Brands Create Customers

One of the best ways to improve brand program effectiveness is to employ the concept of the brand chain. The brand chain is a new way to understand the configuration and value steam of brand programs. No brand should be without it. The brand chain has illustrative power:; it helps us to visualize and analyze the process of brand value creation and brand program flow. It  has strategic power, too. It helps brands to focus their resources where they can create and grow strategic customer outcomes.

As shown in the diagram below, the brand chain is analogous to the supply chain. The key difference is that where the supply chain is made of value inputs leading to product production, the brand chain is made of value inputs headed toward the customer.

While the supply chain helps create products, the brand chain helps create customers.

The brand chain defined

Here’s how I define the brand chain in our New Brand Glossary:

Brand Chain
The brand chain begins where the classic supply chain ends. While the supply chain is made up of value-adding inputs leading to the product, the brand chain begins with product development and heads toward the customer. Through brand platforms and programs it delivers multiple forms of downstream value. The brand chain consists of creative brand interactions between customer and company, customer and product, and between customers themselves.

The brand chain plays a critical role in advancing both the customer and the brand platform, primarily through open-ended brand innovation and continuous customer integration.

The brand chain is vital to business

In business, the brand chain is every bit as important as the supply chain. Many companies with superb supply chains fail their customers by under-performing in their brand chain. They envision the brand chain as “sales,” when in fact it is a whole new level of value creation.

In practice, the brand chain is powerful tool that helps clarify the distinctive forms of value that brands can deliver. When a company analyzes its value creation process in terms of its brand chain, it can begin to focus on creating customers with brand platforms and brand programs that are both more effective, and more efficient, than media-based brands structured as broadcast “communications.”

The brand chain and value-based brands

A brand chain implies value-based brands. In effect, you want your brand chain to be a chain of strategic brand deliverables that advance your customers where competitors can’t follow. The more value contained within the brand chain, the more unique brand pathways a company can create for its customers. A fundamental step in this process is to develop your brand as a customer-focused application, not as a static “thing.”

The brand chain and the value chain

Conceptually, you can include both the supply chain and the brand chain in an overall value chain model. The value chain, which classically dates to Michael Porter’s work several decades ago, is itself ripe for re-assessment. A lot of value now comes from customers, who are partners in the value creation process. We need new ways to model that. (Ideally, your customers would radiate part of your brand chain back to you as value added to the brand, and would also radiate brand value into a wider value net.)

Managing the brand chain

Carefully managing the supply chain enables a business to optimize production and supply cost management. Carefully managing the brand chain enables a company to optimize how it advances its customers, and how it integrates them into its chosen innovation pathways. This can create a competitive advantage by raising the “barriers to brand” that competitors must overcome.

A company’s customers are its greatest competitive weapon. The purpose of your brand chain is to create these customers and to whip them into fighting shape.

Brands as vertically-integrated value

For analysis purposes, dividing the value chain into a Supply Chain and a Brand Chain is very helpful in that it helps us visualize the complete brand picture and its components. The next step (overdue from me) is to call the whole process the Brand Value Chain and include a proactive section for customers. In other words, we define “brand” as a system of vertically-integrated value, where the brand values championed by the company are extended back to suppliers and forward to customers. As a result, more brand value flows through to the customer, and that’s a strategic win.

See also: The brand goes in before the brand goes on.

Note: Updated 6/1/11

When you’re managing a brand, you always want to know how much of your brand is signal, and how much is simply noise. This signal to noise ratio is a good indicator of the effectiveness of your brand platforms and programs. Lots of signal is good. Lots of noise is not so good.

Use the right brand model

The first step in identifying brand signal and brand noise is to use the right brand model.

Old-school brand practitioners who still model their brands as “communications”—like some kind of broadcast beam—might be tempted to send the customer a survey: “Hey, do I sound cool or crappy?”

Unfortunately, this approach has two drawbacks:

1. Brands aren’t “communications”
2. Customers won’t understand the context, and will give unhelpful responses

For our purposes, then, the traditional “message model” of brands is a non-starter.

What counts is what the customer does with the brand

For signal to noise assessments, I prefer a different brand model, as illustrated above. In my view this is much closer to the way brands succeed in the real world. As shown, the brand is the violin, and the customer is the player. (Hope you didn’t think it was the other way around! The notion of the brand “playing the customer” gets things absolutely backwards, and explains a lot of wasted brand dollars.)

What we want to discover is what the customer does with the brand. Does he or she make music, or a dreadful howl? The effective brand “signal” or “noise” comes from the customer, using what the brand provides.

The brand is a tool for customer expression

The above model comes with several sets of parameters:

1. The brand is a tool for customer expression
2. The brand has the potential to add value to the customer’s life
3. Signal vs. noise is a result of brand/customer interaction

As noted above, the value of your brand lies in what the customer does with it. If the customer consumes your brand and promptly forgets it, your brand is effectively static. If your brand is out of tune, worn out or worn down, customers will grind out a few discordant notes and stop playing, relegating you to the attic. If your brand supercharges your customer’s life, opening new avenues of expression, then your brand is really rockin’.

The brand as enabler

In this model we can see that the brand is an enabler. This contrasts with other brand models which conceive the brand as a message, a controller, a prod, a godhead, or an illusion. Being an enabler gives you tremendous freedom in leading customers where competitors can’t follow.

And since we’re modeling brand interactions, we can add several observations about the duties of the brand. Within this model:

1. It’s your job to teach the customer how to play
2. It’s your job to suggest new tunes
3. You are not so much a “conductor,” as you are a “toe-tapper in residence.”
4. The purpose of this brand/customer interaction is to attract new listeners, and new players. The point is to get them all making music with you.

The value of this model is that it makes it easy to distinguish brand signal from brand noise. You can tell how well your brand is doing by listening to the customer

It’s that simple.

Brand signal is music that makes a market

Using this model, I define brand signal as music that makes a market. It’s music that’s good for your business, not some waste-of-time ditty. And it’s good for the customer, too. The music you make with customers should send competing brands to the back of the stage, if not into the frigid alley outside.

How can you tell if what you hear is music—and not an ear-piercing screech? Well, you’re in brands because you’re smart enough to know. You’ve got creative chops. Expressive chops. And customer chops.

Photo: meganne_soh, Flickr

Michael Urlocker notes that Australian brewer Foster’s is redirecting its US ad spend from TV broadcast to interactive media. While the amount is relatively small ($5 million), Michael sees this as symbolic of an ongoing disruption of traditional broadcast media by new interactive models. He cites a number of sources who reach similar conclusions.

There’s a brand story here, too. I see Foster’s move as part of a disruption that extends far beyond the TV broadcast model. It extends to brands themselves, which for the last 50 years have been heavily predicated on TV advertising modalities. Brands have tremendous capacity to “create customers”—in Peter Drucker’s original sense—but not when they’re hobbled by the top-down, one-way broadcast model.

Brands are not part of the pitch

Today’s commercial TV networks often reduce television to a pitch-box, and that’s bad news for brands. Brands are not part of the pitch. They’re a handshake, a hug, or in extreme moments of good fortune, a kiss.

Plus, a pitch-box makes a terrible brand platform. It goes nowhere. No wonder people are tuning out. The real deal is found in products that work, in companies that listen, and in brands big enough for two.

Thankfully, the brand model is not tethered to the broadcast model.

Interactive media and “disruptor brands”

Foster’s is certainly not alone in its new media direction. The move from TV to interactive media coincides with a reinvention of brands as tools for innovation and value creation. We will soon see “disruptor brands” that will accelerate this process, leaving only the laggards (and losers) bound to TV.

Photo: Chris Moffett, WikiMedia

To anyone involved in brand-building, it’s pretty clear—if not shockingly obvious—that we’re in the midst of a tectonic shift in the nature of brands. One sign of this upheaval is that slowly but surely, the glory days of the brand icon model are drawing to a close. Everywhere you look, famed icon brands are increasingly isolated, or in danger of toppling from their pedestals. Yet, while this is certainly bad news for those brands affected, it’s by no means the end of brands, or of great brands.

Icon brands point backward, not forward

What’s evident is that the icon brand model wasn’t made for the new market landscapes now emerging. For decades, the “brand-as-icon” was the ideal, the brand raised aloft to be revered, commanding rapt attention and radiating context from atop its pedestal. In today’s flattish, interactive world, however, icon brands point backward, not forward. A brand that sets itself high above customers separates itself from customer input, energy and direction. It can easily set itself up for a fall.

Pedestals lock you in place

Note, too, that pedestals lock you in place. Thus, it’s no surprise that icon brands are now often being outpaced by customers. Customers have dozens of brand choices, and can create their own brand value via collaboration, co-creation and social networks. At the same time, once-dominant icons are being out-innovated by upstart players who thrive on customer connections. These new firms can deliver new forms of brand value in weeks, not decades.

Some icons will shatter, but most will survive

In the present seismic turmoil some notable brand icons will hit ground and shatter. But many more will realize that there’s little advantage to being perched on a pedestal in the first place. (Indeed: being on the pedestal is part of the problem.) Brands can redirect themselves in mid-air and land safely on brand platforms, a far better foundation.

From brand icon model to brand iteration model

What we’re witnessing is a monumental change in brand models and brand paradigms. Brands are migrating from the lofty icon model to a customer-grounded brand iteration model. The latter is characterized by the ability to rapidly prototype, test, and iterate new brand initiatives to deliver new forms of customer value. The brand appears as a value stream, rather than an object. Brand program iterations enable brand pacing. They also can produce multiplier effects because they’re structured as architectures of participation. They can tap into customer intelligence and energy to create new brand initiatives from below.

Brands focused on iterating customer value won’t need to preen themselves as icons. They’ll be too busy creating customers.

A dynamic platform strategy plus robust brand iteration is quite in evidence here.

More vital and less iconic

The current challenge for icon brands is to get off their pedestals and get down to business. The brand icons that manage to survive will be those that reinvent themselves to be more vital and less iconic. In fashion, Coach has shown a way forward from its iconic plain leather purses. The ultra-plaid-iconic Burberry, once hit hard by the anti-icon “chav” embarrassment, faced a more daunting task, but has transformed itself into a powerfully nimble brand, especially through social media.

From timeless icons to timely iteration

On another front, Apple exemplifies the shift from timeless icons to timely iteration. Apple is vigorously reinventing itself (and its customers) out of the traditional computer business, music business, phone business and publishing business. Ever notice how Apple seems to make things happen while its iconic competitors sit dumbly on their hands?

There’s a reason why most “icons” are symbols of the past. Maybe Apple is on to something.

Iconic brands and iconic brand experiences

Today we create brands as experiences, not as fixed objects. We don’t simply program a brand experience as “iconic” and then walk away. We monitor every aspect of it and change it often, curating it rather than sticking it on a shelf. It’s a hands-on experience from the customer side and from ours, iterative in every respect. The “iconic” brand experience is never allowed to become an icon.

Create iconic customers instead of iconic brands

As a brand builder, if you still wish to create the iconic brand (pedestal and all), be aware that iconic brand mechanisms (especially those of the top-down, command and control variety) often impede brand innovation at the customer level. The iconic approach comes with a rigid icon attitude that resists change, plus a full-body cast that minimizes customer touch.

Personally, I think we’d all be better off if we tried to create iconic customers instead of iconic brands. That approach puts brands on the right footing. We position customers to win, and win with them—pedestals be damned.

Top photo: Andreas Tille, Wikimedia Commons

The time has come to recognize a new role for brands—and the brand team—at the core of business. As shown in the Brand Core Model below, brand building is moving to a crucial position at the strategic center of business operations. At this vital confluence of company, product and customer, the brand team provides the vision and the platforms to create new forms of value, and to create and grow the customers that will drive the business forward.

And that, folks, is a big deal.

Brand Core Model

Creating value at the core

The Brand Core Model illustrates how brands have moved from symbols and slogans at the periphery of business to a value-creating activity at the heart of the enterprise. Brand practice belongs at the company core because the brand logic of creating customers shapes the allied fields of marketing, product development and customer development. From this central position, the brand team emerges as a key player in determining how customers are created, and how customers can be grown into new market opportunities.

Brand as the hub of a value network

Within the brand-centric enterprise, the brand is the core of a value creation process and the hub of a value network, feeding the innovation pipeline within the company, and between the company and its customers. This new brand environment differs radically from that of traditional brands. The brands produced are action-based. They’ve moved beyond the symbols, gestures and identities of conventional brand campaigns. These new brands are digitally enabled platforms and programs of value innovation. They pump value through the company, into the customer, and back again, gaining power and reach via network effects. While old brands beg for attention, these new brands join their customers as allies, directly adding pop and pulse to their lives.

Brands move from periphery to core

For most companies, this will be a dramatic new role for brands and the brand team. It marks the progress of brands from a communication layer on the periphery of business to a value innovation engine at the core.

In this process, brands are finally emerging as a strategic business practice in their own right. They’re no longer a subset of marketing, advertising, design, packaging or communications. Brand strategy can drive the business. Brand practice brings its own vision, platform logic, customer creation process, methodology, tools and resources.

Brands reinvented

From their new locus, brands are situated to reinvent themselves, sloughing off antiquated, top-down approaches for a new fusion of culture, technology and social software. They’re free to morph to customer needs, large or small, from a panorama of the possible to pocket-size, a pin, or a pixel. As we’ve said before: “Brands are tools that enable customers to interoperate with the universe. The genius of brands is that they have no limits. The value of brands is that through them, customers have no limits.”

A new role for the brand team

The Brand Core Model illustrates the central importance of the brand team. Through a collaborative process, the brand team brings together company vision, business priorities, platform logic and freewheeling creativity, all focused on creating and growing customers. The role of the team is to guide and augment value innovation through the company, and then through the customer, insuring that resulting customer growth can return new forms of value back to the business.

Yes, this is a new and different brand team. Instead of creating perceptions, their mission is to create customers. Their patron saint makes high demands, and pays high rewards.

Brand central: how it works

The Brand Core Model illustrates how innovation and value are co-created by groups inside and outside the company, mediated by the brand. The brand provides a collaborative framework for value innovation, cutting across internal divisions and other boundaries, and speeding innovation to market.

Looking at the diagram, here’s how I see things working:

At the intersection of Company and Product, the brand shapes Marketing by defining the platforms and programs that will create and grow the customers to grow the business. Brand platforms and programs become the structure for marketing imagination.

At the intersection of Product and Customer, the brand shapes Innovation in three ways: 1) by providing clear brand platform and customer platform direction to R&D, product development and engineering; 2) by helping develop cost-effective, high-value prototypes, and 3) by enlisting customer initiative and intelligence to augment the innovation process.

At the intersection of Customer and Company, the brand shapes Value by using collaborative methods and value networks to establish an exclusive context of mutual (company/customer) value. This helps synchronize brand platform deliverables with customer platform needs. Because the brand is committed to creating customer freedoms, it does not lead to backwater pools where innovation stagnates in an attempt to contain customers.

At the core—and at the edge

While the new locus of brand is at the core of a company, the brand team operates at the edge. Yep, brands are an edge force. The brand team leads. That means they thrive at the far edge of the customer, leading the customer, along the untamed frontiers of the market. Your brand team is a large part of your edge competence. You want them cracking open new worlds, not tending a hearth. They have a home, to be sure, but like all great explorers they’d rather be hacking the wilds.

Notes:

1. This diagram is hardly etched in pixels, let alone stone. It’s how I currently see things coming together. As I drill into different layers, I’m sure I’ll find inconsistencies that will result in changes to the global model. All comments are much appreciated.

2. For reference, see earlier discussions of brand platforms and the brand team mission here and here.

Diagrams and visual models can be extremely helpful in illustrating how brands operate. They can often produce an “aha!” moment by revealing a hidden structure or an unseen customer relationship.

Being able to visualize a brand process, or a brand outcome, helps us craft stronger brand strategies. This is especially important when markets are changing, and legacy brands face threats from all sides.

Lately I’ve been working up a series of models for internal and external brand interactions. On the external side, brand interactions usually take place along four planes:

1. Company/Customer
2. Product/Customer
3. Employee/Customer
4. Customer/Customer

Rich models can be developed along all four planes, assuming the brand is fully engaged. An integrated model will include all four within a single strategy and program framework.

Here are two initial representations I came up with while trying to develop a generalized “big picture” brand interaction model along Company/Customer lines.

The traditional model
The first model represents the traditional, top-down brand approach, in which the brand attempts to engulf the customer with a set of meanings so profound that the customer becomes a creature of the brand. In many respects, this is still the “ideal” conventional brand model. The brand aims to be “like a God” to the customer, who is positioned as a meek, credulous and faithful “consumer.”

Without going into too much detail, this model has all the weaknesses of the conventional “command and control” brand approach. I’ve discussed those problems here.

The biggest (obvious) drawback of this model is that it constrains the customer. It doesn’t allow the customer to innovate and add value back to the brand—at a time when customer initiatives are increasingly seen as a driving force in brand success.

The interactive model
What would a brand interaction model look like if the brand aimed to create customers who could add value back to the brand? That is, if the brand were “two-way” instead of one-way, with customer intelligence and initiative factored into the model?

I was playing with different representations of Company/Customer interactions when I suddenly realized that the robust “two-way” model might look something like this:

Now that’s interesting. In place of the linear, marketing-induced top-down brand, we might be moving toward a subtle, supple non-linear brand, where the interaction between company and customer is not one of power and domination, but one of fluid intermingling, dynamic balance, and co-operation. Some background on this particular shape.

Who now has the inside track on brands?
And here’s another thought: American and European companies like to believe that their past mastery of brands will save their necks in the future, when competing products from Asia flood Western markets. In this conventional view, the inherent savoir faire of Western brands will still win customers and command price premiums that “Asian commodities” can only dream of.

Maybe that’s true for now, but what culture might have the inside track to the brand model of the future?

Am playing around with Gliffy beta in my so-far-fruitless search for the optimal collaborative brand visualization tool.

Fairly limited feature set at this point . . ..

At Dcamp in Palo Alto last Saturday I made it a point to see Sarah Allen’s presentation called “Cinematic User Experience.” It featured slick UX technology from Laszlo (blog) that enables a user’s web experience to approximate the unitary experience of seeing a movie. When a website is created using Laszlo technology, everything unfolds in front of you in the context of a continuous dialogue or story. Instead of discontinuously jumping from web page to web page, you use tabs to unfold additional views that quickly appear in the context of your present web space. You become, in essence, the director of your own web experience. Very interesting approach. Brand builders should check it out.

Brands and the cinematic experience

Sarah’s presentation got me thinking about “brands and the cinematic experience.” As soon as she finished, I grabbed a Peets coffee from the food table, stepped outside to the cool shady courtyard (the Bay Area is unconference Nirvana) and scribbled 20 minutes of notes and diagrams. I usually link “cinematic” to the phenomenon called “persistence of vision,” that peculiarity of the human eye (or brain) that enables us to watch 24 discrete frames per second and translate them into continuous motion, instead of chaos. A movie becomes our own “fiction” of those 24fps.

In a brand experience, we interleave frames from the brand with frames from our own lives, effectively editing our personal “demo reel” with cuts of brand context, images, brand fx, grainy b/w clips, or whatever the brand brings to the table.

Brands and “persistence of context”

Brands, of course are very different from motion pictures, but they do share some “persistence” qualities. Brands operate in a zone that I would call “the persistence of context.” Products come and go like individual frames of a movie, but a brand provides a “persistence of context” that keeps customers in touch with the core narrative (value dialog) that’s taking place. This is largely because brands are created in the context of the customer, not that of the product, or the company.

The brand narrative is all about the customer

Yes, the brand narrative (all those frames of context) is about the customer. The brand narrative is a brand interaction in which the brand frees the customer to experience new facets of life. (If the brand is any good, it should have the power of an awakening, and a revelation.) Through the brand, the product tells a special customer story. Or, more generally, brands plot a customer course, and help the customer shape his or her own unique narrative. The brand narrative is never a top-down “telling.” It’s a collaborative process of discovery.

“Cinematic” or “landscape”

Question: Is “cinematic” the right metaphor for brands? Maybe not. Brands might be more “landscape” than they are “cinematic.” The cinema is a passive theater. Landscapes invite exploration. Brands have a lot in common with vast spatial expressions: topographies, maps, horizons, worlds. What’s clear to me is that mankind was not made for piddly caves. (Or silos.) We crave the wide open spaces.

And the point of brands is to create new customer spaces.

Breaking through the prescribed heavens

See that guy in the banner at the top of the page? He’s breaking through the veil of the “prescribed” heavens to gaze into a wondrous vault of the real universe. What he sees is only the first layer. Beyond that glorious vault there is another vault, and then another. Brands are the rips in the firmament that enable us break free from the dictated world into a world of discovery. When you “create a customer” with your brand, you enable him or her to break through an imposed veil to grasp a larger truth and a larger reality. Brands are the dynamic adventure that rips through the static here-and-now.

Brands as metaphor

Brands are the metaphors of products, and of customers, and of customers “customizing” products. I’ll say more about this in another post.

Brands: portrait view, or landscape view?

After thinking about cinematic and landscape views a bit, it dawned on me that we could go a step further and analyze brands as to the type of “page view” they represent: portrait view, or landscape view. Traditional brands are hierarchy-driven, much like the standard “portrait view” page, a hierarchy of top to bottom. They put the brand at the top and their customers on the bottom. Customers become brand derivative, within a brand silo. The traditional brand agenda is to lock them into the page.

The landscape view of value-based brands

In contrast, value-based brands are “landscape view” because brand innovation and customer opportunity need the wide open spaces of a landscape, the opposite of the restrictive silo. Landscape brands are full of new vistas, fresh horizons and soaring vaults of heavens, where brands and customers can collaborate to create new value. They’re superior to portrait view/silo brands because customers themselves are creatures of landscape mode. They want their brands to open out, so they can leverage the brand experience to grow themselves.

Semi-bottom line

I will have to get back to these thoughts at a later date. There’s more here than I can sort through at the moment. I would say, though, that if you’re in the process of designing and developing brands, get the biggest cinema display that your business can afford. You might as well envision your brand through the widest customer eyes—across the widest customer spaces.

Photo: mikefats — Flickr

Note: updated August 11, 2007

Added photo and some new material, links and new heads.

Note to self: Instead of updating an old post, write a new one. Well, a new one on this subject is now in the queue.