one of iteration and experimentation, and pay sequential attention to idea generation and evaluation in a way that attends first to possibilities before moving onto constraints. Finally, and perhaps most importantly, we would recognize that good designs succeed by persuading, and great designs by inspiring.

Since one of the first tasks of the brand team is to “design a customer,” all of these elements (and many more) will come into play.

Over at the Adobe Design Center website, Khoi Vinh has an interesting interview with Jason Fried of 37signals on lightweight but effective methods to create successful software collaboration products.

Since brands are code, and also collaborations in context, the methods 37signals employs may serve as a model for brand teams racing to develop and deploy agile brand programs. This would be especially true for collaboration-driven brands with high levels of customer interaction.

Generalists instead of specialists
37signals has been turning out highly innovative products using a very small staff. Jason explains how they do it using generalists instead of legions of specialists. In place of grandiose planning and processes, they usually jump in and start prototyping, maximizing feedback, tweaking and iterating as they go. They feel this frees up creative output and produces better results sooner.

Jason Fried:

. . . we used to go through lengthy processes, draw lots of abstract diagrams, spend lots of time on documentation. But what we realized was that that made the “process” better but it rarely made the product better. So we decided that we’d be better off staying as close to real for as long as possible during a project than approaching real towards the end. You never know what’s real until you see real, and often times it’s too late.

For the coming age of agile brands, this seems like sound advice.

See brand run. No pun intended, seriously, but Apple and Nike are pushing the brand envelope. They are jointly extending their customers into new domains of performance where competitors will have a hard time chasing following.

From the announcement on the Apple site:

Thanks to a unique partnership between NIKE and Apple, your iPod nano becomes your coach. Your personal trainer. Your favorite workout companion. Introducing Nike+iPod.

It’s this strategic brand vision that separates the iPod from the ranks of competing mp3 players. Apple is now building out an iPod platform that will escalate customers from the mire of low-imagination products. Their relentless whole-customer innovation may cause others (Sony, Creative) to cede lucrative segments, because with Apple defining the race, second place is as good as last.

And yes, Nike-created workout mixes will soon be available on iTunes.

We’ve written about brand pacing before.

(Personally, I’m not surprised by the Nike/iPod alliance. I’ve always felt there was a hidden Nike swoosh in the treble clef.)

Update: minor edit.

BrandWeek has published an excerpt of the Brand Keys Customer Loyalty Index for 2006. The excerpt is a pdf with summary charts, and is well worth reading.

Based on the Brand Keys survey, brands are struggling to meet customer expectations. In fact, many brands are falling behind, creating a “loyalty gap.”

The average level of consumer expectation across 35 major brand categories rose by 4.5% from last year. Over the same period, the survey shows, the average ability of brands to keep up with those hopes decreased 9.2%. Put another way, while brands certainly try to meet the expectations of their loyal customers, those expectations are nonetheless growing two times faster than the brands’ ability to keep up with them.

What do these results mean?
Various experts cited in the BrandWeek article offer up a “usual suspects” range of explanations and remedies:

1. Brands have to do a better job of managing customer expectations.
2. There’s too much hype in ads. People believe it, and brands get caught trying to deliver on vapor.
3. Better brand strategies are needed. Don’t over-promise (and under-deliver).
4. Customers themselves are to blame. They demand too much. They’re unrealistic. Brands are caught in the middle.
5. Lower the bar for brands. That way, whatever you do will be appreciated.
6. Just sell commodities. That way all brand problems disappear. (Oops—my joke.)

My take
In general, I’d say these results (the survey calls them a trend) indicate a systemic breakdown weakness in traditional brand
practice. Attempts to “differentiate the brand” by “changing customer perceptions” invariably lead to campaign-driven brands, instead of customer-driven brands. The usual result is huge discontinuities between brand perception and reality. Customers and brands become “out of sync.”

The problem starts with top-down brands
The traditional top-down approach to brands is a main cause of the “loyalty gap.” That approach typically aims to create an unrealistic mind-meld of iconic brand worship, or, failing that, simply bribes customers with rewards and perks. The first sets customers up for a clash with reality; the second merely conditions customers to ask for “more.”

Top-down brands create low-performance customers. Customers conditioned by top-down brands are shocked (shocked!) when the brand veil is pulled from their eyes, or when they feel the least bit jilted in rewards. Typically, top-down brands are not designed to deliver value, and they’re not developed to create customers. That’s a big part of the problem.

Collaboration is key
If you use your brand to collaborate with customers, engaging them on mutual terms, you can create a platform of understanding and trust that avoids problems like the top-down “loyalty gap.” For instance, Southwest does not need to “lower expectations” to be a successful brand. It forges an agreement with customers on travel value: lots of reliable, cheap flights to key cities at attractive travel times. Their (high-performance) customers willingly pitch in to keep this brand proposition viable. Customers want to collaborate.

Needed: a new concept of “brand loyalty”
One problem with the “loyalty gap” meme is that it’s predicated on the traditional “loyalty to the brand” approach, and that approach itself is off base. In fact, trying to make customers “loyal to the brand” only makes matters worse.

As we note in our new definition of “brand loyalty,” brand loyalty is:

The loyalty of the brand to what it stands for. In practice, brand loyalty is a mutual loyalty of company and customer to a common cause. The customer is loyal through the brand, not to the brand.

There is no “loyalty gap” when you and your customers are on the same side.

Seth Godin has a very insightful post on the success of Trader Joe’s. One of his key points:

“The key mantra is that Trader’s finds foods for its customers, NOT customers for its foods.”

To that I say, Amen.

Trader Joe’s plays an important role in the food experience of our family. At one time we did most of our grocery shopping at Safeway. Now, Safeway takes 1% of our grocery dollars, if that.

Our monthly grocery breakout is something like this:

Costco (meat, fish, staples) 30%
Berkeley Bowl (produce, organics) 20%
Trader Joe’s 30%
Ranch 99 (Asian foods, fish, produce) 20%

We buy dairy, some organics and many speciality items at Trader Joe’s. They have a solid combination of quality/price and taste (that we like).

Trader Joe’s is farther from our house than the local Safeway. It has more congested parking, and is often more crowded, with long waits at checkout. Yet we still go there.

Why?

Store and brand are one
We go there because Trader Joe’s is on our side. While they have far fewer sku’s than a typical Safeway, what they do have is more focused, and relevant. Shopping there is an extension of us. Safeway offers brand choice, but Trader Joe’s offers brand trust. What they lack in acres of “name” brands they make up in holistic brand performance. In this, the Trader Joe’s store and brand are one. (In fact, Trader Joe’s own brands probably have more appeal because they’re not widely advertised. They’re discoveries, not “merchandise.” The store itself is their platform.)

Shopping at Trader Joe’s is a collaboration. It’s highly efficient for them, and for their customers.

.

Am playing around with Gliffy beta in my so-far-fruitless search for the optimal collaborative brand visualization tool.

Fairly limited feature set at this point . . ..

On Friday, May 19th, Apple opened its stunning Fifth Avenue store in Manhattan. The large underground store is entered through a striking glass “cube” aboveground in a spacious urban plaza, making the entrance itself an iconic beacon. It’s an immediate landmark.

The Fifth Avenue store is a showcase of the Apple brand. It has lessons for all brand builders.

Framing the customer
To aspire to greatness a brand must frame its customers on a plane of greatness. Apple knows how to do this. Through its innovative architecture, Apple makes a trip to this store the virtual equivalent of visiting the Louvre in Paris, where visitors enter through an equally striking glass pyramid. Apple thus frames its customers in the context of Europe’s greatest art. The “cube,” though, does not mimic the Louvre’s pyramid. It honors it symbolically while making its own distinct statement. It invites customers to become active creators of art using Apple technology, not just spectators of past creations. Customers who enter the glass cube experience both the homage and the daring break.

The event
A cardinal rule of retail is to make your retail space an ongoing event that awakens your customers to new experiences. Your store is a realm of customer connections, not just a door and four walls. And “event” means drama—lots of it. Thus, opening a store becomes an exponentially dramatic event, flush with new connections. Apple is a master of such occasions. The indefatigable ifoApple has some Fifth Avenue event details. Here is a snippet:

The short early line and thunderstorms translated into a huge line just before and after the opening. At 4:10 p.m. New York Times tech writer David Pogue showed up with a new black MacBook, with the iMovie recording feature running, and was interviewing people. At the same time, we could hear the store employees yelling and hooting inside the store. At 4:30 p.m. there were 915 people in line, stretching around the block. Security guards split the line at business entrances to keep them from being blocked.

At about 5:30 p.m. dozens of store employees came up the stairs and started working the waiting line, standing on the plaza and making like cheerleaders–the crowd yelled back. At the same moment, Steve Jobs appeared at the entrance, generating more yells, including from some young woman who told Jobs, “You hot!” Apple’s architects and retail execs also joined the group, standing to the right of the cube entrance. Johnson and Blankenship hugged again. The press had arrived and were positioned to the right of the entrance.

With just 15 minutes left before opening, the young man who was #8 in line turned to his female companion and proposed to her. She accepted, and that set off a ripple of “Awwww” back through the crowd, and up to the Apple staffers. Some came over to offer their congratulations.

The waiting line was in a perfect configuration to watch the show and create sidewalk buzz. The closest people were both those at the front of the line, and those at the end. Both groups were looking straight at the cube, which is raised up several steps, creating a stage. The pedestrian area was jammed, and there was a huge crowd of people across Fifth Avenue trying to catch a glimpse of what was occurring.

Retail as an expression of brand
Apple rightly considers retail to be an expression of the Apple brand, on par with other brand expressions such as “design” and “user interface.” In other words, “retail” channels the brand. It is not allowed to impose constraints that bend the brand.

Apple demonstrates that retail space is also a spatial extension of brand, a multi-dimensional platform for customer experience and growth. Retail is thus a workspace for brand. You build out from the brand. It’s what your brand does with—and within—that space that defines who you are, and where you lead.

More on the Fifth Avenue Store from Apple.

Photo source: openeye, flickr

UPDATE: ifoApple looks into estimated construction and maintenance costs of the Fifth Avenue Store.

Every craft and every profession needs a patron saint. Your patron saint is the spiritual power and muse to tune your senses, watch your six, and ease the path ahead. It’s someone you can commune with on the Ducati, in the midst of a do-or-die decision, or while laying out the bills for a case of ‘99 Antinori Tignanello.

People graced by a patron saint have that special glow. Their inner dashboard radiates a confidence of connection.

So, who’s the patron saint of brands?

Dionysus: patron saint of brands

That’s easy. It’s Dionysus, the edge-god of art, passion, creation and wine, Mr. Wild Side himself, ecstasy in excelsis, musician, dancer, fount of thoughts unbridled, lust undying. Like great brands, Dionysus unfolds the untamed. He pushes limits. In a world of tepid convention, he’s the sensual feast of free.

Not for the meek

Dionysus is not for the meek—but neither are brands. He’s a non-stop force of creative destruction, blasting the current context for something bigger and better, shredding, melding, re-shaping, re-birthing. He may be momentarily satiated, but satisfied—never. He doesn’t let brands coast, or calcify.

Brand-builders can’t have limits

Dionysus is the perfect patron saint for brands because brand builders can’t have limits. Their mission is to bring products to life, pushing, pulling and transporting customers beyond the grind, into new contexts of living. Brand builders don’t just strut upon a stage; they cook up new stages. Dionysus fuels their brew. (Titian’s Bacchus and Ariadne above captures some of the Dionysian fire.)

The Dionysian license to create

Vital question: If you’re a brand builder, does having Dionysus as your patron saint grant you the license to let your senses soar and your creative juices run wild?

Vital answer: Only if the essence of your creation is a higher form of customer. (Brands aim high. Don’t waste your powers on trivia.)

Dionysian brands

There are brands, and then there are Dionysian brands. Dionysian brands are a ferment of mind and matter. Instead of being some concocted add-on, or a cheap-rent façade, they’re primordial and potent, delivering visceral value, procreating customers, infusing every synapse of company being. They’re passion from the core. You, the brand builder, are the music, the grapes and the dance. Step one is to Unzip Your Brand.

Per Nick Wingfield’s article in the Wall St. Journal (sub req), an informed source claims that the new Apple store in Manhattan will be open 24 hours a day.

Well, why not? Brands never sleep.

Brand pacing

Apple understands the value of brand pacing. When your brand confers strategic advantage, work it hard and put it up wet. The faster you innovate on brand, unlocking more context for your customers, the more light years you place between yourself and your competitors. By the time they cobble up a look-alike, you will have moved your customers to a far better universe.We’ve commented on the Apple store before. It’s the Apple brand platform at work, designed and developed to create customers.

Companies run on two feet: product and brand. When they’re in sync 24/7, competitors can’t catch up.

Photo source: jackcheng

I’m not a big fan of product placement. Paid placement smacks of low-life commercialism. (High-life commercialism being a totally different matter.) The real problem is that conventional product placement usually violates brand context. Since brands are collaborations in context between company and customer, the arbitrary imposition of a particular beer or soda in the context of a story usually breaks the story. It reduces it (glaringly) to an ad.

If it’s a posh action flick about the good spy in a BMW being menaced by the evil oaf in a Hummer, that’s different. Those brands extend the characters, in context. But usually the placement has as much relevance as arm candy at the Oscars. The placement doesn’t make the story better. And viewers are used.

Creative placement trumps product placement
Brands used creatively can make a story richer. Movie buffs gasped in delight when Sin City’s Marv dragged a thug face down through the streets while driving a 1968 Corvair. A ’68 Corvair! Now that is placement.

Alas, all too often product placement is story defacement.

A creative option
There’s an option, though. Tell a special story yourself, in the context of your customer. In it, explore the full character of your brand. Plumb new dimensions. Raise questions. Be fearless. You—and your customers—will be the richer for it.

The difference in a nutshell: Creative sells products. Apple creates customers.

Few people have an “mp3 player problem.” Lots of people have a “lack of music problem.” iTunes and the iPod make music available, easily and copiously.

Apple connects people with their music. Creative sells a player.

You and your music can grow with Apple. With Creative, it’s you and your player.

So, when you’ve lost the customers, try to win with lawyers. BusinessWeek has the latest.