Brands Create Customers

NOTE: This post replaces a post of 8/25/08 in which I did a bang-up job of getting some key facts wrong. Many thanks to Richard Dudley for the correction. I have deleted that 8/25/08 post.

————-

Dear Adobe is a new site established by Adobe users to tell Adobe what its customers need. In effect, it’s a pipeline to the Adobe brand. The site is an example of how customers can proactively collaborate to add value back to a business.

A brand’s customers are its greatest competitive weapon

A brand’s customers are often its greatest competitive weapon. Having sharp customers who care about Adobe products is extremely valuable to Adobe. Such customers can help Adobe maintain a competitive edge, especially as it now confronts Microsoft in major markets.

It’s always better to get wake up calls from customers rather than competitors.

Currently more heat than light

In its newly-born state, Dear Adobe is mostly a torrent of pent-up vents and rants. It’s more heat than light, as might be expected. Its founders say that changes are underway to add more structure. For starters, there’s a Top 50 List. (A few days ago I think this was a Top 25 list.)

Structure is vital, because you cannot build a brand out of pet peeves. Pet peeves are local and personal; brands are strategic and global. The task within Adobe is to sift and winnow these customer voices to glean strategic truths. (Ideally, there would be more brand, fewer features.)

The brand question: what is holding our customers back?

Where might Adobe start in making brand sense out of the Dear Adobe comments? The first question every brand should ask is, “What is holding our customers back?” It’s the brand’s job to advance customers to where they’re going. This is often beyond what products alone can provide. When customers feel unduly burdened by certain products, it’s usually a sign that the brand (a collaboration of company and customers) is not keeping pace with product development.

A brand never wants to be caught between a user and his/her productivity. That can be a sign that disruption is near.

A positive response from Adobe

The founders of Dear Adobe received feedback from Adobe within 48 hours and consider Adobe’s response “very positive.” I would guess that most of the comments on Dear Adobe are not new to Adobe. The company has a long history of extensive usability and user workflow studies, and deep user groups. What may be new is the dynamic range of the comments and their raw intensity, in an aggregated format.

Some additional thoughts on the content and context of Dear Adobe can be found on John Nack’s Photoshop-related blog here. (John is a Photoshop product manager but his blog posts are his own—not official Adobe viewpoints.) Don’t miss the 100+ comments to his Dear Adobe post. Clearly, Dear Adobe has struck a chord.

Dear Adobe is not a suggestion box

It’s in Adobe’s interest not to treat Dear Adobe as a “suggestion box.” That would diminish its potential value. From a brand perspective, Dear Adobe is a collaborative innovation platform. It should be treated as such. Customers contribute more value when they’re treated as proactive brand partners instead of being treated as “purchasers” who may come up with “suggestions.”

The brand imperative

Dell has initiated a customer pipeline site of its own, which it structures and manages to optimize information flow: http://www.dellideastorm.com/. Eventually, Adobe may decide to opt for something similar if its current efforts (plus what it gains from Dear Adobe) don’t yield the results it needs. For Adobe, Dell and others, the brand imperative is to team with customers in new product and process innovations. They’ll be on the same page with customers because they’ll be writing it together.

Photo: midiman — Flickr

Hat Tip: Daring Fireball

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

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

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

Business Week reports on what makes Trader Joe’s so attractive to customers. It includes a number of examples comparing the shopping experience at Trader Joe’s vs. shopping at conventional supermarkets. Well worth reading.

Brand first, store second

As I see it, the key to Trader Joe’s success is that it’s a brand first, and a store second. The brand imparts a unique customer logic (or customer predicate) to the store, and customers interact with—and evolve—this logic, giving the store a very intimate feel, even without the usual jam-packed aisles. It’s a brand approach in which Trader Joe’s presents itself as a buying agent for customers rather than as a grocery chain trying to unload stuff from its shelves.

Private labels are the stars of the show

Trader Joe’s carries about 2000 products, and about 80% of these are Trader Joe’s own brands. At most grocery stores, such private labels maintain a secondary presence. They exist as a means to under-price selected “name” brands in certain categories. At Trader Joe’s, however, the store brands are the stars of the show. They evoke the brand logic; they forge customer connections; and they produce a much more integrated shopping experience than the brand cacophony of conventional grocery stores.

Trader Joe’s scales its brands to customers

What’s also unique is that Trader Joe’s scales its own brands to customers. There’s no marketing megaphone hyping products from on high. That helps make the brands eminently social, and sociable. They are brands in the context of the customer, not brands in the context of a far-off producer, or a third-party media campaign. At Trader Joe’s, store, products and customers move largely as one.

I wrote about Trader Joe’s previously, here and here.

Howard Schultz is coming back to Starbucks, and not a moment too soon. Starbucks, one of the great brands of our time, has seemingly hit a brand wall, with no second act in sight. While the brand may have reinvented the coffee house on a global scale, and developed a distinct coffee customer and a coffee culture, the brand’s glory days appear to be mostly in the past. Does the opening of another Starbucks excite anyone in 2008?

The brand wall

Companies hit a brand wall when their brand runs out of vision and no longer advances the customer. A brand vision contains a new context of customer opportunity; a company has it when it can see the future through its customers’ eyes. Without brand vision, the brand often devolves into symbols, gestures, theatrics, decoration and self-centered fluff. These superficial measures are intended to corral and contain customers, while hiding reality from them. But, no one is fooled.

Generally, value-based brands avoid the problem of a brand wall.

The Wall Street brand trap

In recent years Starbucks has also been caught in what I like to call “the Wall Street brand trap.” This is a condition that can cause severe brand distortion unless management relentlessly innovates and stays a step or two ahead of investment analysts. It usually happens like this: Wall Street demands robust profit growth quarter over quarter. This typically pushes brands away from innovating with (seemingly risky) high quality products and services toward (surefire) rapid expansion at the lowest common denominator (10,000 Starbucks outlets and counting). It also steers a brand away from customer-focused innovation and toward higher levels of operating efficiencies, in order to wring those mandated profits from additional units produced. In effect, the brand is redirected from being a customer platform to being a stylized sales stimulant for a profit platform.

From coffee house to soda fountain

In the case of Starbucks, the famed Starbucks barista is gradually morphed into a transaction jockey. The coffee house model gives way to an easier-to-grow soda fountain model. The Starbucks brand is reduced to formulaic packaging and retailing with sugar ascendant, closer to a Baskin Robbins than the authentic, local coffee houses of its inspiration.

In many cases, the more the brand works for Wall Street, the less it works for customers, eventually hitting the brand wall. The business underperforms its brand. In that sense, the recent troubles at Starbucks are not that different from what has happened at Gap.

Creating customers for competitors

One sign that Starbucks is losing brand traction is that it’s now creating boatloads of customers for its competitors. Local coffee shops—who were supposed to flee in terror when a Starbucks opened nearby—are now doing great business by locating near an existing Starbucks. The local shops can match (or top) Starbucks in coffee quality, and can offer a combination of authenticity, coolness and community that Starbucks can’t seem to match.

Starbucks as market catalyst—for local shops

If Starbucks does not solve its brand problem, it may go down in history as a high-flying market catalyst that created a huge market for better coffee and social coffee consumption, but then like a catalyst vanished from the scene, ultimately leaving local shops to give people what they want.

From the Slate article cited above:

When Starbucks opens a store next to a mom and pop, it creates a sort of coffee nexus where people can go whenever they think “coffee.” Local consumers might have a formative experience with a Java Chip Frappuccino, but chances are they’ll branch out to the cheaper, less crowded, and often higher-quality independent cafe later on. So when Starbucks blitzed Omaha with six new stores in 2002, for instance, business at all coffeehouses in town immediately went up as much as 25 percent.

The local brand advantage

In the long run, the mom and pop coffee shops may be the real winners as local brands with authentic cultural context and community roots, where customer innovation can flourish. Such shops can be unique, idiosyncratic, rich in character, thematic, intense, pub-like in their social scene, deliriously inconsistent, and otherwise brand-rich in specialized customer contexts that Starbucks, as a regimented megabrand, can’t readily touch.

Great coffees have great character. So do great coffee houses.

(more…)

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

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.

Yesterday the Crocs stock price plunged more than 30% on indicators of slowing growth. This precipitous drop has raised questions about the future of the Crocs brand beyond its fun shoe origins.

We wrote about the Crocs brand and its long-term prospects a month ago, noting then that short-sellers controlled 20% of the stock and were primed to profit at any sudden downturn.

From vibrant to visceral

As we noted in our analysis, the challenge for the Crocs brand is to advance from a vibrant fun shoe to a more visceral brand proposition, one involving the whole customer in more than “footwear” mode. This type of brand solution is still entirely viable. An unsettled stock price may make it even more imperative.

Here we are in the year 2007, yet when we analyze current brand practice it appears that some brands behave as if we’re still in the Middle Ages, way back in the year 1007. In effect, they go medieval on their customers, treating them as a passive flock whose fate is to be told what to believe—and then to believe it heart and soul.

Medieval messaging

The medieval model of brands assumes a static, stratified society with brands on top and customers below. It puts the company on a throne, or in a pulpit, high above customers, dispensing brand doctrine to (hoped for) awestruck believers. It’s very much a one-way show of medieval messaging. And these days, it’s also a risky one.

Times have changed

It’s risky because times have indeed changed. The year 2007 is not the year 1007. When it comes to brands, the medieval approach now stands out as a potential brand weakness, for three reasons: 1) the medieval style places artificial barriers between companies and their customers; 2 it positions customers as a passive audience, who can’t add value back to the brand; and 3) it relies on closed brand doctrine, minimizing brand innovation and shared discovery.

A containment agenda

The medieval style of brands follows a containment agenda. It wants to freeze time, and to freeze customers in place—in 2007!—when customers have more to offer brands than ever before. In the medieval model, a brand that might become a joint (customer) venture with a live edge is reduced to a steady stream of preachments from on high, into a confined, compressed 2-D space without perspective or horizons—with no place for customers to grow.

Elements of the medieval model

The medieval model for brands typically sustains itself by using indoctrination techniques to instill desired beliefs and emotions in customers. It does this instead of innovating to create new brand value. Its brands are designed as messages, rather than as avenues of innovation.
The medieval model includes:

1. A belief system (doctrine) based on glorifying the company and the brand
2. A top-down process of inculcation (”messaging”)
3. A static universe untouched by innovation and change
4. Use of music, images, symbols, signs and icons to foster and fortify belief
5. Rituals and rites of passage
6. Myths and stories to make the brand appear larger than life, and/or magical
7. A passive, dependent role for the customer

Medieval style brands invite disruption

As the world transitions to a digital age, leaving much of traditional mass media behind, brands that embrace the medieval style become increasingly vulnerable to brand innovation from competitors, and to brand disruption from below, where customers chart a new course for themselves. By confining customers and holding them back, the medieval model works against itself. It helps make its customers ripe for the taking.

What shape will that customer liberation take? It will be participative, decentralized, proactive and bottom-up, just like the advent of printing, the growth of cities and private enterprise and popular movements helped sweep Europe out of the Middle Ages into a much more vigorous and productive era.

(more…)