Brands Create Customers

Defining “brand essence” has long been a key task of brand building, but I’ve been wondering lately if a heavy focus on brand essence may actually be counterproductive, i.e., that it might diminish brand value rather than increase it. It seems to me that there’s often a static, inward and defensive quality to a heavy brand essence approach. This can actually work against a brand, hobbling a brand that’s trying to grow (dynamically) through its customers.

So, imagine my interest in a BBC report on the brand essence (bloodlines) of thoroughbred horses—one that says bloodlines aren’t a dominant predictor of horse racing success.

Nature vs. nurture

Bloodlines and DNA have long been the gold standard in valuing race horses for purchase. However, it appears that how a horse is nurtured and trained is more important to winning races than the “essence” of a horse’s biological heritage.

From the Beeb:

Racehorse winning secret revealed

The offspring of expensive stallions owe their success more to how they are reared, trained and ridden than good genes, a study has found.

Only 10% of a horse’s lifetime winnings can be attributed to their bloodline, research in Biology Letters shows.

Edinburgh scientists compared the stud fees, winnings and earnings of more than 4,000 racehorses since 1922. They found that the vast sums breeders are prepared to pay for top stallions do not guarantee the best genes.

…

The offspring of expensive stallions did tend to win more over their lifetime, he said, but genes played only a small role.

By far the biggest factor was the horse’s environment - the way they were trained, the choice of races entered and which jockeys were employed, Dr Wilson added.

Limitations of classic “brand essence”

I think one might make a parallel argument in brands: that too strong a focus on brand essence can be limiting for a brand. Maybe it’s the customers that the brand creates and nurtures, rather than some ethereal “essence” deep within the brand itself, that leads to long-term brand success. Brands that devote gobs of energy and resources to their “essence” often do so at the expense of customer relationships, and at the expense of creative brand interactions that keep things fresh. All too easily, a classic brand essence retreats to a well-guarded, airtight showcase, while the real, interactive world moves on without it.

Brand essence is customer essence

The way I see it, a great brand essence is also a great customer essence. In other words, brand essence must be inclusive rather than exclusive. It is shared, rather than privatized. The brand defines itself in customer terms as it charts a course for itself and its customers. Customers are loyal not to the brand but through the brand to the shared qualities it stands for.

Often the decisive factor in market success is where customers themselves take the brand, as they are nurtured by it. The brand grows them, and they grow the brand.

Ergo, productive brand essence is not “distilled” in boardrooms and retreats. It’s co-created with customers in the tumult of everyday life.

A well-nurtured winner

Reading the Beeb article and thinking about well-nurtured brands brought this fellow to mind.

Hat tip: Kottke.

Photo: dbarronoss — Flickr

Yesterday I discussed Facebook’s troubles as it tries to monetize the social networks of Facebook users. Today I want to discuss how monetizing brand relationships with customers can put a company on the slippery slope of brand decay.

Definition of “brand decay”

To begin, let’s define “brand decay.” As I see it, brand decay is the progressive loss of brand integrity due to the weakening of essential brand elements, including respect for customers and value delivered. These generate the earned trust that’s vital to brand growth. Without them, the brand ceases to be a co-creation of value with customers, and reverts to being a standalone company projection.

During brand decay the brand “hollows out,” becoming more superficial and more prone to make-believe, spectacle and theatrics. The brand becomes a “show” instead of a platform for advancing customers beyond the reach of competitors.

In brand decay companies spend their own brand equity

Brand decay often appears when a company begins to burn brand trust as a source of revenue. In the brand decay process companies spend their own brand equity, without deepening customer collaboration or adding new value.

When companies take this route there’s usually not much “brand strategy” involved, except to hope that customers won’t notice. Of course, in these days of blogs and instantaneous news, customers do notice. The word gets out that something is wrong at company X.

Signs of brand decay

Here are some telltale signs that indicate the presence of brand decay:

1. Brands are reduced to tools of persuasion. They become stylized sales stimulants.
2. Brands become extensions of media campaigns (instead of being extensions of customers).
3. A company’s brand responsibilities end when the cash register sings. Brand relationships are outsourced to “customer service” in a time zone far away.
4. Brand innovation from the company grinds to a halt. Remaining innovation happens at the customer level, powered by customers.
5. Brand communities dry up, or are re-born at the customer level in efforts to “save the brand.”
6. The brand increasingly becomes a dance of empty gestures and empty symbols.
7. Companies treat their brand as a static “asset” rather than as a creative means of generating new forms of customer value.

Brand decay is usually a slow process. Major US airlines have been in a state of brand decay for decades. They now rank somewhere below a visit to the dentist.

The high price of monetizing the brand

A company can pay a high price in brand decay when it attempts to monetize its brand. Consider Tom Foremski’s reservations about Facebook’s current push to monetize its social network:

For now, Facebook works for me because it hasn’t yet started to monetize my network, it provides a lot of positive value, and very little negative value. Once it does ratchet up the negative value by trying to monetize my “social graph,” and if it does it in an offensive manner, then I will stop using it. Once I stop visiting my “social graph” on Facebook then that’s it for Facebook’s ability to monetize my network.

I think this could be the Achilles’ heel of social networks–if you push the monetization too far–you will lose your networks.

If I don’t visit my social network because the owners are trying to monetize the heck out of it, then they have lost.

Even pre-IPO startups like Facebook are not exempt from brand decay.

What causes brand decay?

Brand decay can have several causes, but the most significant is probably generalized strategy decay. A company becomes so trapped in traditional business models (and their assumptions) that it cannot create new value, or new customers, or new market spaces. Simply put, the company has lost its context to innovate. Out of desperation, it tries to extract value from customers. So it harvests its brand, and its customers with it.

Hat tip to Umair Haque, for his many pathfinding insights in these areas.

Photo: tigerweet — Flickr

The short answer to this question is yes—absolutely. In our information age, a company’s brand acts as a vault of security for customer privacy. It’s a first line of customer trust. Strong brands protect customer privacy. Weak brands leak. Or worse, they’re information sieves, and can’t be trusted.

Protecting privacy builds customer trust

Yes, customer privacy is a brand issue, and a critical one. Simply stated, safeguarding customer privacy is a key part of a company’s strategy for building brand trust in the digital era. Customer privacy and brand trust are deeply intertwined. As products, brand programs and customers increasingly interconnect, interact and share information, customer privacy issues will increasingly determine which brands emerge with customers on their side.

Protecting privacy confers strategic advantage

The digital age has raised the bar on brands, and protecting customer privacy is becoming a new form of brand value, with strategic implications. Brand platforms can gain strategic advantage as they become strong privacy platforms. This is especially true as brands grow through customer initiative and innovation. Brands that actively team with customers on a platform of trust can develop more traction than brands that treat customers as a demographic resource to attract advertisers.

Facebook’s privacy faceplant

To witness how important privacy has become to the world of brands, we need look no further than Facebook’s recent faceplant over its widely criticized Beacon advertising program. Facebook’s experience illustrates how poorly conceived and/or poorly implemented privacy policies can threaten to undermine a brand.

The Beacon program tracks what Facebook users do on partner websites and sends that data back to Facebook. There, it is combined with user data (anonymously) and made available to advertisers for better ad targeting. It is also passed along to one’s Facebook friends as shared data, letting them know what you’ve been doing on those other sites.

Privacy issues raise questions about the brand

Facebook pitched Beacon to users as an easy way to share activities and information with friends. But as users realized that their private purchases and activities at other sites could now be revealed on Facebook, and also fed to advertisers, resistance set in. Was Facebook a brand of user enablement and expression, or a brand of information harvesting? And whose side was Facebook on? It wasn’t entirely clear how much control users had over their own data. And to make matters worse, opting out of the Beacon process was not easy.

Facebook clarifies its brand intent—to a point

After several weeks of mounting criticism (see here, here and here) Facebook’s CEO issued a public apology, and began steps to make Beacon elective for Facebook users through a more direct opt in process. This was a major step in clarifying what the Facebook brand stands for, although some critics argue that Facebook still needs to do more.

Ed Felten has a balanced overview of Facebook’s privacy issues and implementation, from which he derives operational lessons for all companies. To Ed’s list, we might add the following brand considerations:

To “monetize” customers is to erode the brand

A major brand challenge facing Facebook and similar social sites is how to balance their revenue needs with their strategies for social growth. Such sites are under pressure from investors to build profitable revenue streams, typically through advertising. The sites feel compelled to capture as much user information as possible, in order to make themselves attractive vehicles for highly targeted ads. But if the sites “monetize” their users by exploiting them as information resources, they risk driving their brands in a commodity direction—because they’re essentially treating their users as (information) commodities.

A social site that “monetizes” its customers often does so at the expense of the brand. To monetize means to make money the first principle of customer relations, whereas for brands the first principle is customer growth. (Brand-wise, monetizing is the opposite of value creation and innovation.)

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Far be it from me to speculate on Google’s ultimate ambitions in the wireless arena, especially regarding its bid for one or more new blocks of spectrum. What I have found, however, is a very cogent analysis of Google’s possible strategy, one that posits a Google brand vision for “mobile broadband.” This is an exciting vision because it stands to make brand history, while consigning the traditional concept of “wireless” (that of AT&T, Verizon, et. al.) to the historical dustbin.

A new platform for creating customer value

Check out this illuminating analysis on Google’s mobile broadband strategy by Harold Feld. It’s a longish post, but fascinating in detail and eminently readable. Like all brand visions, it’s about a potential new platform for creating customer value. In Feld’s analysis, Google’s vision of mobile broadband would create a whole new context of communications and mobile computing.

A brand vision that redefines the customer

I define brand vision as a company’s ability to see the future through its customer’s eyes. Accordingly, brand vision is more about the customer than it is about the company. It typically redefines the customer and the customer’s scope of freedom and action, elevating them to a new level. In other words, a brand vision is a new context of customer opportunity.

What grabbed my attention in Harold’s post was this paragraph:

OK, the biggest problem is that analysts are looking at this as if Google wanted to break into the wireless phone business and introduce the fabled “G-Phone” similar to the Apple iPhone. But that’s not what Google (and the rest of Silicon Valley) want. What Google really wants is far more audacious. Google wants to eliminate the entire wireless “phone” industry and replace it with the “mobile broadband” industry. In this world, people do not buy “mobile phone service” with the option to load all manner of various features for additional prices onto their phones. People buy a wireless service contract for a “dumb pipe” similar to what they buy (now) from cable and DSL companies.

Creating a new world is the stuff of brands

Creating a new world for customers is the stuff of brands. If Harold’s analysis is correct, Google would be changing the communications game by providing a new communications platform (mobile broadband) open to unlimited innovation and customer initiative. In many respects, it would operate just like the Net. If this is what Google is planning, it would reflect a brand agenda that’s truly disruptive.

Harold continues:

Needless to say, the existing wireless carriers — to the extent they can even contemplate such a thing — regard Google’s vision with unbridled abhorrence. But Google has one big advantage — everybody else wants the same world Google does, they just don’t know it yet. That may sound absurd, elitist, patronizing, etc. But the fact is that most people don’t realize what they want until someone with entrepreneurial vision thinks it up and sells it to them.

Extending what the iPod began

In effect, Google may be attempting to do to the communications industry what Apple did to the music industry with the iPod. It would introduce a new value equation in which the customer gains significant (real) freedom to reshape the world in his or her image. In an act of cultural liberation, customers would be freed to be proactive with mobile media, instead of being bound or hobbled or crippled by established restraints that benefit only a few.

Is there anyone (besides the incumbents) who wouldn’t want that world?

Great brands side with customers

To get customers on its side, a brand must side with customers, on the largest playing field possible. If Google’s vision for mobile broadband is close to what Feld predicts, it’s as if Google has an unstructured, subliminal understanding of what brands do.

Hat tip to David Weinberger for the link.

Photo: kengo — Flickr

Brands are special because they stand for something, but when a brand suddenly stands for less, by lowering its own standards, the brand places itself in jeopardy. By lowering the bar that it has previously set, the brand has breached a quality compact with customers, partners and its own employees. The brand pays a strategic price, too. By lowering the bar it gives up territory it once owned, and makes life easier for commodity-level competitors.

The US Army lowers the bar

Two cases of lowering the brand bar have been in the news recently. The first is that the US Army has lowered its recruiting standards in order to meet recruitment goals. As noted in the International Herald Tribune, the Army made its recent recruiting numbers “by accepting a higher percentage of enlistees with criminal records, drug or alcohol problems, or health conditions that would have ordinarily disqualified them from service.”

This is no trifling matter. In the referenced IHT article, Senator Carl Levin states:

“While quantity is of course important, quality must remain the highest priority. … The army must continue to uphold high standards - moral, intellectual, and physical - for new recruits, to ensure that these young men and women are capable of handling the great demands that they will face. We must find a way to both increase the size of the army and to maintain its standards.

The honor system behind the brand

To get the drift of what stands behind the (original) US Army brand, one can go right to the famed Honor System at West Point.

Honor, as it is understood by the Corps of Cadets, is a fundamental attribute of character. Honor is a virtue which implies loyalty and courage, truthfulness and self respect, justice and generosity. Its underlying principle is truth. It is not a complicated system of ethics, but merely “honest dealing and clean thinking.” If a cadet is true in thought, word, and deed, there is no question about his meeting the standards of the Corps. On the other hand, quibbling, evasive statements, or the use of technicalities to conceal guilt are not tolerated at West Point.

The US Army as a brand of honor

It seems to me that the US Army is fundamentally a brand of honor: “a virtue which implies loyalty and courage, truthfulness and self respect, justice and generosity.” At the other end of the military spectrum, mercenaries and death squads can be brands of brute force and mayhem, invoking fear and passive acquiescence, but they do so without honor. They are horrible brands because they are neither a platform for public trust, nor peace.

As a brand of honor, the US Army can also be a brand of public trust, and of constructive peace. Both are fundamental requisites in this age of new warfare where armies and citizens are co-mingled, and where “battlefields” quickly spill over into communities and public services.

Brands and the moral edge

One of the major strengths of brands is that they can develop a moral edge. They can embrace and encapsulate “good,” and this can become a significant advantage in business and in war. Guerrilla armies claim a moral edge because they’re fighting for “the people,” but these claims are often not realized in fact. As the armed force of a major democracy, the US Army should benefit from a profound moral edge—if its soldiers embody requisite virtues and values.

The question for Army recruiters, then, is this: Which way are you taking your brand? And how does your recruiting strategy help build your moral edge?

Lowering the bar in the cockpit

In a second example of lowering the brand bar, US regional airlines (which account for half of all US airline flights) have been lowering their hiring requirements for pilots.

Traditionally, most regional carriers required 1,500 total flight hours before an aspiring pilot could apply for a job. These days, the flight hour minimum has been reduced to 500 hours, with one airline going as low as 250, before raising it back to 500. Regional airlines say they can’t afford to maintain their previous flight hour standards because there aren’t enough pilots with those hours available for hire—at least at the starting wages that the regionals currently offer.

Wages and conditions

As the quoted article notes, highly qualified pilots are generally not attracted to regional airlines. They can typically find better wages and conditions at executive aviation firms, discount airlines, cargo shippers and foreign airlines. A starting pilot at a regional airline, flying the maximum number of hours allowed, would earn approximately $22,000 per year.

The brand challenge for regional airlines

Thus the brand challenge for regional airlines: how you you build your brand when the major carriers keep off-loading schedules to you in part because your flight crews are cheaper? To get the flight crews you need, you lower your traditional standards, resulting in less experience in the cockpit. You may meet safety requirements with additional training and supervision, but your brand is now traveling a slippery slope. It’s more reactive than proactive.

Two possible courses of action

At first glance there are two possible courses of action that regional airlines might take. The first is really an accommodation, not a solution. It is for regional airlines to take their brands off the table, and to operate as anonymous adjunct carriers. They agree to compete on price, not on brand, because it’s low price that brings in the business from major carriers. In essence, the regionals agree to become commodity carriers. They reduce their brands to the lowest possible profile—the operating names painted on the plane. (This, of course, is exactly what the major carriers prefer, because it eliminates regional airlines as potential competitors.)

A more ambitious course

A second course is more ambitious, and more brand positive. It would aim to solve the regional pilot shortage by creatively teaming with airline pilot organizations to develop solid career paths, with wages, conditions and training that would attract more qualified pilots to regional airline cockpits. It would attempt to make regional airline cockpits positions of envy and esteem, rather than positions of commodity. It would aim to transform what is now a brand weakness into a brand strength.

In many ways, regional airlines are much closer to their passengers than the national carriers. This is an inherent brand advantage, which should be tapped.

Hat tip: tingilinde

Google is taking an innovative approach in building out its YouTube brand, moving the brand in a direction few expected. Instead of plunging deeper into a narrow video essence, it’s creating a new context for YouTube on a broader public stage. Through this brand strategy it seems YouTube aims to become an emergent video network from the citizen up, while forging a new meaning for media.

The public road to a stronger brand

One way to advance your brand is to take a leadership role on an issue of national (or global) importance. To make this strategy work, you pursue a path that’s results driven rather than merely symbolic, one that enables you to add value in clear and decisive terms. You want your brand to become a (distinctive) method for getting (important) things done. You’re after results, not just feelgood “associations.” In this way, your brand becomes an enabler of higher forms of action and understanding—and potentially, a powerful platform in creating new market spaces.

The payoff is that strategically, your brand can extend your company value, and your product value, into greenfield areas of common good. These can change customers, and change markets.

From molten Mentos to the “YouTube Debates”

A good example of this brand strategy is YouTube’s role in the ongoing “CNN/YouTube Debates.” Who would have thought that YouTube, barely out of its molten Mentos phase, would now have a signal voice in the national political process, sharing top billing with CNN, a premier news network?

On the Web the debates are often referred to as the “YouTube debates,” as if YouTube is now an accepted kingmaker on the national political scene. That’s a tremendous brand leap from YouTube’s born-in-a-basement origins a few years ago.

This new debate format is a baby step toward a more participative democracy. It’s far from perfect, and it barely scratches the surface of its digital potential. But what currently stands out is the innovative role played by YouTube, not the mainstream shepherding by CNN.

A brand of democratic engagement

To see where the YouTube brand may be headed, check out YouTube’s new political blog called CitizenTube. YouTube is on the way to becoming a brand of political engagement, and perhaps a brand of political transparency as well. The debates in concert with CNN are only a first step.

You can also see the deeper strategy here. Just fill in the blank next to “Tube” for a new area of YouTube relevance. “CitizenTube” for politics. “SportsTube” for athletics. “HealthTube” for wellness, etc. While a marketing approach would typically create these avenues as static “channels” (for passive, static “targets”), a brand approach creates them as active fields of collaboration and innovation.

How YouTube frames its debate initiative

Here is how YouTube frames its debate initiative:

The core concept behind these debates is to let real questions from real people drive the dialogue. The power of YouTube is that it lowers the barrier to entry to engage in the political process, and levels the platform for political discussion. It used to be that a voter had to live in Iowa, New Hampshire, or Florida to engage with the candidates at this stage of the campaign, but YouTube has broken down those barriers, and has brought more transparency and access to the political dialogue than ever before. We think that politics will never be the same (thankfully).

Make your brand a springboard, not a billboard

The bottom line is that you want your brand to be a springboard, not a billboard. It’s a springboard for customers and partners to break free from current constraints. That’s why we need a new definition of brand, one that’s action-oriented, collaborative and driven by initiative and opportunity.

Our own master definition of brand seems to fit YouTube’s direction rather well:

Brands are avenues of value innovation in a creative engagement between companies and their customers.

And, as we also like to say, great brands are not meant to be seen. They’re a lens on life, and meant to be seen through. A YouTube brand that enables political transparency is a definite plus.