Brands Create Customers

I was going through my notes on creating customers when I came across the two entries shown below. They’re from a post I wrote two years ago, but to my mind they still do a good job of defining what “creating a customer” means, and outlining the brand framework that supports customer creation as an ongoing process.

What “create a customer” means

I define “create a customer” this way: To create a customer means to connect a customer to a larger part of himself or herself through the brand. This is a connection to that person’s potential and/or passion, within the context of the customer’s expected brand outcome. Your brand helps customers to discover themselves, unfold themselves, iterate themselves, and prototype new selves that are now latent, awaiting only the wondrous “developer” that flows through your brand platforms and programs.

And since your brand is a creative engagement, you have many, many options at hand to work your wonders. What counts is the nature, content, direction and value of your brand connections.

Brands and “creating customers”

“Creating customers” is what brands are all about. It’s where brands come into their own as a process of value creation, combining strategy, imagination, innovation and customer interaction. Yep, brands are all that, which makes brands the single most expressive—and engaging—process in business. Moreover, the process of building brands is most effective when it’s openly shared with customers. That’s one reason why brand building stands head and shoulders above most other business practices. It aims to team the best and brightest of a company with the best and brightest of customers. That combination is hard to beat.

The full post goes into much more detail, starting with my hero and yours, Peter Drucker, who said: “There is only one valid definition of business purpose: to create a customer.”

See:  How brands create customers.

As a world leader in consumer electronics, how do you intend to create customers in the 21st centry when one of your key executives believes that nothing good has come from the Internet? Yes, it’s time for another Fortune update on the travails of Sony, a company intent on capturing customers at the expense of its brand.

A doomed brand agenda

Howard Stringer has been “transforming” Sony for years, but so far all he has to show for it is the old entrenched Sony with a few younger faces. While other brands are innovating to set customers free (as with that Internet thing) Sony remains a preeminent brand of lock-in and lowered horizons. It innovates for Sony, not for you. That’s a doomed brand agenda.

The “transformed” Sony will be called Samsung

The way it looks now, the “transformed” Sony will be called Samsung. When you’re intent on capturing customers instead of creating them, you’re opening doors for your rivals.

What should companies do with brands that still retain valuable equity, but no longer generate expected sales? A growing market for brand builders is to develop strategic revival programs for such brands. A case in point is Booz & Company, which has announced a new service to help companies regain “new life for tired brands.” It’s “a rigorous, data-driven approach to brands” that helps companies decide whether to retire a dormant brand, or try to revive it.

(I have to admit that I did a double-take at the phrase, “tired brands.” It echoes the famous “tired blood” campaigns for Geritol®, the iconic tonic of old folks. Geritol® is now kind of a dormant brand itself, but it did have its frisky moments 50 years ago.)

It’s not the brands that are tired

Of course, it’s not the brands that are tired. It’s customers who are tired. They are tired of mediocre, do-nothing brands. That’s why they ignore them. The real brand challenge is to provide new life for tired customers.

A balance of analytics and emotion

In reviving a “dormant brand” one must balance analytics (on the marketing side) with the emotional and qualitative elements on the brand/customer side—as the Booz approach recognizes. To revive a brand means to revive a customer, and that calls for a fresh look at where customers want to go, and how the company can take them there. A piecemeal “brand refresh” does little. The goal is a strategic revival with new pathways where the brand can create and grow customers. Or better yet, change the brand game.

Choosing the right brand model

In any brand renewal effort, it’s also important to select the right brand model. An inappropriate model may fail to recognize (or capture) potential brand opportunities. For example, a traditionalist (i.e., old-fashioned) approach might position the brand as a stylized sales stimulant. That’s a messaging model typically geared to produce conventional media campaigns for a passive “audience” of customers—who may soon tire of it. A more productive model would be to make the brand a customer enabler, powered by interactive and collaborative brand programs that engage customers in new dimensions.

The brand as a tool to revive customers

If you think of the brand as a tool to revive customers, and to help them get where they’re headed, you may find that customers themselves become proactive players in the revival effort—a very good sign indeed.

Photo: wallyg — Flickr

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

Opening the brand to new opportunities

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

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

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

The old way: differentiate the brand from rivals

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

Conventional assumptions that can limit the brand

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

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

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

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

Company potential X customer potential

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

Creating a new and improved customer

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

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

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There’s a sober brand lesson behind the recent announcement that The Sharper Image has filed for bankruptcy protection. If your brand has no idea of the customer that it needs to create, every new product you introduce can actually undermine your brand, leaving you vulnerable to death by a thousand brand cuts, all of them self-inflicted.

Brand cuts—and why they sting

The act of creating customers builds a strong customer context for the brand. Without this context, new products can appear as random events, cluttering the brand and masking brand value. Each new (random) product cuts into the brand, unintentionally to be sure, but a cut nonetheless. Instead of deepening customer relationships, the new products create more distance between a company and its customers. In time, the brand is shredded from within. Customers lose interest, wondering why the company lost interest in them.

No coherent brand strategy

The Sharper Image is an example of what happens to a company without a coherent brand strategy. “Coherent” in this sense means that the brand has to include the customer. And more to the point, the brand must have a definite customer in mind that it desires to create, a proactive customer type that will drive the business forward and add value back to the brand.

A seller’s brand

Unfortunately, The Sharper Image brand never really included its customers. As a brand, it was all about The Sharper Image. It was a prototypical seller’s brand, rich in merchandising and marketing, but one that could never conceive of its customers as anything other than passive “targets.” It never managed to create a customer context and a customer culture, two critical elements that fall into place during the customer creation process.

A brand of novelty, not innovation

Although The Sharper Image liked to posture itself as a brand of innovation, it was really a brand of novelty. It was a novelty store featuring electronic and digital gadgets. It promised and delivered novelty, although in later years, with items such as Trump Steaks, the novelty itself seemed rather forced.

Compared to Abercrombie & Fitch

It’s productive to compare The Sharper Image brand with that of Abercrombie & Fitch. The Abercrombie & Fitch brand knows how to create a customer. For many customers, the brand is liberating; it enables breakout behaviors. The brand points customers in a certain direction. It opens doors they could not open by themselves.

What new customer freedoms does The Sharper Image brand enable? What doors does it open? In what key direction does it point its customers? What new holistic truths does it reveal, or evoke? How does it promise to change it’s customers? These are key questions the brand never answered, or didn’t answer well.

The health angle bottomed out

For a while, The Sharper Image appeared as a brand of healthy living thanks to its many air purifier products featuring ionization technologies. But the company’s health claims for these products were debunked by Consumer Reports, and later became the subject of a major class-action lawsuit, which the company lost settled. It never seemed to recover after these blows.

The dangers of excluding customers from the brand

Some might consider The Sharper Image as simply a “1980’s company” that had outlived its usefulness, ultimately done in by real innovations on computers, the Internet, cell phones, instant messaging, etc. No doubt there’s some truth to that. Yet, had the company actively created its customers during its heyday, it would have had some valuable help in its time of need—and perhaps even before then. By excluding customers from its brand, it ultimately excluded them from its future.

Photo: Henthorn — Flickr

Boeing is offering airlines new brand touchpoints in its advanced Boeing 787 Dreamliner passenger planes—in the form of new seating layouts. For a “premium economy class” on the airplane Boeing has designed a new three–two–three arrangement (see above) intended to be “more efficient at making people more comfortable.” Boeing also offers a more traditional two–four–two configuration.

Space to relax: a critical brand touchpoint

Customer research by Boeing led to the new three–two–three layout. Says Boeing:

In economy, if you get an empty seat next to you, it feels like you’ve won the lottery. With a triple, for every empty seat two passengers benefit, whereas with doubles and quads it only makes one passenger more comfortable.

So far, reaction from airlines has been “mixed.”

Flightglobal has the story, and more details.

Brand dividends from subtle changes

Airlines that are brands of flying comfort and convenience may find that these simple geometry changes can pay significant brand dividends. The subtle differences between them might transform a brand experience from a cramped ordeal to a restful flight.

I always wonder how many innovations from Boeing and other aircraft makers never make it into the cabins of passenger planes, since it’s the airlines who make the final call. More than a few, I’d guess.

Illustration: Boeing, via Flightglobal

In its usual level-headed style The Economist analyzes the basic issues involved in managing risk and brand reputation, especially for global corporations. They address the subject as part of a special report on Corporate Social Responsibility (CSR).

This special report will look in detail at how companies are implementing CSR. It will conclude that, done badly, it is often just a figleaf and can be positively harmful. Done well, though, it is not some separate activity that companies do on the side, a corner of corporate life reserved for virtue: it is just good business.

Three layers of CSR

The Economist identifies three layers of CSR as it’s currently practiced in large corporations:

1. Philanthropy — beginning with “checks for charities”
2. Risk management — to ensure that screwups (or disasters) don’t occur
3. Strategic opportunities — to use CSR for competitive advantage

Where do brands come in? In level three, of course. Brands and CSR are a perfect strategic fit.

Beyond an antiquated notion of brands

I totally agree with the Economist’s integrated approach to CSR, where it shrugs off superficial feelgood communications and focuses on CSR operations embedded in the business. However, The Economist seems to have an antiquated notion of brands, as if we’re still living in the 1950’s, when brands were static “assets” to be kept polished and squeaky clean lest any “bad press” diminish their value. This defensive and reactive concept of brands prevents the special report from addressing proactive brand strategies that may dramatically raise the bar for both social responsibility and profits.

Brands and social responsibility

“Brands and social responsibility” is an important subject that deserves its own in-depth report. CSR requires new attention to the supply chain, and to the brand chain. It also requires new brand models, and new brand approaches. That’s more than I can manage in this post, so I’ll end with some general comments.

1. A brand is company potential X customer potential. When brands are understood in this context, the arena of “social responsibility” becomes a strategic brand opportunity, rather than a nagging and/or awkward problem.
2. Brands managed as “assets” are dead ends. The purpose of brands is to create customers. This is in itself a socially responsible act.
3. When brands are reduced to perceptions (”how the company is perceived”) they become little more than PR exercises, with a dash of design. This completely ignores a brand’s game-changing potential to create customer value.
4. The brand mission is to grow the customers that will grow the business. In general, the more socially responsible the brand, the more opportunities it creates for customer growth.
5. A brand platform is a social platform. The more socially responsible the brand, the more power it can generate through (and from) its customers.
6. “Asset brands” sit on the shelf, or hide in the vault. They’re eventually bypassed by proactive, socially responsible brands that can run (and grow) with customers.
7. The best way to be “socially responsible” is to embrace those strategies that advance customers, rather than merely aim to empty their wallets.
8. In general, a brand cannot do any more for its customers than it does for its employees. Social responsibility begins at home.
9. Brands stripped of social responsibility are low-performing brands. At the very least, they will be leaving money on the table.
10. The best way for a brand to manage its reputation is to lead customers to higher levels of value. Brands that don’t lead get stuck in the muck.

Photo: Jamison — Flickr

The short answer to this question is yes—absolutely. In our information age, a company’s brand acts as a vault of security for customer privacy. It’s a first line of customer trust. Strong brands protect customer privacy. Weak brands leak. Or worse, they’re information sieves, and can’t be trusted.

Protecting privacy builds customer trust

Yes, customer privacy is a brand issue, and a critical one. Simply stated, safeguarding customer privacy is a key part of a company’s strategy for building brand trust in the digital era. Customer privacy and brand trust are deeply intertwined. As products, brand programs and customers increasingly interconnect, interact and share information, customer privacy issues will increasingly determine which brands emerge with customers on their side.

Protecting privacy confers strategic advantage

The digital age has raised the bar on brands, and protecting customer privacy is becoming a new form of brand value, with strategic implications. Brand platforms can gain strategic advantage as they become strong privacy platforms. This is especially true as brands grow through customer initiative and innovation. Brands that actively team with customers on a platform of trust can develop more traction than brands that treat customers as a demographic resource to attract advertisers.

Facebook’s privacy faceplant

To witness how important privacy has become to the world of brands, we need look no further than Facebook’s recent faceplant over its widely criticized Beacon advertising program. Facebook’s experience illustrates how poorly conceived and/or poorly implemented privacy policies can threaten to undermine a brand.

The Beacon program tracks what Facebook users do on partner websites and sends that data back to Facebook. There, it is combined with user data (anonymously) and made available to advertisers for better ad targeting. It is also passed along to one’s Facebook friends as shared data, letting them know what you’ve been doing on those other sites.

Privacy issues raise questions about the brand

Facebook pitched Beacon to users as an easy way to share activities and information with friends. But as users realized that their private purchases and activities at other sites could now be revealed on Facebook, and also fed to advertisers, resistance set in. Was Facebook a brand of user enablement and expression, or a brand of information harvesting? And whose side was Facebook on? It wasn’t entirely clear how much control users had over their own data. And to make matters worse, opting out of the Beacon process was not easy.

Facebook clarifies its brand intent—to a point

After several weeks of mounting criticism (see here, here and here) Facebook’s CEO issued a public apology, and began steps to make Beacon elective for Facebook users through a more direct opt in process. This was a major step in clarifying what the Facebook brand stands for, although some critics argue that Facebook still needs to do more.

Ed Felten has a balanced overview of Facebook’s privacy issues and implementation, from which he derives operational lessons for all companies. To Ed’s list, we might add the following brand considerations:

To “monetize” customers is to erode the brand

A major brand challenge facing Facebook and similar social sites is how to balance their revenue needs with their strategies for social growth. Such sites are under pressure from investors to build profitable revenue streams, typically through advertising. The sites feel compelled to capture as much user information as possible, in order to make themselves attractive vehicles for highly targeted ads. But if the sites “monetize” their users by exploiting them as information resources, they risk driving their brands in a commodity direction—because they’re essentially treating their users as (information) commodities.

A social site that “monetizes” its customers often does so at the expense of the brand. To monetize means to make money the first principle of customer relations, whereas for brands the first principle is customer growth. (Brand-wise, monetizing is the opposite of value creation and innovation.)

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