Brands Create Customers

The practice of brands stands apart in the business world because brands have a strong moral dimension. Superficial brands ignore this dimension, but strong brands embrace it, and build it into competitive advantage.

For insight into the proactive dimension of the  concept of “good” in business, I can think of no better place to begin than a recent essay by Paul Graham called Be Good.

Whether you’re working with for-profit or non-profit brands, this essay will give you ideas.

Troubled movie rental chain Blockbuster announced today that it has offered up to $1.3 billion to buy troubled electronics retailer Circuit City. While the announcement of this shotgun sandwich led to a lot of head scratching on Wall Street, Blockbuster said the deal would deliver new customer value in electronics and digital media. The company was a bit short on specifics, but did mention a new combined business based (very loosely) on “digital convergence” and Apple Stores.

Little brand logic behind the deal

Frankly, it’s hard to see any compelling brand logic behind this move. Based on their recent poor performance, the two companies haven’t figured how to sustain deep connections with customers in their respective markets. At best, joining up might deliver some rather “iffy” value streams, like Circuit City upselling movie subscriptions with sales of DVD players. It’s hard to see what new kind of customer this unlikely combo could create. The comparison to Apple Stores is far too stretched to be credible.

Synergies questioned

Indeed, many Wall Street analysts wondered what real “synergies” the deal would produce, and whether these two companies could produce any such synergies.

From Reuters:

‘It’s not quite clear to me what (Blockbuster’s) intentions are, how they would finance it, what’s the strategic rationale for the deal,’ said Dennis Bryan, a partner and portfolio manager with First Pacific Advisors, a Circuit City shareholder.

‘The world is littered with remnants of bankrupt retailers,’ said Michael Pachter, an analyst with Wedbush Morgan. ‘It’s a bad idea.’ . . . ‘Blockbuster has not yet completed its own turnaround. . . . . Circuit City has serious problems and I’m not sure if Blockbuster management has demonstrated it has the skills to turn those around.’

Failure meets fiasco?

Columnist John Paczkowski labeled this proposed buy-out, “failure meets fiasco.”

Like what, exactly, are the synergies between a foundering movie rental chain and a foundering electronics retailer—aside from the fact that they’re both, you know, foundering? If it’s Blockbuster rental kiosks in Circuit City stores, the alliance would seem doomed to failure. Wait. It is Blockbuster rental kiosks in Circuit City stores.

When brands are reduced to “assets”

There’s a large amount of deal making behind the proposed buyout, involving agendas of activist and dissident shareholders on both sides, as the Wall Street Journal notes. In this context, brands play no proactive role in either business. They’re reduced to “assets,” just as customers are reduced to “sales.”

The problem with the asset approach to brands is that if often kills innovation. Brands become part of valuation packages. They no longer create value themselves. Perhaps that’s one reason why both companies are in such trouble to begin with.

Photo: jslander — Flickr

Brand builders are generally very familiar with the concept of “whitespace” used by designers. In design, whitespace is usually defined as the space between elements in a composition. This is not “empty” space but an organizing force in its own right, one that can add considerable power and emotion to a design or layout.

A related kind of whitespace plays an important role in brands. What I call “brand whitespace” is conceptually akin to the whitespace of designers, but in brands it’s a behavioral space for customers rather than a graphic one for layouts. Brand whitespace is the new maneuvering room that a brand creates for its customers. It can make a dramatic difference in how customers perceive a brand, and interact with it.

Brand whitespace is engagement space

Brand whitespace flows from the brand context that we create for, and around, customers. It forms the “engagement space” of the brand, where customer potential meets brand potential. The larger the brand whitespace, the more freedom the customer has to interact with the brand, to do something proactive with it, and to extend it. With this customer freedom, brand whitespace helps us create customers who can add value back to the brand.

Breathing room

You can think of brand whitespace as the breathing room of a brand. Creative brands offer lots of whitespace because they want the customer to be creative, too. Brand whitespace is that blast of fresh, bracing air that customers inhale in the presence of your brand programs. The more nourishing that atmosphere the more sustaining the brand engagement, and the more new life customers can breathe back into the brand.

Why brand whitespace matters

Brands suffer when they fail to create sufficient whitespace for customers. This can occur when a brand tries to impose a belief system from above, using campaigns of messaging, theatrics and special effects. Such an approach can choke the customer out of the brand. Without whitespace the brand becomes a series of pronouncements about itself: one-dimensional, top-heavy, closed, cloistered and stale. With no space of their own, customers can’t freely interact with the brand or with each other. With a diminished air supply they become passive and dull. The brand itself eventually withers to doctrine and drill, kept alive only by inertia.

Brand whitespace is interaction space

Brand whitespace is brand interaction space. It is where the brand and the customer join to advance their mutual agenda. Brands, of course, are a two-way street. An airy brand whitespace can transform that street from a cramped, one-way alley into a bustling two-way thoroughfare, opening the gates to ideas, insights, innovations and emotions. The more freedom that the whitespace affords the customer, the more the customer can interact with the company, the brand, and other customers to generate new forms of brand value.

Brand whitespace is collaboration space

We design brand whitespace as a context of collaboration and joint discovery. It’s an open work space where the customer and the brand join forces. This is a space of partners, and of equals. The more stimulating the brand whitespace that you provide, the more your customers are free to grow in new directions, taking your brands with them into potential new markets.

Brand whitespace is innovation space

We need brand whitespace so our brands can fully benefit from the initiative and innovation of the customers we create. In this context, brand whitespace is the customer’s opportunity space, mediated by the brand. I like to think of it as a virtual sandbox, where the brand and the customer are free to experiment, explore, prototype and iterate.

Brand whitespace helps advance the customer

Brand whitespace is customer growth space. It helps advance your customers beyond the reach of competitors. In the process it helps transform customers from lowly marketing “targets” to a living brand resources with value-adding potential. By giving customers the freedom to maneuver in the context of the brand, the brand can elevate customers from passive “consumers” to active brand participants and partners.

The brand goal here is twofold: 1) leverage customer insight and initiative to create new forms of value that competitors can’t match; 2) let customers take the brand into new markets where competitors can’t follow.

From a brand perspective, your customers are your greatest competitive weapon. Creating a stimulating whitespace is one way to build out your competitive arsenal.

The measure of brand whitespace

The measure of brand whitespace lies in the degrees of freedom that the brand makes available to customers, within the brand context. These can stem from the company, the product, the brand and the customer. On an axis, the low end of whitespace would be propaganda, and the high end would be partnership.

How to create brand whitespace

How do we create the brand whitespace that both brands and customers need? The answer will differ with every brand, but here are some general guidelines:

1. Understand that your brand is a method for creating customer value. Brand whitespace is one of your premier tools. It’s a new context of freedom that you deliver.
2. Your brand whitespace will determine how freely your customers interact and interoperate with your brand. The greater the freedom your brand confers, the greater your potential brand drive from below.
3. Conceive your brand as a shared innovation platform with customers. Brand whitespace forms an innovation sandbox where you and customers can tinker.
4. Build your brand as a means, rather than an essence. A brand that enables customers to shape new forms of self and to do new things will have plenty of whitespace where customers can re-create themselves through the brand.
5. Design your brand to deliver freedoms that competitors can’t match. Use your whitespace as a competitive weapon to win customers to your side.
6. Brands designed as messaging campaigns usually offer very little whitespace for customers. They clutter the customer’s world, and are vulnerable to brands that take a whitespace approach.
7. Brand whitespace is customer headroom. It’s a sign that you respect your customers.
8. Create a brand context larger than the company. Share this context with customers. Ask them to help shape it, and to move it forward.
9. Use your brand whitespace to open avenues of collaboration, initiative and innovation between customers and the brand, and between customers themselves.
10. How you present your brand can prefigure the brand whitespace you make available to customers.

In future posts I’ll identity specific cases of brand whitespace and how they help build strategic advantage for the brands involved.

Recent surveys by M:Metrics and Rubicon offer further evidence that the iPhone is shaping up as a premier platform for building brands. Third-party applications are booming, and iPhone users are increasingly going online. Google Maps, Flickr and YouTube are popular on the iPhone, as are online news and social applications such as Facebook.

For brands, the question increasingly becomes: How can our brand leverage the iPhone? How can we make it our platform, too?

Choosing the optimum iPhone approach

A brand can take a passive approach toward the iPhone, or a proactive one. A passive approach will pretend that the iPhone is a TV and be content to advertise, using traditional media methods. In a proactive approach, the brand develops a unique iPhone application that co-creates value with customers, in ways that competitors can’t match. Brands with this approach aim to become an iPhone player in their own right—and a big one.

The iPhone opportunity for your brand

Would people want an iPhone because it runs a super-cool application backed by your brand? Or will the application come from a competitor?

There will be killer iPhone apps for every profession and every customer passion. Apple can’t develop all of these. And that leaves room for you.

The brands that will gain the most from the iPhone platform will be those that raise themselves to the level of platform player. Through their applications they can advance the iPhone platform itself, making it more effective (and more desirable) as a means of personal expression and engagement.

The iPhone as lifestyle platform

If the iPhone is setting the standard for mobile devices of the future (and it’s hard to assume otherwise), then it’s likely that the iPhone will become the lifestyle platform of a valuable, growing demographic whose lives are geared online. This is a demographic that doesn’t “consume” media. It embraces and engages it, often in the form of interactive applications that users customize to their liking, or invent themselves in mashups.

Brands on the iPhone: portable, personal, persistent

In many ways the iPhone represents the future of brands: portable, personal, persistent. For brand builders, the challenge is to create a brand experience on the iPhone that leverages the iPhone platform in these three dimensions. The more value that your brand can deliver using the iPhone, the more power you’ll have to form enduring customer relationships. iPhone users may be immediate customers of Apple and the carrier, but strategically, their your customers, too.

The iPhone lets your customers take your brand with them—if you give them a reason.

Brands have three choices for an iPhone strategy

In general, brands have three choices in how they might utilize the iPhone platform in a brand-building strategy. From weakest to strongest, these are:

1. Advertise on the iPhone (via the Web browser)
2. Create tag-along, mini-applications in the form of widgets
3. Create personal brand applications that add so much value that they enhance the iPhone itself, making it more vital to customer lifestyles. This is the domain of the brand-driven killer app.

On the iPhone, apps trump ads

Do you want the iPhone to be a channel for your ads, or to be a springboard for your unique brand value? The more you leverage the platform, the more the platform can leverage you.

Brands that want a unique and definitive presence on the iPhone will think of brand applications rather than ads. These apps will leverage the synergies between the digital platform and the brand, recombining them in a new helix of customer value and customer opportunities.

Brand-driven applications on the iPhone may be of any size. They can be web-based (like Facebook, Flickr, Google, etc.) or native apps written with Apple’s new iPhone SDK. Whatever their type, they’ll open up a whole new realm of brands as direct personal applications, where every use has the potential for rich brand interaction.

Brands as co-creators of the iPhone experience

Don’t tell Apple, but brands have the power to become co-creators of the iPhone experience, adding new customer dimensions, applications and platform effects. The iPhone is now the rage because it’s a huge leap beyond competing smartphones. In a few years, however, when owning one is common, it’s the deeply personal apps and a wide open Web that will carry the day.

Photo: Christopher Chan — Flickr

The monumental baggage problems at Heathrow airport’s new Terminal 5 highlight the importance of what I call brand failure points. Brand failure points are critical company operations that can potentially break the brand if they fail to perform. If they do fail, it’s the brand that pays the price, and the price can be heavy. Full recovery may take years.

Brand failure points often hide behind the scenes, far from the brand limelight. A classic brand failure point for a high-flying airline is, of course, lowly baggage. To an airline, it’s a back room job. To passengers, however, it’s front and center.

Brand failure points: off the brand grid

Brand failure points are especially dangerous because they’re typically off the brand grid. They often inhabit the least glamorous parts of a business, far from the glitz and the glamor. They’re usually not addressed in a typical brand program, especially one that lives large on symbols and fanfare. They’re often outside the direct control of the brand team, tucked away in black boxes and back rooms. Potentially, they are silent brand killers, churning and chugging away in the bowels of the business until they suddenly snap—and take the brand with them.

Failure points and points therein

In this post I’ll first discuss the nature of brand failure points, using Heathrow Terminal 5 as an example. Then I’ll suggest basic steps the brand team can take in identifying potential brand failure points, and in failure point management. The latter requires that the brand team assume a much higher profile in company operations.

Let’s begin with a review of what happened at Heathrow Terminal 5.

The potential for lasting damage

Terminal 5 is a gleaming new wing of Heathrow built at a cost of $8.6 billion on the promise to eliminate airport delays and congestion. It is run by airport company BAA and British Airways (BA) as a prime gateway to BA flights. Terminal 5 puts BA’s brand squarely on the line. Unfortunately, the seriously flawed opening is widely viewed as a brand meltdown for BA, with hundreds of canceled flights and thousands of irate fliers. As a grand opening, it was something of a faceplant.

One report called the inauspicious beginning “an absolute national embarrassment.”

From Bloomberg:

British Airways Plc canceled 54 flights today as the chaos at London Heathrow airport’s new Terminal 5 stretched into a third day.

. . .

“This will clearly go on for days,'’ said Howard Wheeldon, an analyst at BGC Partners LP in London. “The potential for lasting damage to British Airways is far greater than anything that has gone before.”

“A calamitous debut” according to the Los Angeles Times.

A passenger quoted in the Financial Times:

“What a disaster. I was always told that with the arrival of T5 everything would be better. RUBBISH! I was delayed for 1½ hours on a flight that only takes 90 minutes. I still don’t have my bag.”

Perhaps the Financial Times said it best: it will be a “long haul to restore BA’s reputation.”

What went wrong at Heathrow Terminal 5

These are some of the things that went terribly wrong at Terminal 5 as part of its grand opening:

1. Inadequate employee parking caused employees to be late to work as they searched for spaces in employee lots; slow shuttles from alternate lots caused more delays.
2. Once at the Terminal, employees could not get to their stations because not enough security personnel were deployed to screen employees before entry.
3. Baggage handlers underestimated the time it took to get bags from one part of the (huge) Terminal to another.
4. Baggage conveyor belts (10 miles of them) backed up; one belt broke down.
5. At one point, 15,000 bags were stuck in the Terminal baggage system.
6. The first seven flights of day one left Heathrow without checked baggage.
7. In all, 430 flights were canceled.

In addition, as reported by the Independent, BA misinformed affected customers on compensation for delays, and refused to provide hotel rooms for delayed passengers per ticketing agreements.

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I ended a previous post, How to define the brand mission, by stating that I would compare the brand missions of Google and Microsoft as examples of my approach. This post fulfills that commitment. As a bonus it tosses in Yahoo, since Yahoo is now contemplating an unwelcome buyout bid from Microsoft itself.

What we see in this comparison is one company with a productive brand mission, one company that denies brand value altogether, and one company whose brand mission is so lacking in purpose that it never takes off.

Comparison framework

Please keep in mind that my focus is entirely on the brand mission. As I define it, a company’s brand mission is to create the customers that will drive the business forward. “Creating a customer” is a strategic act that entails a joint venture between company and customer. Each feeds off the initiative and innovation of the other.

Brand Mission Criteria

In comparing and assessing brand missions, these are some of the criteria I consider:

1. What new value does the brand intend to deliver?
2. What kind of customer does the brand aim to create?
3. How will that customer add value back to the brand?
4. How does the brand mission help create a platform for new customer opportunities?
5. Where is the brand leading its customers?
6. How does the brand mission add value over and above the business mission?

Applying the “brand of” test

One way to analyze a company’s brand mission is to ask: What is Company X a “brand of” in the first place? This helps reveal the effective, real world brand mission, not a brand mission that’s tossed up for PR purposes. In my analysis, here’s how these three brands stack up:

1. Google is a brand of Internet opportunity—especially for customers
2. Microsoft is a brand of market power, where the customer is tightly contained
3. Yahoo is a brand of place, where many great things happen—for no particular purpose

Microsoft: business mission trumps brand mission

Microsoft seems to be one of those companies where business mission trumps brand mission. If we define “brand” as a collaboration in value and culture between a company and its customers, it’s reasonable to argue that there is little brand mission at Microsoft. At Microsoft, the customer is targeted for capture and harvest; advancing the customer is not part of the plan. The result is a Microsoft brand that’s frequently viewed with suspicion and distrust.

Microsoft: a brand of market power

To the extent that Microsoft is a “brand of” something, it is a brand of market power. The Microsoft brand mission seems to reduce the marketplace to a Microsoft company town, anchored by a Microsoft company store, where customers are limited to Microsoft’s integrated offerings on Microsoft’s terms and conditions. Is this “bad?” Yes, if you want to stay fresh and grow. This model will eventually grow stale and collapse upon itself.

Microsoft’s goal: make brands irrelevant

Microsoft seems to feel extremely uncomfortable with the concept of brand itself, perhaps because brand responsibilities might interfere with Microsoft’s market power objectives . If Microsoft can force customers into a Microsoft company town where other brands can’t compete, then Microsoft wins “the brand game” by making brands irrelevant. In the absence of effective competition, their “non-brand” wins, no matter what they say or do.

Create customer dependencies, not customers

It appears that Microsoft’s strategy is to create customer dependencies instead of creating customers. Those dependencies translate into market power. The downside is that this strategy typically locks out innovation, and over time alienates customers. In the long run, this strategy is counterproductive. One “payoff” of this strategy is the notable lack of enthusiasm for Microsoft’s most heralded product in years, Microsoft Vista.

Google: a brand mission to unlock Internet value

We’re all familiar with Google’s “Don’t be evil” mantra, but that’s not Google’s brand mission. No, Google’s brand mission is far more disruptive, and revolutionary. It is to unlock the value of the Internet using customers as the key, and as the beneficiaries. That’s pretty Schumpeterian right there. If I were to condense the Google brand mission into one line, it would be this:

Google’s brand mission is to translate Internet capability into customer productivity.

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There’s an interesting brand story unfolding in the airline industry: the customers are driving the brand. Airline passengers are pushing to raise service standards and improve airline/passenger relationships, while the airlines trade group is resisting them at every turn.

The real issue: depth of brand commitments

The surface issue is a highly publicized charter of “passenger rights” for passengers stuck on airplanes delayed for long periods on the tarmac. The real issue is the depth of brand commitments that airlines are prepared to make to passengers. While the airline industry has played hardball on the issue, at least one airline (JetBlue) is creating new brand avenues to position itself much closer to customers.

Airlines vs. passengers

The recent news is that the Airline Transport Association (ATA), the airline trade group, successfully challenged a New York law that required airlines to provide food, water, clean toilets and fresh air to passengers trapped in a plane delayed on the ground longer than three hours. (Currently, airlines have no such obligation.) The ATA challenged the state law on the grounds that only the federal government can regulate air travel. A federal appeals court agreed, and rejected the law. Other states are considering similar legislation—or at least they were until the appellate court ruling.

Who is holding passengers back?

The airlines make a good point in that it makes sense to govern them with a single set of laws, not a state-by-state patchwork. Fair enough; let federal laws prevail. But are the airlines ready to propose a passenger rights alternative at the federal level? Something to protect the industry brand and prevent negative brand experiences. An airline proposal might even specify general standards for passenger treatment, to weed out the low performers who give the industry a bad name.

No ATA proposals

The answer is unfortunately, “no.” No ATA proposal seems forthcoming. In fact, the the ATA has opposed such legislation at the federal level, too, with considerable success. As USA Today has noted:

. . . Measures moving through Congress to mandate better airline behavior have been so weakened that they are almost meaningless.

The airline industry, which opposes new mandates, has lobbied with great success. While it can’t seem to scare up a bag of peanuts to feed stranded fliers, it coughed up millions to fuel lawmakers’ campaigns and to finance its lobbying activities. . . .

. . . If airlines put as much effort into meeting customers’ needs as they do into lobbying against consumer laws, then perhaps there might be fewer horror stories.

Horror stories and the brand

We’ve all heard the horror stories. Hundreds of airline passengers are stuck for hours on an aircraft delayed on the tarmac. Passengers can’t leave. Food runs out. Water is scarce. Toilets overflow, and fresh air dwindles. In such abhorrent conditions, passengers suffer, airline brands take a serious hit, and brand trust evaporates.

It’s these horror stories that helped spark the “passenger rights” movement, and continue to fuel it. Since the airline industry doesn’t forthrightly address them, more horror stories are inevitable. They’re brand disasters waiting to happen.

The brand implications of “passenger rights”

The issue of “passenger rights” never would have emerged had airlines (and the industry) done a better job of managing their brand relations with passengers. The rise of “passenger rights” as a public and political issue is really a sign of a general brand breakdown at the airline level. It signifies that passengers can’t trust airlines to do what’s right. (Think about that for a moment.) It steals brand initiative from the airlines themselves, and it puts airline brands on the defensive, where they’re in no position to create new value.

The airline industry pays a high price for not addressing the “passenger rights” movement head-on with creative brand programs. The movement magnifies every airline misstep through the media, requiring ever larger cadres of PR and lawyers to contain the media fallout.

A strategy of low brand innovation

The airline industry backed itself into this corner by following a strategy of low brand innovation. This is a strategy sometimes found in declining industries that devote their resources to lobbying politicians for concessions, rather than creating new customer value. For the airlines, this is a strategy designed to protect less agile airlines from market challenges. As a strategy it can be “made to work,” only because passengers are captive customers: they have no choice but to fly to their destinations.

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Techdirt points out that Google Maps is increasingly behaving like a wiki, allowing users to edit and annotate map information to provide more local relevance. This strategy may allow Google to play a greater role in users’ lives, creating platforms of brand innovation and brand trust that can carry over to other Google applications and services.

A series of Google videos explains how this works.

The wiki context is brand context

A wiki is no substitute for a complete brand structure and strategy, but it may be the dominant brand context going forward. Framing the brand as a wiki makes sense, because a brand is a collaboration in context and in value between a company and its customers. It’s a shared work in progress rather than an icon imposed from above. In a wiki, customer’s don’t just “buy in.” They pitch in to co-create value that the brand alone could not produce.

A wiki context also helps ground the brand in the real world of customers. A wiki keeps brands honest, sparing them the death spiral that can occur when a brand falls prey to its own limitations—or fantasies.

Brand principles behind “wiki-like” Google Maps

A map is a context. It can rise to the level of a brand context when it becomes vitally relevant to its users, like a second skin. With its new wiki-like features in Google Maps, perhaps Google understands a few brand principles that traditional brands still struggle to comprehend:

1. Your customers are your greatest competitive weapon. Enabling customers to add relevance to Google Maps makes the maps more valuable to users, and potentially makes the information on the maps more valuable to Google advertisers.
2. Brands are enablers, not controllers. The more you enable customers to embrace new freedoms and to create new relevance via your brands, the faster your brand can innovate, leaving competitors in the dust. Brands that aim to control or contain customers eventually wall themselves in.
3. A great brand aims to put more customer in the product. Opening doors to customers opens customers to new dimensions of you. Some of these may be quite valuable, and quite possibly, new markets.

Some related posts: Techdirt and TechCrunch.

Photo: Kramchang — Flickr

A few days ago I came across an animated GIF that, to my mind at least, provides a moving metaphor of how brands interact with customers to create value. This particular animation wasn’t designed to explain brands—it shows how a sewing machine creates a lockstitch—but the process of stitching together two elements, in a lasting fashion, is a large part of what brands do.

Check out the animation for yourself:

Animated GIF of brand interaction and value creation—aka how a lockstitch works.

The animated brand

As I view this animation metaphorically, this is what I see happening in terms of brand.

1. Imagine that the green thread represents the customer.
2. The down stroke of the needle is the purchase.
3. The blue thread from below represents brand value from the company.
4. The rotating red arm (the hook) represents the value delivery of a brand program.

These four elements work together to bring about a fabric of co-created value. You can see the fabric being stitched together in the animation. To the right side, before the brand interaction, we see two separate layers of cloth. After the brand interaction, those two layers have been bound into a new relationship, of infinitely greater value. A strong, well-stitched fabric means brands that can be fit to the customer, and endure the test of time. Of such strong threads, enduring brand relationships are made.

What this animation reveals about brands

In this animation you can see how the resulting lockstitch is a co-creation of the customer and the brand. It shows the resulting brand fabric as a collaboration in value. Without that co-creation, the resulting stitch would be a much weaker chain stitch, a kind that can unravel easily. Cheap, flimsy brands are like a chain stitch. They’re not made to last.

Image source: Craftzine blog