Brands Create Customers

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

This entry was posted on Sunday, December 16th, 2007 at 11:23 pm and is filed under Brand Building, Brand Communities. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.