“Choke the customer” is poor brand strategy

Can you build a great brand by throttling your customers?

No, you really can’t—as Time Warner may soon learn.

Time Warner closes the noose on its customers

Jeff Jarvis at BuzzMachine sees a very flawed strategy behind the new usage restrictions that Time Warner is testing for its Internet customers. These new cap and “tiered pricing” measures would throttle Internet usage by imposing metered rates, and higher fees for more active users. While the caps would potentially skim more money from Time Warner customers in the short term, Jeff asks whether such a monetizing strategy is right for Time Warner in the long term:

What if, instead of a gatekeeper, they saw themselves as platforms or technology innovators or catalysts or enablers?

Precisely put. There’s no future for Time Warner as a brand of customer jail. It’s brand agenda needs to embrace customer opportunity, not customer closure.

Limiting customers limits the brand

In an era of incessant innovation and technology breakthroughs, and massive new market creation, Time Warner seems to be heading in reverse. In seeking to impose meters in place of proven flat rates it’s repeating a strategic blunder of music and movie companies who focused on controlling and milking customers, rather than innovate to create new markets. (Their loss has become Apple’s magnificent gain, and strategic brand triumph.)

Brands and innovation—the fundamental connection

Time Warner’s tiered pricing schemes are a brand issue because companies that choose the “gatekeeper” approach invariably stop innovating. When they stop innovating, they stop building value into their brands. Effectively, then, Time Warner is taking its brand off the table. It’s inviting other brands to step in and steal Time Warner customers with new platforms and new contexts of value.

And yes, brands are innovation tools. They innovate new customer contexts that leave static companies in the dust.

Brands are a method of innovating through customers

To grasp what’s happening here we have to look at brands in the big picture, beyond slogans, imagery and high-glitz campaigns. We need to envision brands as a way of innovating through customers, effectively doubling a company’s R&D power, and creating new innovation dynamics in the process.

In this perspective, a brand becomes a method of creating value, not just a series of positive touchpoints, or a well-designed identity.

Brand definitions for an innovation context

Brands crafted as stylized sales stimulants, icons, “personas”, etc. only use a small fraction of the inherent power in brand relationships. That power is a creative power executed and expressed by collaborating with customers.

Thus, the core definition of brand that I prefer:

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

And some corollaries:

  1. Your brand is a method for creating customer opportunities.
  2. Your brand is an enabler. It enables you and your customers to collaborate on creating new products, and new markets.
  3. Your brand is a customer platform. As it grows, extends and raises customers, it elevates you.
  4. Your “brand” is how you grow your customers to grow your business.
  5. A really great brand grows its customers beyond the reach of competitors. (Just hink of Apple and the traditional music industry.)

If Time Warner can’t act on these brand innovation elements, its competitors surely will.

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3 Responses to ““Choke the customer” is poor brand strategy”

  1. steve Says:

    Sadly the cables and telcos are often monopolies or duopolies – no real competition exists in the US – so getting away with tactics like this are not difficult. Some of them have not been building expensive capacity into their systems and this sort of tactic will become more common. Additionally the spin they use is that this is in the best interest of their average (say 95 percent) of their customers – and given their failure to grow their capacity, it probably is.

    There are many other areas where the cables and now telcos get away with ripping off the customer – look at cable tv packages. People often pay an additional $30 or more to get one or two extra channels plus 40 more they will never watch.

  2. Brian Phipps Says:

    Points well made, and taken. I’d like to think that a revitalized FCC might re-regulate the telcom/cable arena to induce more competition, but that probably won’t happen until a new entrant helps force the FCC’s hand. Not sure who that would be.

  3. steve Says:

    PS – AT&T just announced they are going to do the same thing beginning in the Fall. The case study these guys point to is Rogers in Canada, which discovered they can minimize the cost of upgrading their network while claiming they are protecting the speed available to most people though this mechanism. Very few people got worked up about it and most consumers bought the corporate line. It is useful to have a monopoly or a duopoly.

    I’m afraid we are past the point where natural competition would be easy and now we are seeing even more consolidation. Net neutrality gets to be a very difficult area – about the only thing that can be done at this point is to force a funcational separation of moving bits and providing content, but even many of the Dems are too timid for that.