Brands Create Customers

Paul Paetz provides a ground-level, first person account of how the famed Maytag brand became a shell of its former self. It’s a sad story of how a distinguished company, a great product line, and devoted customers were undermined by mismanagement.

Paul calls the Maytag decline and fall “brandicide.” That’s as good a term as any. Most brands are not killed by competitors. They’re done in by their own companies.

The danger of lowering the brand bar

There’s a lesson here for other manufacturers, too. Once you lower the brand bar for your offerings to caveat emptor, you signal your own customers to find brand value elsewhere. And you invite competitors to provide it.

As stated in the name of this blog, the mission of brands is to create customers. Before we can create a customer, however, we first have to design one. In this post I’ll touch on what “creating a customer” means, and then follow with an overview of the customer design process.

In broad brushstrokes, the enterprise of brands is to 1) design the customers who will lead the business forward, and 2) create those customers through the many applications, programs and initiatives in our brand toolkit. And yes, we design our customers to win.

What “creating a customer” really means

When a business makes a sale, it does not automatically “create a customer.” It merely creates a transaction. A transaction is not a customer.

Creating a customer means connecting the customer to his or her passion or potential through the brand, in a way that fosters a mutually beneficial relationship. For brands, creating customers is a multi-tiered process of brand applications, platforms and programs, with specific deliverables across many stages, advancing the customer along strategic pathways, and engaging the customer as an innovation partner. It’s a strategic act of market creation rather than a quick ka-ching, a pimped out package, or a superficial campaign.

Building strong customers

Before we can begin the customer creation process, however, we must design the customer that we intend to create. When we say we want to “build strong brands,” what we really mean is that we want to “build strong customers.” Strong customers are better allies than weak, credulous customers who act like sheep. One of our first design questions, therefore, is “Where do we put the muscles?” We don’t leave customer fitness to chance.

We’ll be designing a “high performance customer”

What we’ll be designing is a “high performance customer.” This is similar to the concept of lead user, except that a high performance customer is more of a “leverager” than a user. He or she can carry your brand down new innovation avenues, or across categories into entirely new markets. For example, Apple, Google and Facebook enable high performance customers by opening their software to third-party applications, resulting in dozens of new mobile apps and desktop applications, new business opportunities, and new avenues for growth.

Do you want an ecosystem that looks like plankton, or Paris?

Everyone wants their brand to be the center of an ecosystem. How you design your customers will determine if your ecosystem looks like plankton, or Paris. If you design your customers to be “consumers,” (or, God forbid, “shoppers”) the creative equivalent of lemmings, you’ll be a brand of lemmings, fated to end at the nearest cliff. It’s a case of value in, value out. If you design a passive customer, or envision your brand playing to an “audience,” you’ll be laying the groundwork for a passive, static brand.

The strategic importance of customer design

Strategically, you want to design customers who will advance beyond the reach of competitors. These are customers who will drive your business forward, returning value back to the brand as they advance themselves—and the brand—to higher levels. In essence, you are designing customers to be one of your most powerful competitive weapons. Not because they’re slavishly “loyal,” but because they’re relentlessly innovative, fueled by your vision and your deliverables.

Develop your customers as you develop your employees

Companies invest huge sums to develop their employees to be creative and productive problem solvers. A company’s brand is its tool to develop customers along the same path. A brand that desires dumb, irrational customers insults its own employees. Eventually it will degenerate into a brand of bureaucracy, where employees are slaves to process and serfs of departmental fiefdoms, slowing innovation to a crawl.

Designing dynamic customers

The brand challenge is to design creative, dynamic customers who will have the drive, cunning and courage to embrace and run with the forthcoming products on our product development roadmap. While the product development team is crafting the next great innovation, the brand team will be designing the customers who will do something totally unique and amazing with it. In this sense, the brand completes the product vision.

Designing “pull” into customers

In the customer design process we design “pull” into our customers of tomorrow, so we won’t have to bear the agony and expense of trying to “push” our products upon them. This design ability relies on a deep ethnographic understanding of customers themselves, plus the brand vision to discern new ways for customers to grow. With our brands we are cultivating an almost rampant customer garden, much more in the style of John Chapman than Jethro Tull.

Developing the holistic customer model

When begin to design our customer we can set aside our Wacom tablets for a while. We’ll need to focus on a larger customer canvas, one with more texture. Brands are holistic expressions of company and customer, and the first design step is to develop a holistic model of our current customer, including what makes him or her “complete. We then map out the customer’s next iteration through the brand. He or she will be a new being with a greater sphere of autonomous action compared to current customers. In this process we’ll design customers for new ways of being and doing, within richer forms of living. All of these will leave current competitors far behind.

In essence, we’ll be designing a “higher order” customer who will be “beyond” future products from our competitors. In other words, we’re designing customers who will shut our competitors out—on the assumption that only our products will be worthy of this customer’s higher-order demands. Does the iPod customers want to buy CD’s? Nope.

The customer template

Typically, we’ll be designing a template of the customer we want as our innovation partner two or three years down the road. “Template” is the key term here. We’re not trying to force fit the customer into a pre-defined mold. We want to create a customer platform of more autonomy, insight and imagination, so our customer can be more proactive through our brand. We leave lots of headroom for independent customer growth. We’re designing a proactive teammate, not a rank “follower.”

Developing customer design criteria

The customer design criteria will vary by business category and customer type. In general, though, we want to maximize the customer freedoms delivered by our brand. The more freedoms the brand delivers, the more the customer can excel, and the greater value the customer can return to the business as a partner in a brand value network. If our company is geared to innovate, a liberation brand model may be appropriate.

Here are some general questions we can ask to help develop specific customer design criteria:

1. What is currently holding our customers back?
2. How can our customers be “un-packaged” from current constraints?
3. What is their immediate pain?
4. What is their strategic pain? Their missed opportunities?
5. What kinds of freedoms do our customers need?
6. How can we make our customers more productive?
7. What new skills, capabilities, values, sensibilities and attitudes do they need?
8. How can our brand become a platform for continuous customer growth?
9. How can our brand advance customers beyond the reach of competitors?
10. How can our brand create the customers who will drive our business forward?

The brand as an engine for customer growth

Since our brand will function as an engine for customer growth, advancing the customer to a point where he/she will be ready for our next level of innovation, we don’t want to leave any potential growth avenues unexplored. Thus, we also develop our brand to advance the customer’s:

1. Personal growth
2. Social growth
3. Economic growth
4. Spiritual growth
5. Creative growth

We need to get a handle on these elements in the design phase because the customer creation process is one of leading, learning and teaming that involves the whole brand, and the whole customer. A brand that aspires to market leadership must first demonstrate customer leadership. And a brand leads from the customer up.

Design the customer that you’d want to be

As a general rule, the customer you’re designing will be more capable, more proactive, and more independent than you are today. In other words, design the customer that you’d want to be. Put yourself in your customer’s shoes, just like they do at Apple.

When you’re designing the whole customer, nothing is off limits. That’s the challenge, and the thrill.

The hardest part about being a brand builder is that you’re a 3D person in a 2D world.

Business is a spreadsheet. It’s a march of X and Y, where 2D thinking is the rule.

Brands are the drama of deep spaces. They hear birds fly, feel tired leaves turn, watch clouds change mountains. And just to make things interesting, they reveal this for, and through, customers.

Business can be out of touch with nature, and with customers, and can lack perspective on itself. It often comes up a dimension short.

Brands restore that dimension. They’re the distance to be touched, the seasons greeted, and life everlasting, underfoot. And they add the customer to this picture. And business, too.

Photo: jurvetson, Flickr

As brand builders we’re continually pushing the edge of innovation, creating customers in new markets, and increasingly across international boundaries. In this effort it helps to situate brands in the big picture of things, as a prime-time player on the global stage. What we need is a succinct formulation that defines the “macro” role of brands as an independent, proactive force in today’s world economy.

And I do mean succinct. Keep it short and sweet, so it packs a punch. Make it a big picture in 25 words or less, something that would also serve as a elevator pitch for the supreme importance of brands.

Moving brands to the top tier

This means raising brands to the top tier of economic movers and shakers, right alongside capitalism and business, the two global economic drivers. Brands currently exist in a world of capitalism and business, so that’s where I start. The goal is to wrap capitalism, business and brands into one integrated concept. In the formulation below, I give each element a global purpose, and then tie all three together in a common value logic, ascending from commodities to higher forms of value.

A big picture context for brands

We’re talking real big picture here, as seen from high earth orbit. What does “capitalism” do for mankind? What’s the role of “business” on the world stage? And how do “brands” complete the picture?

My formulation doesn’t pretend to be definitive (well, not at this point, anyway). It’s my working snapshot, a starting point to put brands in their proper perspective.

So here it is, in 25 words or less:

Notes

OK, let me explain the thinking behind this formulation. As you can see, there’s an upward progression of value from commodity to “life,” i.e., to the customer, with brands as the crowning/creative/human touch. And there’s also a progression from underlying system (capitalism) to active institution (business) to human agency (brand.) In a profound sense, brands complete capitalism, and they complete business. (Could brands exist beyond capitalism and business? Of course.)

Capitalism

I mean free-market capitalism as an economic system, in the textbook sense. The main reason to keep capitalism around (with its endless imperfections) is that it does create commodities, and commodities (eventually) make us all richer by lowering the price of goods. Worldwide, this does seem to be the case. Put a bunch of capitalists in a room and commodities will burst out like popcorn.

Can capitalism be made more open, more responsible and more equitable? Absolutely. That would also make for better brands.

Business

Business uses commodities to create value: iron ore into sheet steel into cars, knockdown furniture at Ikea, H&M, Gap and the clothing chains that run on cotton, digital devices with cheap chips, a grass-roots bank in India using open source software. The more commodities available, the more forms of value that business can create. (Commodities fuel business opportunities.)

Business, though, typically thinks first about profit, not advancing customers. And that’s where brands come in. A business can make a sale, but only a brand can create and grow a customer.

Brands

I mean value-based brands, not brands developed as stylized sales stimulants. In my formulation, brands are avenues of innovation that invent new forms of value beyond the product proper. They do this by integrating the mission of the company and the product with the mission of the customer. Brands “bring business value to life” by transforming it into rich human context. Indeed, this is how brands create customers.

A side benefit of this formulation is that it makes brands the greatest place to be if you want to combine human values, creativity and business innovation. But then, you already knew that.

Comments, please

By all means, please let me know of any comments, suggestions or revisions you might have to make this formulation better. Or create one of your own. We are inventing a new world of brands. It’s the collaborative task of many.

And yes, I’m quite aware that most existing brands would fail this big picture test.

One of the best ways to improve brand program effectiveness is to employ the concept of the brand chain. The brand chain is a new way to understand the configuration and value steam of brand programs. No brand should be without it. The brand chain has illustrative power:; it helps us to visualize and analyze the process of brand value creation and brand program flow. It  has strategic power, too. It helps brands to focus their resources where they can create and grow strategic customer outcomes.

As shown in the diagram below, the brand chain is analogous to the supply chain. The key difference is that where the supply chain is made of value inputs leading to product production, the brand chain is made of value inputs headed toward the customer.

While the supply chain helps create products, the brand chain helps create customers.

The brand chain defined

Here’s how I define the brand chain in our New Brand Glossary:

Brand Chain
The brand chain begins where the classic supply chain ends. While the supply chain is made up of value-adding inputs leading to the product, the brand chain begins with product development and heads toward the customer. Through brand platforms and programs it delivers multiple forms of downstream value. The brand chain consists of creative brand interactions between customer and company, customer and product, and between customers themselves.

The brand chain plays a critical role in advancing both the customer and the brand platform, primarily through open-ended brand innovation and continuous customer integration.

The brand chain is vital to business

In business, the brand chain is every bit as important as the supply chain. Many companies with superb supply chains fail their customers by under-performing in their brand chain. They envision the brand chain as “sales,” when in fact it is a whole new level of value creation.

In practice, the brand chain is powerful tool that helps clarify the distinctive forms of value that brands can deliver. When a company analyzes its value creation process in terms of its brand chain, it can begin to focus on creating customers with brand platforms and brand programs that are both more effective, and more efficient, than media-based brands structured as broadcast “communications.”

The brand chain and value-based brands

A brand chain implies value-based brands. In effect, you want your brand chain to be a chain of strategic brand deliverables that advance your customers where competitors can’t follow. The more value contained within the brand chain, the more unique brand pathways a company can create for its customers. A fundamental step in this process is to develop your brand as a customer-focused application, not as a static “thing.”

The brand chain and the value chain

Conceptually, you can include both the supply chain and the brand chain in an overall value chain model. The value chain, which classically dates to Michael Porter’s work several decades ago, is itself ripe for re-assessment. A lot of value now comes from customers, who are partners in the value creation process. We need new ways to model that. (Ideally, your customers would radiate part of your brand chain back to you as value added to the brand, and would also radiate brand value into a wider value net.)

Managing the brand chain

Carefully managing the supply chain enables a business to optimize production and supply cost management. Carefully managing the brand chain enables a company to optimize how it advances its customers, and how it integrates them into its chosen innovation pathways. This can create a competitive advantage by raising the “barriers to brand” that competitors must overcome.

A company’s customers are its greatest competitive weapon. The purpose of your brand chain is to create these customers and to whip them into fighting shape.

Brands as vertically-integrated value

For analysis purposes, dividing the value chain into a Supply Chain and a Brand Chain is very helpful in that it helps us visualize the complete brand picture and its components. The next step (overdue from me) is to call the whole process the Brand Value Chain and include a proactive section for customers. In other words, we define “brand” as a system of vertically-integrated value, where the brand values championed by the company are extended back to suppliers and forward to customers. As a result, more brand value flows through to the customer, and that’s a strategic win.

See also: The brand goes in before the brand goes on.

Note: Updated 6/1/11