Archive for May, 2006

Platform effects: how cellphones grow their customers

Wednesday, May 31st, 2006
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.

The landline phone continues to lose luster with me. I much prefer my cellphone.

The voice quality of my cellphone can’t compare to my landline, but in every other respect the cellphone wins. My contact database is totally integrated on my cellphone. My landline phone doesn’t even know what a contact database is. I get emails on my cellphone, and phone numbers are hyperlinked so I can click and call them. Try that on a land line.

You get the picture. The cellphone rocks. The landline does not.

This weekend I wanted to send The Gotham Gal a text message. I couldn’t make a phone call without being rude. But a quick text message would have been fine. Only she was home, on a landline. And I knew she wasn’t on email. I wanted to text message the landline and have the phone beep alerting her to an incoming message.

The cellphone has conditioned me to behaviors that aren’t possible on landlines. And so I don’t want the landline anymore. I’ll take the reduced quality. What I really want is increased functionality.

Platform effects
The cellphone has “grown” Fred and virtually every other cellphone user (including yours truly) to a new platform of personal performance. It’s a push-pull platform effect. The cellphone transforms us, and we transform it, adding value back to the platform by extending its scope. Thus, the cellphone is no longer just a “phone.” It’s community, identity, fashion advisor, social action, social net, and much more. It delivers the freedoms we need to get things done—or to invent new ways of doing them.

The technology grows us, and we grow it in return.

Can carriers grow their customers?
Since brands begin where products end, one might think that cellphone carriers might step in with brand programs that would grow their customers beyond the technology arc of cellphones proper. They could use their brands to deliver additional forms of value. That might create major brand differentiation with long-term benefits.

Unfortunately, most carriers still radiate a landline ethos when it comes to brands. Their brands flourish in the fine print, where they happily corner customers with convoluted plans. That’s not growing customers; that’s trapping them. The first carrier to use its brand as something other than a punji pit will command the allegiance of cellphone users ready to do more. That would be a welcome advance.

UPDATE: Improving phone usability is a step in the right direction.

UPDATE 2: Edited headline for clarity, Original headline: How to grow customers: cellphones.

Photo: thefinned1, Flickr

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Brand remix picks a new tune

Monday, May 29th, 2006

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.

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“Design thinking” and the brand team

Friday, May 26th, 2006

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.

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Tip to brand team: prototype, iterate, tweak

Thursday, May 25th, 2006

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.

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Brand pacing from Apple and Nike

Wednesday, May 24th, 2006

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.

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Customer Loyalty Index shows brands struggling

Tuesday, May 23rd, 2006

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.

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How Trader Joe’s does it

Monday, May 22nd, 2006

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.

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Gliffy — I pray that ye be spiffy

Sunday, May 21st, 2006

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 . . ..

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