Brands Create Customers

Recent research from Google suggests that social media may become a double-edged sword for brands. While social media sites may be excellent platforms for promoting sales, they can also position a brand as a source of deals and discounts. This positioning can erode a brand’s pricing  power by conditioning customers to shop on price rather than intrinsic brand value.

In other words, unless a brand takes care in how it develops its social media community, it may lose in strategic pricing power what it gains in immediate promotional power. I say “may” because the data is far from complete at this time. But it’s data that points in a definite direction.

Retaining pricing power is crucial for brands

Social media provides enormous value to its users while offering low-cost and effective communications and promotional opportunities for brands. (For typical examples see here). For brands, the critical task is to develop a productive social media strategy that deepens brand engagement and experience while maintaining price premiums. I previously discussed this issue in a post on a Razorfish social media study conducted in 2009. Razorfish found that roughly 40% of brand “fans” and “followers” of Twitter and Facebook were looking for deals. My takeaway from the Razorfish study was that a brand may risk becoming a “brand of deals” if it is constantly linked to deals, or to the expectation of deals. The brand’s pricing power may be reduced accordingly.

Google finds that a brand’s “friends” on social media often want deals

Google released partial data from its research on Facebook, the 800-lb. gorilla of social media sites (and, we should note, a prime Google competitor). Google’s data indicates that the single largest segment (25%) of those who “friend” a brand on Facebook do so in order to receive discounts, deals and other types of special offers. In my view, this may perfectly acceptable if a brand needs constant promotions to attract customers. However, a brand that is not in the business of hot offers and blowout sales may find that this “deal ethos” on social media sites reduces its leverage as a brand of exclusive qualities. You cannot be a high-rent brand with a low-rent strategy.

A chart of Google’s findings

Below is a chart from the findings that Google presented:

For the consumers who do friend your brand, what are they looking for? Discounts!

A brand’s social media pages can become virtual coupons

Google’s data seems to confirm the Razorfish findings that a significant portion of a brand’s social media followers is shopping on price. These followers may treat a brand’s social media presence as a source of deals and discounts, as if the brand suddenly appeared in an outlet mall, offering an equivalent outlet mall experience. The brand may get more traffic and social graph referrals, but it’s traffic that can put price pressure on the brand if the prevailing ethos of fans is “let’s get a deal.” Fundamentally, brands are the deal; they don’t have to make deals. And once every competitor rolls out their social media shingle, deal shopping between brands will be easy. Strategically, the brand’s ability to command a price premium may be compromised.

Two causes of why this may be happening

I can envision two causes for why the deal ethos suggested by this data may be developing on social media sites. The first is that many companies envision social media as the ultimate advertising and PR platform–low cost, viral and high impact–and have consequently flooded their social media pages with sales pitches, deals and promotions. These companies want sales, not a strategic brand community. They gladly create a deal ethos, perhaps because their brands are little more than a sales ploy to begin with. They target fans and followers with pitches, and their “fans” target them with the expectation of deals.

The second reason is that the minimalist designs and capabilities of social media sites generally resemble bare-bones discount sites. The brand is a tenant on social media sites, with a cookie-cutter store front. In such formats, it’s hard for brands to create exclusive brand experiences. Brands that  lack strategic brand vision and a community sensibility (as many do) may adopt a social media default mode of persistent promotion—just to fill up the space.

Current social media sites may homogenize brands

A further thought: It seems to me that in their current formats social media sites can exert a significant power to homogenize brands. They can (inadvertently) reduce brands to a lowest common denominator (e.g., Facebook page or Twitter account) that fits the social media scene. We wind up with brands stripped down for the convenience of social media sites themselves. If you look at how the brands express themselves in a fixed social media format you can sometimes glimpse a frightening similarity, as if two very different brands in the real world behave virtually the same in the social media world. Is this what your brand wants?

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“You want the cooler, the six-pack and Wi-Fi for your iPhone?”

Burberry’s Art of the Trench social media site is now live. When Burberry announced the site a few months ago, I discussed Burberry’s brand options in creating the site. Now we can examine the site close up. Initially, the site consists of hundreds of top quality fashion shots of models/people in Burberry trench coats. You click on the photos you like, register your approval, enter a comment, or share the photo with a friend. You can even submit your own Burberry trench photo for consideration—assuming it meets the very high standards of the site.

Burberry/Facebook collaboration

Art of the Trench appears to be a collaboration between Burberry and Facebook, with a Burberry front end and Facebook back end. Burberry defines the brand identity and manages the “content,” while Facebook (apparently) handles key parts of the social software side. It’s as if the Burberry brand has absorbed a large segment of Burberry’s existing Facebook page. Quite seamlessly, too.

As far as I can tell, you must be a Facebook member (and sign up with Facebook Connect) to comment or submit photos to Art of the Trench.

Burberry’s brand options

In my previous post on Art of the Trench I noted that Burberry could opt for a fan site, at the lowest level of social media, or could aim higher, toward an interactive brand platform geared toward collaboration and co-creation with Burberry customers. Fan sites are marketing and PR tools. Co-creation sites are innovation tools. With the latter approach, Burberry could explore the trench as a deeper part of culture, with an eye to creating new customers in new market spaces.

A fan site

It appears that Burberry has settled for a fan site. The site’s stated purpose is “to celebrate the Burberry trench coat” as “a living document of the trench coat and the people who wear it.” To my eye the site currently seems more of a “celebration” of Burberry rather than a discovery or exploration—where Burberry might lead its customers on a unique brand journey.

As a fan site, Art of the Trench works as a rolling ad/PR campaign, where Burberry provides photographs of attractive people in stylish Burberry trench coats. As noted above, fans can click on images they like, make comments, or share photos with others. Over time, the site may have value as a means of generating customer feedback. The highly visual layout would seem to work well with an international audience, which Burberry certainly has.

Low involvement

The Art of the Trench does not seem to encourage high levels of user interaction. I did not see the word “interactive” on the site. (I may have missed it.) Burberry states that it wants customers to be “involved,” but the level of involvement seems constrained. As a fan, one’s role is mostly to “celebrate” Burberry. Only positive clicks (“I like it”) are allowed. There doesn’t appear to be any mention that fans are part of any Burberry team.

Submit your own photo—but don’t expect too much

A key “social” feature of Art of the Trench is that users can submit their own photos. A photo must be portrait orientation, outdoor, with the submitter or a friend wearing a Burberry trench.  However, fans who submit photos should not set their hopes too high. From Burberry’s content guidelines:

We will use our absolute discretion when selecting photographs for inclusion on the Site. Please do not email us asking why your photograph has not been selected. You should expect only a very few photographs are likely to be selected. We hope you will not be disappointed if your photograph does not make it.

I’m assuming Burberry would reject unsuitable photos with a polite “thank you” note, as befits a classy company.

Burberry and the brand dilemma

Sooner or later every brand finds itself on the horns of a dilemma. It needs an iron fist to manage its brand identity, yet it also needs an open hand to join with its customers, since it has no future without them. Every brand vacillates, vibrates ping-pongs between these two poles. Some years back Burberry had its brand hijacked by Chavs, with devastating results, so it’s no surprise to see Burberry today in a mode of absolute and total control.

The questions: Is the “open hand” fan site of Art of the Trench sufficient to create and retain customers? Can Burberry get by with customers who are “involved,” but not really “interactive” with the brand?

The potential weakness of Burberry’s approach

The potential weakness of Burberry’s Art of the Trench approach is that it’s a brand stage, and not a brand platform. It can style and pose before its fans, but it cannot leverage them strategically. Burberry’s biggest threat is that a competitor will change the brand game and leverage its customers in ways that an iron-fisted Burberry cannot. The challenger doesn’t have to create a better (or more fashionable) trench coat to do this. It needs to create a different (and deeper) customer context of the trench. Social media, the open hand par excellence, may be the lever.

For brands, there’s also the possibility that sites like Art of the Trench may in fact look backward, rather than forward. The future may belong to personal brand applications, where the brand is a direct drive, with no need to be staged.

UPDATE

Burberry’s Twitter page (@Burberry) announces the Art of The Trench mission as, “A living celebration of the trench coat and the people who wear it.” That’s an all-inclusive statement that some might interpret as going beyond the Burberry brand proper. It could work wonderfully for Burberry, but I sense that the site is focused exclusively on the Burberry brand.

For brand builders, the current media frenzy about Twitter can only mean one thing: either it’s the last stage of massive fad fever before Twitter implodes, like Oprah’s latest diet, or Twitter actually enables people to enrich their lives in new dimensions–in which case brands better pay attention.

My bet is that it’s more of the latter than the former. There are revolutionary brand platforms waiting to be be built on Twitter—but only if brands take a strategic approach to Twitter, one predicated on creating customers through innovation and value delivered. This means moving beyond the routine marketing and PR uses of Twitter that make up most brand uses at the moment.

Twitter is an innovation challenge for brands

Twitter is a form of networked communications that’s fast, direct and highly granular, with the power to link individuals and groups through their immediate experiences. As such, Twitter stands as an innovation challenge for brands, which have typically been built on non-collaborative broadcast models. To leverage Twitter’s potential we’ll need to create new structures of brand interaction, new forms of brand value, new brand relationships and new Twitterized brand platforms. All this will require new brand strategies to incorporate Twitter’s unique strengths.

Don’t pour old wine into this new bottle

For brands, the last thing we want to do is to pour old wine into the new Twitter bottle. That would cripple its potential. Approaching Twitter as just another marketing, advertising and PR outlet, as a linear descendant of direct mail, email and blogs,  is poor brand strategy— as we’ll discuss below.

Twitter changes the context of brands

Twitter is important because it can change the context of brands, from one-sided inducement and persuasion (in the classic model) to a two-way street of shared experience, shared values and shared discovery. In the big picture of things, brands are collaborations in context. Twitter enables brands to create more collaboration, and more context.

Structurally, Twitter has the potential to turn brands inside out, transforming brands from symbols and icons to a seedbed of customer innovation, where what customers co-create with the brand returns more value than the purchase price. In this process, Twitter can grow customer value in a non-linear dance, which is much more agile and adaptive than regimented brand campaigns from the top.

Non-strategic brand uses of Twitter

To date, most brands have used Twitter for standard marketing, sales, promotion and publicity purposes. For the most part, this really has been putting old wine in new bottles.

1. Companies can” listen in” to Twitter via keyword scanning tools to monitor how their brands are being mentioned. Simple enough. Most companies already monitor the Internet for this purpose.
2. Brands can monitor Twitter to discover customer problems, and can respond promptly and directly, as needed. A quick, useful response can also help personalize the brand, faster than email or blogs. However, reactively chasing random Tweets across the Twitterverse is not exactly a brand building strategy. Some examples and caveats here.
3. Brands can try to generate “followers” on Twitter, stringing them along via short messages. It isn’t clear yet how such a following ever becomes a brand community. (A key question: what are “followers” actually following? And why have followers when you could have co-creators?)
4. Some brands use their Twitter connections to send out marketing and sales messages, as if Twitter were just another form of direct mail, or spam. This is counterproductive.
5. Some brands may be tempted to use fake Twitter personas to gin up publicity. This tosses Twitter authenticity out the window. Some attempts in this direction have been egregiously lame.

Twitter’s “celebrity mode” certainly won’t last long.  Nielsen reports high rates of Twitter defection after initial celeb-fueled excitement. Twitter’s value lies deeper than the glitterati.

For an overview of standard marketing and PR uses of Twitter, see two Mashable posts here and here.

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A while back I set forth a three-phase history of brands, as an evolution from mark, to media, to means. I noted that the end of the “media” era was at hand, and that the days of mass market advertising and mass market brands, where brands were little more than stylized sales stimulants, were drawing to a close.

The current recession may have accelerated this process.

The recession impacts traditional marketing and brands

David Armano has some great diagrams and analysis of how the recession is upsetting traditional advertising and marketing models. This sea change is also impacting the traditional concept of marketing-driven brands, where brands were often developed to manipulate customer behavior in a credit-fueled economy. That era is also fading into the past.

Brand culture replaces sales culture

In my view, the current recession leaves brands in a perfect position to supersede the sales culture of marketing with a value culture of innovation and personal relationships. This is brand culture instead of sales culture. Instead of being part of a persuasion package, driven by advertising, brands can become a means of personal growth and expression, with brand platforms creatively designed to transform the personal growth of customers into value added back to the brand. A creative culture of brands is a far more productive environment than the often cynical and exploitative selling culture of advertising.

And, as I said previously, everybody wants a brand experience. Nobody wants a marketing experience.

Brands as a context of opportunity

All this means we have to re-think brands, of course–which is the very purpose of this blog. Going forward, brands are re-conceived as a shared context of value between a company and its customers. Their purpose isn’t to sell, but to unlock customer growth, innovation and opportunity. These deliverables are then networked back to the brand, raising its value and expanding its innovation horizons.

Brands as personal applications

What makes this possible is the advent of always-on digital technology. Think of the iPhone, and its successors. Thanks to digital technology, brands can take the form of “applications,” interactive enablers that are personal, portable and persistent. Instead of being creations of mass-market media, brands become enablers, as a second skin.

Goodbye consumer, hello customer

The current recession may also accelerate the end of the “consumer” era. That “era” was invented to justify a relentless sales culture based on ever-expanding credit. Thinking of fellow citizens as “consumers” treats them as little more than sheep with credit, and now the credit is gone. A “consumer” mindset also depersonalizes company innovation, lowering standards and making breakthrough innovation increasingly difficult, if not impossible.

Creating customers, on the other hand, is the springboard of innovation, and of business strategy. And that’s where brands come in.

In order to provide better products to its customers, a San Francisco grocery has gone into farming. This new capability totally changes the context of its brand, and its customer relationships. For the products it grows and sells, it is a genuine “farmer’s market.”

Extending the brand chain to the farm

Bi-Rite Market has been a local leader in providing organic produce and artisan products. Having its own farm extends its brand chain into what was once “supplier” territory. It adds unique brand depth and brand trust. Currently, Bi-Rite is able to grow about 5% of the produce it sells. Because Bi-Rite can “grow its own,” when you shop there you are closer to the food you eat. You have one foot on the farm–and that’s a powerful connection.

Deepening the brand engagement

By bringing the farm into the retail experience, Bi-Rite dramatically deepens its brand engagement with customers. Customers now have first-hand access to the grower, enabling them to learn exactly how and where their food was planted, cultivated and harvested. What had been a “retail” engagement is now a fully-shared “food” engagement, from seed to checkout.

Changing the brand game

Bi-Rite states its mission as, “Creating community through food.”  Through its own farms, Bi-Rite is moving to change the brand game in food retail by changing the context of food retail itself. They’re integrating grower and grocer—and customer.

Admittedly, Bi-Rite is a small grocery in one city, but their end-to-end brand is one that large food chains (except perhaps Whole Foods) would find it very hard to match.

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.

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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