Brands Create Customers

Mobile devices will have a huge impact on brands in the coming decades. They will change the way brands engage the customer. Not only will these new brand engagements be more personal and more portable, they can also be more creative, offering many more levels of brand imagination. None of this will be in the form of intrusive ads, or ham-handed “branded” placements.

Perspectives in mobile context

Two recent posts shed some early light on these new directions in mobile brands. They’re not about brands per se, but they present some perspectives on “mobile context” that will get brand builders thinking. The first has a handy chart just begging to be deconstructed and repurposed.

LINKS:

1. Read/Write Web
2. Raghavendra Prasad

Device: Nokia 770

See brand run. No pun intended, seriously, but Apple and Nike are pushing the brand envelope. They are jointly extending their customers into new domains of performance where competitors will have a hard time chasing following.

From the announcement on the Apple site:

Thanks to a unique partnership between NIKE and Apple, your iPod nano becomes your coach. Your personal trainer. Your favorite workout companion. Introducing Nike+iPod.

It’s this strategic brand vision that separates the iPod from the ranks of competing mp3 players. Apple is now building out an iPod platform that will escalate customers from the mire of low-imagination products. Their relentless whole-customer innovation may cause others (Sony, Creative) to cede lucrative segments, because with Apple defining the race, second place is as good as last.

And yes, Nike-created workout mixes will soon be available on iTunes.

We’ve written about brand pacing before.

(Personally, I’m not surprised by the Nike/iPod alliance. I’ve always felt there was a hidden Nike swoosh in the treble clef.)

Update: minor edit.

Apple Insider quotes a Piper Jaffray report on reasons for the continued success of Apple retail stores. It’s a testament to how the Apple brand platform creates and grows customers using the Apple retail space.

From the report:

Why Are The Apple Retail Stores So Unique?
The difference between Apple retail stores and other stores is that Apple is hoping the real relationship with the customer starts when the customer is buying the product and is at check-out, while with other retail stores, the relationship with the customer ends at check-out. The goal of the Apple retail store is to move customers from making a one time purchase into becoming ongoing participants in the store. Apple wants people to keep revisiting Apple’s offerings. Pro Care is an example of this: at $99 a year Pro Care is essentially a membership to the Apple store and all the resources that are available at the store. While the company does not disclose attach rates, we estimate about 25% of people who buy a Mac in an Apple retail store will buy Pro Care. If you assume that Apple will sell 200,000 Macs in its retail stores in CY07, that is 50,000 members at $99 a year, or $4.9m in income from store memberships. We believe the retail strategy gives customers the ability to go deep (Genius Bar and Studio) and, ultimately, buy more Apple products. It is the strong Apple service element that is really driving more revenue per customer.

At the retail brand level, there is much more going on than alluded to in the Piper Jaffray analysis. To grasp the importance of what Apple is doing, we have to examine Apple’s brand platform, and how it functions within the confines of the Apple store itself.

Leveraging the brand platform
What we see at Apple retail is tightly focused execution in leveraging the brand platform. As we define it, a brand platform is “a structure of integrated brand components architected to create focused customer growth.” Apple’s brand platform drives the Apple retail experience. The Apple store is designed (physically, emotionally, functionally) to create Apple customers and to grow them into more proficient users of digital technology. This goal separates the Apple store from computer stores which aim no further than the sales transaction. Such stores usually treat their customers as commodities: “purely to be sold to.” They invest in the sale, not in the customer—and it shows.

Apple identity and values anchor the platform
Apple doesn’t try to “differentiate” itself in the retail sphere, as if “differentiation” were a separate marketing exercise. Apple just works to infuse its identity and values throughout the store space. Apple retail raises customer experience to a higher level because it embodies the same values that drive Apple design and innovation. Apple challenges itself to produce digital technologies that increase the scope and depth of personal interaction, and individual expression. In Apple’s view, digital technologies should make one more empowered and more proactive, not more dependent and marginalized.

Product displays are invitations, not “inventory”
When you enter an Apple store, the electric vibrancy of Apple’s mission—and their serene confidence in pursuing it—are immediately apparent. Apple’s retail brand platform is centered on you, the customer. The store is a hands-on heaven. Apple products wait for your touch, turned on, ripe with full sets of applications and Web access. In their elegant, minimalist displays Apple products are not “inventory.” They are invitations. The retail environment “opens up” to you, ready to unlock that buried you in you.

Brand platform elements
We can list some of the key brand platform elements in the Apple store. Each one, in its own way, helps create or grow a customer.

1. Hands-on, interactive product displays. Everything is at your fingertips: hardware, software and accessories. You, the customer, are in control. Apple facilitates you.
2. Web access, so you can test performance and look and feel of Web-based apps. The store connects you to the online world, where you’ll be spending most of your time anyway.
3. “Solution zones” where products are grouped by customer interests/function/activity, i.e., music, digital photos and movies. These let you go deeper into workflows that span multiple products.
4. A “Genius Bar” where staff experts diagnose problems and help customers resolve hardware, software, maintenance and repair issues. This is a featured area of the layout, not hidden away in some back room. (At a PC-only store, this would presumably be called the “Idiots and Dummies Bar.”)
5. A “Creative Bar” or Studio Bar where staff experts help customers use Apple’s various creative apps. In some stores these areas also host tutorials. If you’re having problems timing the jump cuts in your son’s’s birthday video to Ride of the Valkyrie, this is where you go.
6. Apple ProCare, an in-store service which provides personalized assistance for system setup, operations and maintenance, and expedited repairs.
7. Well-trained staff assistants. In my experience, they are several cuts above what you find in other computer stores.

Beyond “brand experience”
The goal of the Apple brand platform in the retail store is to deliver much more than a “unique brand experience.” The platform is designed to create and grow customers. The reason behind this purpose-driven platform is simple: Apple lives and dies by its innovation, both functional and aesthetic. By creating customers (instead of merely creating sales) the Apple brand platform forges deeper and more lasting connections with users. By growing customers, Apple ensures that its customers will be ready for the next round of innovations that Apple is planning for them. They can align their customer roadmap with their product roadmap.

(For history and details on the Apple store, see this account in the invaluable ifoAppleStore.)

Wal-Mart has taken the first steps to enter the banking business. Banks, rightfully, are concerned.

Wal-Mart has the potential to disenfranchise conventional bank brands. It can employ a radically different brand model, one that established bank brands are ill-prepared to counter. Brand-wise, most banks still operate like the old-fashioned store: you walk up to the counter and ask; the store tells you what’s on their little shelf, and the price. Period. Brand value has been mostly relegated to non–performing ambience.

Does that sound like the Wal-Mart approach?

Robert Reich lays out the issues:

Wal-Mart wants to start a bank. Well, not exactly a bank. Wal-Mart says all it wants to do is provide customers with its own credit-card service on Wal-Mart sales, so it can trim costs on the millions of payments it processes each year. Wal-Mart has been telling bank regulators it has no intention of expanding into other banking services.

Most Wal-Mart watchers (including the entire U.S. financial industry) don’t believe Wal-Mart. They see this move as the Wal-Mart camel’s nose under the tent of commercial banking. First come credit-card services on Wal-Mart sales, then discounted credit-card services on other sales, then commercial deposits and loans. Presto. Before you know it, Wal-Mart is a full-service commercial bank.

I say, let Wal-Mart under the tent. Commercial banking is now one of the stodgiest and least-competitive parts of the American economy. Fees and prices are way too high. Service is lousy. The industry needs a shakeup. Have you ever had a bank give itself an interest-free “float” on your money while you waited two weeks for a check to clear? Have you ever filled out twenty-five forms to get a simple bank loan? Have you ever collected anything close to fair interest on money you keep in your checking account?

I guarantee you Wal-Mart’s low-price business model will force complacent bankers to do better.

Building the customer platform
Credit and related banking services can be an invaluable customer platform. Wal-Mart understands this. They can see a wide open field to grow their brand platform into an effective customer platform.
As we noted before, “The brand platform is a structure of integrated brand components architected to create focused customer growth.”

As for the customer platform:

The customer platform is the structure of resources, tools and capabilities that the customer relies on to succeed. A properly constructed brand platform can step in and support critical aspects of the customer platform, often in a 1:1 fit, freeing the customer to pursue additional objectives. In this process, the customer “adopts” the brand platform and can add value to it through customer initiative and innovation, ultimately feeding this value back to the brand.

How banks fare against the Wal-Mart initiative will depend in large part on how they deliver additional brand value to customers. The old brand verities won’t be much help.

Yahoo now enables video mashups with a spiffy prototype online remix tool. If this becomes fully baked, video mashups will be emailed back and forth, networked, and mashed anew, creating a neverending stream of chain letters as endless, iterative flicks. Yahoo Research was the developer.

Little tools like these are the happy feet of larger platforms.

When you dramatically reduce a barrier to entry into a compelling activity, and free people to grow new capabilities, you can dramatically increase the customer value of your brand.

Ed Byrne has put forth some interesting ideas on “how to de-commoditize your product.” This is something that everyone in brands has to deal with, one way or another. The commodity question always keeps coming up, and will keep coming up for the foreseeable future. It’s a major challenge for companies. And it presents a major opportunity for brands.

In a comment to Ed’s post I said:

I think what you mean is that a company’s brand must deliver value to the customer, above and beyond the product proper. As such, “building a brand” becomes a value creating process. The long term goal, at least as I see it, is to transform your brand platform into a customer platform. Once that happens, a lot of commodity worries fade away.

So, my quick answer to the commodity challenge: think platforms, not products.

For the record, here is how I currently define “brand platform” and “customer platform.” These are working definitions; I’m always interested in comments and ideas on how to make them more meaningful.

Brand Platform
The brand platform is a structure of integrated brand components architected to create focused customer growth. As a platform, it: 1) serves as a common foundation for brand program applications; 2) allows for greater efficiency in brand program development via shared elements; 3) leverages context and content across the brand; and 4) enables customers to extend the brand through bottom-up brand innovation avenues.

Customer Platform
The customer platform is the structure of resources, tools and capabilities that the customer relies on to succeed. A properly constructed brand platform can step in and support critical aspects of the customer platform, often in a 1:1 fit, freeing the customer to pursue additional objectives. In this process, the customer “adopts” the brand platform and can add value to it through customer initiative and innovation, ultimately feeding this value back to the brand.

Brand platforms and customer platforms are thus key elements in creating customers. The stronger your platforms for customer creation, the less you have to worry about commodity incursion.

If you work in brands, you have to be excited about the brand potential of widgets and gadgets. These are the live, highly visual icons that reside on your desktop and do important things for you. They are quick to access, and persistent. They are little friends, always there when you need them.

Widgets and gadgets are icon-like, mini-applications designed to provide information, lookup, and functionality via a quick glance or click on your computer screen. They can be designed to receive live data from the Web, increasing their power. Current examples deliver basic information, such as weather, time, news headlines, RSS feeds, computer system performance, and specialized information such as local team schedules. Using their rich visual interface, they also provide a slew of functions: calculator, radio station tuners, live charts, news readers, etc.

By design, widgets and gadgets are fairly easy to develop. Examples can be found here, here, and here.

Widgets and gadgets are brand interfaces.
Widgets and gadgets are new. Currently, they give only a faint hint of their potential power as brand interfaces. Most are geeky and one dimensional. Given a decent shot of brand imagination, however, they can open up a multitude of new connections, many of which can extend far beyond the product. The context of widgets and gadgets is a wide open field. On a basic level, they are interfaces to the brand. On a deeper level, they are interfaces through the brand. It’s at this deeper level that widgets and gadgets can build real brand connections.

Widgets and gadgets are tools for brand innovation.
Think of them as mini-platforms, bundles of relevance that can advance your customers through your brand. In a year or two, I’d fully expect that all new cars will come with a package of widgets. Download them to get basics such as service information and reminders, owner’s information, driving tips, mileage calculators, etc. Beyond that, it’s left to the brand to initiate any type of relevant, persistent connection that the customer can use. The widget is a portal of relevance with a customer power far greater than its diminutive size.

Brand platforms are the stuff of life, and lessons in brand platforms come from all aspects of human endeavor. Here is one I found in an unusual place: the sports pages of the San Francisco Chronicle.

Scene and situation: McClymonds high school sits in one of the poorest, drug-plagued areas of Oakland, California, but still manages to graduate football players who are academically eligible for Division I universities. Coach Alonzo Carter focuses his players on academic achievement, as well as athletics. This year eight of his players signed letters of intent to Division I football programs.

The brand platform connection: This Coach Carter is creating customers as he interacts with his players. He’s delivering a vision of success, one in which the product platform (football) rises to the level of a customer platform (personal responsibility to succeed). Coach Carter frames the players in their next level, as opposed to the current one, sweeping aside the traps on the streets outside.

From Scott Ostler’s report:

“There’s not a sob story you can give me where I’m gonna give you an out,” said Carter, who grew up in West Oakland, went to McClymonds, fathered a child at 17.

“Their worst story isn’t half of what I went through.”

One player pleaded with Carter to lighten up.

“You act like we’re in college, coach.”

Carter shot back, “You go to McClymonds University.”

Precisely! That’s the platform moment. To advance your customers, raise them to the next platform now, and work with them to make it real. Lock your competitors in the past.

Of course, if you don’t have that platform, you’re setting the stage for a lot of dropouts.