Brands Create Customers

Brands are special because they stand for something, but when a brand suddenly stands for less, by lowering its own standards, the brand places itself in jeopardy. By lowering the bar that it has previously set, the brand has breached a quality compact with customers, partners and its own employees. The brand pays a strategic price, too. By lowering the bar it gives up territory it once owned, and makes life easier for commodity-level competitors.

The US Army lowers the bar

Two cases of lowering the brand bar have been in the news recently. The first is that the US Army has lowered its recruiting standards in order to meet recruitment goals. As noted in the International Herald Tribune, the Army made its recent recruiting numbers “by accepting a higher percentage of enlistees with criminal records, drug or alcohol problems, or health conditions that would have ordinarily disqualified them from service.”

This is no trifling matter. In the referenced IHT article, Senator Carl Levin states:

“While quantity is of course important, quality must remain the highest priority. … The army must continue to uphold high standards – moral, intellectual, and physical – for new recruits, to ensure that these young men and women are capable of handling the great demands that they will face. We must find a way to both increase the size of the army and to maintain its standards.

The honor system behind the brand

To get the drift of what stands behind the (original) US Army brand, one can go right to the famed Honor System at West Point.

Honor, as it is understood by the Corps of Cadets, is a fundamental attribute of character. Honor is a virtue which implies loyalty and courage, truthfulness and self respect, justice and generosity. Its underlying principle is truth. It is not a complicated system of ethics, but merely “honest dealing and clean thinking.” If a cadet is true in thought, word, and deed, there is no question about his meeting the standards of the Corps. On the other hand, quibbling, evasive statements, or the use of technicalities to conceal guilt are not tolerated at West Point.

The US Army as a brand of honor

It seems to me that the US Army is fundamentally a brand of honor: “a virtue which implies loyalty and courage, truthfulness and self respect, justice and generosity.” At the other end of the military spectrum, mercenaries and death squads can be brands of brute force and mayhem, invoking fear and passive acquiescence, but they do so without honor. They are horrible brands because they are neither a platform for public trust, nor peace.

As a brand of honor, the US Army can also be a brand of public trust, and of constructive peace. Both are fundamental requisites in this age of new warfare where armies and citizens are co-mingled, and where “battlefields” quickly spill over into communities and public services.

Brands and the moral edge

One of the major strengths of brands is that they can develop a moral edge. They can embrace and encapsulate “good,” and this can become a significant advantage in business and in war. Guerrilla armies claim a moral edge because they’re fighting for “the people,” but these claims are often not realized in fact. As the armed force of a major democracy, the US Army should benefit from a profound moral edge—if its soldiers embody requisite virtues and values.

The question for Army recruiters, then, is this: Which way are you taking your brand? And how does your recruiting strategy help build your moral edge?

Lowering the bar in the cockpit

In a second example of lowering the brand bar, US regional airlines (which account for half of all US airline flights) have been lowering their hiring requirements for pilots.

Traditionally, most regional carriers required 1,500 total flight hours before an aspiring pilot could apply for a job. These days, the flight hour minimum has been reduced to 500 hours, with one airline going as low as 250, before raising it back to 500. Regional airlines say they can’t afford to maintain their previous flight hour standards because there aren’t enough pilots with those hours available for hire—at least at the starting wages that the regionals currently offer.

Wages and conditions

As the quoted article notes, highly qualified pilots are generally not attracted to regional airlines. They can typically find better wages and conditions at executive aviation firms, discount airlines, cargo shippers and foreign airlines. A starting pilot at a regional airline, flying the maximum number of hours allowed, would earn approximately $22,000 per year.

The brand challenge for regional airlines

Thus the brand challenge for regional airlines: how you you build your brand when the major carriers keep off-loading schedules to you in part because your flight crews are cheaper? To get the flight crews you need, you lower your traditional standards, resulting in less experience in the cockpit. You may meet safety requirements with additional training and supervision, but your brand is now traveling a slippery slope. It’s more reactive than proactive.

Two possible courses of action

At first glance there are two possible courses of action that regional airlines might take. The first is really an accommodation, not a solution. It is for regional airlines to take their brands off the table, and to operate as anonymous adjunct carriers. They agree to compete on price, not on brand, because it’s low price that brings in the business from major carriers. In essence, the regionals agree to become commodity carriers. They reduce their brands to the lowest possible profile—the operating names painted on the plane. (This, of course, is exactly what the major carriers prefer, because it eliminates regional airlines as potential competitors.)

A more ambitious course

A second course is more ambitious, and more brand positive. It would aim to solve the regional pilot shortage by creatively teaming with airline pilot organizations to develop solid career paths, with wages, conditions and training that would attract more qualified pilots to regional airline cockpits. It would attempt to make regional airline cockpits positions of envy and esteem, rather than positions of commodity. It would aim to transform what is now a brand weakness into a brand strength.

In many ways, regional airlines are much closer to their passengers than the national carriers. This is an inherent brand advantage, which should be tapped.

Hat tip: tingilinde

When a business launches with an iconic product, it may discover, sometime down the road, that the product is on the verge of icon wear-out. Business growth slows. It’s in these situations that the brand must come to the rescue. That’s because the brand (when properly conceived) includes the customer in the icon. This is a critical step, because customers are infinitely protean, proactive and (self) sustainable. They never wear out.

When your iconic product falters, it’s time to tap into your iconic customer—the one created by your brand.

The Crocs brand in transition

We can see elements of this brand transition taking shape in Crocs, the highly successful, breakout brand of colorful foam clogs. Crocs has the daunting challenge of building (and sustaining) the Crocs brand beyond its original comfy beachwear cachet. As pointed out by the Wall Street Journal, Crocs is rapidly diversifying, and none too soon. The brand is under particular pressure from short sellers who are betting that Crocs is a fad—and not a sustainable brand.

Short sellers vs. the brand

Short sellers currently hold about 20% of CROX shares. According to the Journal, holders of short positions believe that Crocs is a one-trick pony, a fashion craze that will soon crash as customers lose interest and move on. In the short seller view, Crocs are Krispy Kreme for the feet.

In essence, short sellers believe that a company’s share price has overshot its brand. They profit when a stock price falls. A typical short-seller assessment is here. (Investors with short positions can lose their shirts when a stock price rises, so short seller assessments have a vested interest in being negative.)

And Crocs imitators everywhere

The Crocs brand challenge is even more difficult because there are scads of Crocs clog imitators in the market, selling at one-third the price—around $10 in the SF Bay Area. They may lack the segment-leading Crocs design and engineering, but their ubiquity testifies to a market for inexpensive foam-clog “fun shoes.” (Crocs has aggressively protected its brand in court.)

Where does a brand go for its second act?

So, what does a company do when 20% of its shares are visibly being bet against the brand, and low-price icon-imitators are everywhere? Where does a brand go for its second act?

It usually has two choices:

1. Reach back into its marketing bag of tricks to keep its head above water.
2. Reach out to customers to change the game, and get back on dry land—in a space it can own.

Call in the Ansoff Matrix

A first marketing step is usually to fill the whiteboards with some version of the Ansoff Matrix, so a company can systematically probe opportunities in Market Penetration, Market Development, Product Development and Diversification.

Crocs seems to be doing just that.

As the WSJ article notes, Crocs is diversifying into apparel, with Crocs branded shirts, pants and jackets. (The immediate brand connection is apparently that croslite, the plastic resin from which Crocs footwear is made, will somehow be incorporated into the apparel. From the Crocs site it’s not yet clear how this will be done, or how it will add new value.)

Crocs is also doing sponsorships (Pro Beach Volleyball), folk/rock campus tours, segment licensing deals (Disney, NBA, MLB, NFL, NHL), moving ahead with customized shoe add-ons via an acquisition, and developing new footwear lines, including mammoth, a fleecy Crocs made for cold climes. There is also CroxRx for pediatric purposes, Crocs work shoes (potential markets for nurses, waiters and other service personnel), a substantial kid’s line, and new leather and canvas shoes (with croslite soles).

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How do great brands change the game? One thing is certain: they don’t start with the game. They understand, perhaps intuitively, that the current game has reached its limits. The rules constrain the players—both the customer, and the brand. Stick to those rules and you’ll be bound to the same few moves, on the same hard bench, in the same small park, for a long time to come.

To change the game, change the customer

Great brands change the game by changing the customer. They redefine the customer and the customer’s world, elevating the customer to a completely new context. In this new context the old game suddenly becomes irrelevant, along with all the companies, products and brands wedded to it. It isn’t the new brand that spells the difference as much as it’s the new customer that the brand creates. He or she is delighted to leave the old game behind.

If you want to really change the game, you can liberate the customer.

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Michael Urlocker deftly summarizes how the Nintendo Wii is disrupting the market-leading Sony PlayStation. The lower-priced Wii is flying off the shelves, outselling the PS3 by 60% in the U.S. Significantly, it has helped raise Nintendo earnings 43%.

Beneath the surface this is a brand story, too, but first let’s look at the six disruption lessons that Michael gleans from the Wii’s stunning success:

1. Nintendo’s market disruption is not about better technology;
2. Disruption is not about incremental improvements;
3. Disruption is about understanding where the customer experience is not good enough;
4. Disruption is about making a product more accessible;
5. Disruption is about changing the basis of competition;
6. Disruption is about a new business model.

These are all excellent points. And while it may not be obvious at first glance, most contain a strong brand element, because a key focus of brands is to put more customer in the product. Do this in the right places, and your new product can marshal the power of customers behind it—with disruptive impact.

Brands activate customers

Through brands, you’re not just selling a better-packaged product. You’re activating customers. It’s this activation that has disruptive power. The Wii raises customers off the couch and into the action sphere of the game itself, redefining game space, and redefining the very role of the player.

Brands have disruptive power

Where the above list uses “disruption” you can just as easily put “brands.” Brands have disruptive power too, if companies choose to use it. Brands can create new customers by freeing them from existing market constraints, and by then advancing customers to higher levels of experience. In this context, the strength of a company’s brand depends on how much customer the company wants to put inside the product. When you put enough new customer in, you can break the mould (and hold) of a market leader.

Choose your brand model carefully

You might call brands such as these, “disruptive brands,” but it really comes down to the brand model you employ. Brands that liberate their customers from boring, low-level experience may find they have a new market to themselves without trying to be “disruptive” at all.

With the right brand model, brands can free customers to disrupt a market for them.

Unlocking brand value

What’s especially evident is that brands can exert disruptive power without out-spending or out-shouting their competitors. Brands are able to do more with less because they can capture value from customer experience. The Wii does not have the super high tech profile (and cost) of a PS3. It simply frees customers to experience gameplay in exciting new dimensions. It creates market value by unlocking experience value—that’s been bottled up inside the customer.

Nintendo’s brand vision

I’d also say that Wii’s success is testimony to the quality of Nintendo’s brand vision. We define brand vision as a company’s ability to see its future through its customers’ eyes. That’s not always easy, but that’s what Wii seems to do rather well.

Photo: Jeronimo Palacios — Flicker

Well, to answer this question right at the start, the answer is “yes.” In fact, a lot of mainstream brands have already gone over the falls, but their demise has been shrouded in mists of mismanagement, buyouts and bankruptcy. But make no mistake about it: they were brand failures first. The other things happened when they had already let themselves drop over the edge.

The mainstream brands that are still afloat are somewhere upstream, in the middle of the flow, enjoying the serene drift. Perhaps they can’t hear the deafening thunder of their fate, but they’re surely coursing toward it.

What makes a mainstream brand?

Mainstream brands are defined by their assumptions:

1. They assume brands are all about shaping perceptions, rather than delivering value.
2. They assume the sole mission of brands is to push the product. In their view, brands are “the salesman on the package.”
3. They assume customers are only valuable as one-dimensional “consumers,” and that customers can add no value back to the brand, or to the business.
4. They assume that the only way to build their brands is through top-down media campaigns.
5. They assume that brand success means corralling and containing the customer—under lock and key if at all possible.
6. They assume that brands are a substitute for innovation. Get people to believe in “the brand” and you can stop innovating and preserve the status quo, forever.
7. They assume that brands “never rock the boat.”

And then they feel the waters quicken, and hear a distant rumble.

It may seem counter-intuitive, but a primary purpose of your brand is not to be seen.

It is to be seen through.

Your brand is a lens that enables customers to experience their world, and their role in it, in a richer and more complete context. You show the way.

A brand activates beyond the brand. It does not hook.

It frees.

And great brands do not sit dumbly on a shelf.

They fly.

The highly publicized Yahoo peanut butter memo has identified some key problems in Yahoo’s structure and strategy, mostly related to “spreading the company too thin.” Many companies can relate to these issues. The memo makes some good points. Here’s a small taste:

I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.

Sounds like a brand vision problem to me

In reading the memo, my first reaction was: These issues all point to a problem with brand vision. There’s lots of Yahoo pieces in play, but no clear picture of where they’re taking Yahoo—and Yahoo customers.

“Brand” is mentioned one time in the memo, and the way it’s mentioned is somewhat revealing:

We have awesome assets. Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet.

I would argue that if Yahoo’s brand is “synonymous with the Internet,” Yahoo has a brand problem. Yahoo really needs its brand to be synonymous with customer dreams and aspirations, and for that it needs a clear (and coherent) brand vision.

Brand vision defined

Let’s start by defining “brand vision.” Brand vision is the ability to see your company’s future through your customers’ eyes. (No customers, no future.) It’s a shared vision that comes from being customer-connected at a level that’s at once visceral, and spiritual. (These guys get it, as do many others.) When you’re in this zone as a company, your brand pumps customer blood, and you think, feel and act like a super customer. It’s a creative high, 24/7. And it’s the brand’s job to help articulate this vision, across all relevant customer dimensions.

Rarely, if ever, is a successful brand vision a private dream hatched in a vacuum, and unilaterally projected from the top. Those approaches tend to stay in a vacuum. And they can drop you into an undifferentiated brand tableau that might look something like this.)

Brand vision takes leadership

Brand vision takes leadership, because customers are usually wrapped (and bound) in the present. They can have a hard time discerning their future until you map it for them, with pathways, platforms and value they can use. That’s why I call brand vision a “capability.” It shows in what you do, not in what you put in a PowerPoint, or in a media campaign.

A brand vision is simple and direct

Keep in mind that the best brand visions are simple and direct. They’re pathways, platforms and value. There’s no room for corporate ego, and no need for gaudy spectacle or Utopian fantasies. The brand vision of the United States was a Bill of Rights, democracy and a promise of 160 acres to pioneer homesteaders. The pomp and circumstance of regal brand trappings were stuffed in a bag and shipped back to England.

Brand vision is a mutual vision

That said, the goal of your brand vision is not to steer customers toward the future you want. It’s a mutual vision. You are helping customers articulate a future that will advance the both of you. Think of it as binocular vision, with the attendant deep perspective. Your brand vision engages customers in ways that help you gain new market insights and directions.

Customers become co-creators of your brand

Given a vision that adds richness to their lives, customers will amplify, elaborate and extend your brand in ways you can’t imagine. They become co-creators of your brand because they can expand your field of vision and your depth of field. That can give you significant market advantage. But if you treat customer “eyeballs” only as a window on their wallets, the results are far more problematic.

Brand properties are not automatically a “place”

One reason why Yahoo might find itself “spread too thin” is that it’s been less concerned with brand performance and more concerned with staking out large swaths of turf, as large portals do. In this approach, you buy a lot of properties to become a large landlord, exerting some control over those who reside in your (expanding) domain. But these properties do not automatically make a “place.” Only customers can make it a place—when they share a brand vision.

Acquisitions and brand vision

This week Amit Chowdhry gives us a detailed rundown of the 44 acquisitions Yahoo has made since 1997. It’s an interesting list. Each acquisition was a logical move to gain a strategic property. What’s not clear (as evidenced by the peanut butter memo) is the over-arching brand vision that integrates them to carry Yahoo and its customers forward.

Bottom line, the Yahoo brand vision is still a work in progress. Lucky for Yahoo that Microsoft and Google are very much in the same boat.

Image: Lego blocks

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.