Brands Create Customers

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

Costco is now selling Crocs shoes for $21.99 a pair. A few days ago I noticed the display on an end cap, two colors, pinkish and greenish, so not the greatest shades, but apparently the real deal in the standard beach clog model.

This represents another brand challenge for Crocs, which I’ve written about here and here. Personally, I see it as a major brand opportunity.

The Crocs response: “defend the brand”

The fact that Costco is selling Crocs is news for several reasons. First, Costco has the shoes in some volume, and the prices may be attractive to Costco customers. Second, Costco has 50 million cardholders, with immense purchasing power. Third, Crocs doesn’t approve of it, since Costco is not part of their brand distribution strategy.

From Crocs:

While there have been rumors and speculation that we are now selling our Crocs-branded footwear to Costco, this is untrue. We have not sold Crocs-branded products to Costco nor have we authorized any of our customers to sell our products to Costco; however, we have discovered instances where we believe our products were being sold indirectly to Costco and we promptly terminated those relationships upon learning of that behavior.

As the Crocs CEO stated, “We are continuing to take aggressive measures to prevent this from happening. I want to reiterate that Costco is not an authorized dealer of Crocs products.”

In this classic brand defense strategy Crocs is attempting to protect its brand identity and pricing power by trying to control distribution through its approved channels. There’s logic in this approach, because Crocs shoes are unique in many respects, and there’s already tons of low-cost imitators on the market selling in the $10 range.

Limits of a brand defense strategy

That said, let’s also note that the CROX stock price has dropped from a high of 74 in October, 2007 to about 18 today. To some, such a huge a drop in six months may suggest an “embattled brand,” its price points under siege, hunkered down behind the brand gates, circled around its brand assets, fighting to maintain every last bit of exclusivity.

Such a focus on brand assets is understandable, but it may not address the real threat. Companies may find themselves in “brand defense mode” because they haven’t created new avenues of brand exclusivity that advance the context of the brand. Or the brand may be structured too narrowly, with its brand value mostly IP and contractual, rather than deeply geared in specific customer lifestyles.

Brand innovation is the best brand defense

Over the years I’ve come to believe that brand innovation is the best brand defense. You take your brand where your customers are headed, not where the brand stood five or ten years ago. Fight for the future, not the past.

Other thoughts:

1. Brands conceived as “assets” will bog a company down. Assets don’t innovate. Often, they wind up fighting for progressively smaller bits of turf while competitors march ahead.
2. Brands are offensive weapons. When your brand becomes entrenched in defensive battles, something is not right. Either your brand strategy needs strengthening, your brand vision is too short-sighted, or your brand innovation is lagging the market.

Costco as an opportunity for the Crocs brand

Crocs is an innovative company, with a product that’s more than a fad, so it’s distressing to see them in defensive brand mode. I’m wondering if there’s not a better way forward.

Maybe Costco is an opportunity for the Crocs brand, rather than a threat.

Some data points:

1. Costco doesn’t sell junk. Many people shop at Costco because it carries major brands, known measures of quality. Costco innovates on quality and price.
2. To repeat, Costco has 50 million cardholders. That’s at least 100 million feet, not counting other family members.

Ergo, perhaps Crocs could work with Costco to package a special Crocs offering that doesn’t threaten Crocs price points at authorized dealers, yet promotes the brand while providing unique value to Costco shoppers. Maybe it’s a 2-pak or a 3-pak, or a pair in a certain style with some kind of “extra” that poses no threat to fashion-forward Crocs at department stores. And yes, I know you can’t do multi-paks of footwear like you can with jars of spaghetti sauce, but creative brand minds could figure a way to make it happen.

Contain the customer, or liberate the customer: it all comes down to the brand agenda that a company follows.

This nifty design is from a T-shirt available online at Uneetee.com for $12. Why wrestle with a brand dilemma when you can just wear it?

The brand interpretation is mine, of course. The image was just too good to pass up.

Image courtesy of Uneetee.com. Designer: Loy.

Today’s SF Chronicle reviews the renovated San Francisco Ferry Building and its highly positive impact on the San Francisco urban experience, five years after its grand re-opening.

Social lessons for brand builders

There are many lessons here for brand builders. Perhaps the most salient is that the social and community aspects of any place become the real backbone of its success. A place rises to the level of a brand when it becomes an extension of the community, a continuous invitation to visit, linger, explore, express. It enables visitors to make the place a part of themselves, and in so doing to extend the brand context, and the brand experience.

Re-creating a place in new dimensions

A re-created place re-creates visitors, leaving them revitalized in new dimensions. A key aspect of the renovated Ferry Building—apart from its stunning 600 ft. nave, upscale shops, diverse eateries and Bay-side location— is that it hosts a thriving farmer’s market twice a week, with a huge turnout on Saturdays. It’s a social food mecca in a food-crazed city, with a wide variety of organic produce and artisanal food products.

A few decades ago the Ferry Building was a disheveled mess in the death shadow of a stunningly egregious eyesore. At that time it would have been almost impossible to imagine what it is today. Thankfully, it was saved by the same civic spirit that rescued the cable cars in the 1950′s.

Locals pave the way for tourists

Napa’s brand new Oxbow Public Market aims to bring the Ferry Building experience to the wine country in Northern California. Built from scratch, and still in its opening phases, its first challenge is to build a sustaining community around itself. On my latest visit the Market outposts of (local) Taylor’s Automatic Refresher and The Model Bakery were bustling. As with all such public places, locals pave the way for tourists. All they ask is a context they can make their own.

Top photo: Mike_sj40 — Flickr

Inset photo: Geigenot — Flickr

Time for another chapter in my continuing carve through traditional brand practice. Today I’ll boldly propose that a focus on “differentiating the brand” can be a misguided approach—even though it’s the primary thrust of a vast majority of brands. The problem with “differentiating the brand” is that it’s never enough. It’s a half-measure at best. What a brand really needs to do is to differentiate the customer. That’s how a brand gains traction. It’s that new and different customer that will carry the brand forward. Your brand is the endless wave that makes it happen.

Opening the brand to new opportunities

“Differentiating the customer” opens a brand to new opportunities of value creation at the edge of the brand. Instead of the brand being a top-down, hermetically-sealed means of control, it becomes a customer infusion, vibrant and vigorous, speeding forward on customer feet. A brand that differentiates its customers can tap into customer initiative and innovation to explore new brand territories and discover new markets.

Your ability to differentiate the customer can make your brand a personal ally of those ready to conquer new realms of experience.

There’s no better place for a brand to be.

The old way: differentiate the brand from rivals

In the traditional brand approach, the brand is “all about the company,” and “brand differentiation” is all about competing head-to-head against rival brands. “Differentiating the brand” in this manner becomes a major goal of the brand team. Working from an inward vision, the team does everything it can to make its brand stand out from the competition. Ergo, the conventional brand approach: a unique identity, positioning, emotional appeal, brand experience, brand personality, promise, packaging, loyalty programs, slogans, visual and audio signatures, look, feel and everything else that might give the brand special appeal.

Conventional assumptions that can limit the brand

Unfortunately, the conventional approach to brand differentiation makes critical assumptions that have can have serious brand-limiting consequences.

1. It assumes that the brand is a form of communication; it employs a media model of brands. This can reduce a brand to messaging, when customers need an enabling model of brand that delivers new customer capabilities.
2. It assumes that a brand is part of an “offering” that needs to attract customers. The brand sits on a shelf, on a screen, or at a location where potential customers interact with it, and hopefully fall under its spell. This assumption can reduce a brand to a stylized sales stimulant, with little power to change the game.
3. It assumes that the brand is the predator and the customer is the prey, the more passive the better. The customer is there to be hooked; the brand is part of the lure. The problem with this assumption is that predators don’t build communities.
4. It assumes that the brand is all about the company and the product. By minimizing innovative diversity from customers, the brand risks becoming an inbred monoculture with a single point of failure.

In general, these assumptions influence companies to homogenize customers into commodity categories such as “consumers” so they can be “targeted” with media campaigns.

Alas, you can’t differentiate customers when you view them as commodities.

Company potential X customer potential

As I’ve noted previously, a brand is company potential X customer potential. The problem with all those assumptions above is that they differentiate only one half of the brand: the company half on the left side of the X. In a whole brand strategy, you are far better off with an enabling model of brand (that seminal X ) that fully includes the customer as an active brand component. The right side of the X can produce a decisive brand advantage.

Creating a new and improved customer

In other words, the last thing we want to do is to slap “New and Improved” on the brand package and leave it at that. Through the brand, we want the customer to be new and improved. We want to move the locus of the brand from the company and the product into the customer, so customers open the brand to initiative and innovation from below, and can extend the brand beyond the reach of competitors.

This means letting go of the brand as a self-centered media object and embracing the brand as a dynamic collaboration with customers. When you create the conditions for customer success you create the conditions for brand success.

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