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Brand transformation: Don’t focus on the change, focus on the difference

By Mark Di Somma

Brand transformation - Difference made is more important than distance covered

I regularly refer to adrenalin as the chemical of change. To me, transformation must be radical and scary, because it pretty much requires the same levels of energy and momentum to get to a ‘dangerous’ place as it does to shift to somewhere a lot more comfortable. The only difference may be the time it may take for people internally to get comfortable again.

That’s particularly true if you’re a brand that has fallen behind – where the shift required to even stay alive can feel huge. And yet for all the effort, the concern, the misgivings, where your brand lands can in reality be right in the middle of the pack – meaning that sooner rather than later, the company will need to repeat the same process in order to avoid being lost.

So often, it seems, those undertaking brand change misjudge impact. People assess what has happened from the point of view of how far they have shifted rather than looking at the two things that really matter: the active difference it has made for consumers; and where the brand now lies in relative competitiveness and interest to those in the market today and those on the verge of entering.

It’s not just brands that need to catch up that face this dilemma. Even brands that lead their fields and are widely perceived as shapeshifters can agonise over decisions that, to consumers, are perfectly sensible once they do appear. I remember having this discussion one day in an airport with the Creative Director of a global clothing brand I know well. Pointing to the new imagery on the posters in the display window, I commented that I liked the way they had extended the brand a little.

He looked puzzled. “A little?” he asked. Yes, I said. I thought the new imagery was whimsical and interesting but nevertheless strongly connected (in a good way) to the brand they had always been. “We agonised over that internally for months,” he told me. “I took a lot of flak for putting the brand in so much danger.”

“I’m glad you persisted,” I replied, “for the brand’s sake.”

It’s an encounter that comes with a message for every decision maker – aim for further than you feel comfortable with. Drive to the point of pain. Because, in the vast majority of cases, providing you stay true to the spirit of the brand, the change you feel in doing so will be significantly higher than the difference anyone else, including your buyers, actually notices.

What can feel like giddy revolution to the people who are so close to it will often be greeted by customers as a welcome refreshment.

Acknowledgements
Photo of “Distance” taken by Zdenko Zivkovic, sourced from Flickr

9 ways to stage a brand resurgence

By Mark Di Somma

9 ways to stage a brand resurgence

Commoditisation is a fact of market. I always remember that great observation by VJ Govindarajan that “Strategy starts dying the moment it is created”. It dies because its (potential) effectiveness dies and with that, its relative value.

That idea, transposed to brand is, in reality, what commoditisation is: the (slow) death of relevant value. However, there are strategies you can put in place to reverse the speed and/or pace of that commoditising effect. Here are nine ways I outlined to a leadership forum in Malaysia recently to decommoditise your offering and reassert its branded value.

In the presentation itself, I focused on actual commodities, but the principles are in fact applicable to any brand/product that doesn’t command the value that it needs to, or once did:

1. Think of the product in new ways – when you redefine what something is or could be, you reframe its context and it’s much easier to redefine what it can be used for. When you stop thinking of milk as a drink, for example, and start thinking of it as a food, as Fonterra did, you change the scope of the product you’re working with in so many ways.

2. Redefine who you want to be a brand to – if the current audience places a declining level of value on it, think about who might be able to use it in ways that enable you to regain value. Starbucks redefined the value of coffee globally by making coffee hip, urbane and tailored to individual taste. Now they’re looking to do the same thing with tea. In a world that really does believe it’s seen or searched it all, discovery is a powerful consumer motive.

3. Change what it looks like – sometimes changing the value of a commodity can be as simple as changing how it appears to others. Think about the difference in pricing and perception between bottled beer and beer on tap. However, new packaging alone won’t make up for a product that doesn’t add value. What it can do is signal the unrealised value that you want consumers to take up on.

4. Formulate your offer in different ways – the water industry changed how we think of water by adding vitamins and/or carbon dioxide and then segmenting those offers to specific audiences. Today, the world spends more than $100 billion a year on bottled water. What could you do to what you have to make it more than it is right now?

5. Name it in different ways – the deer industry in New Zealand renamed its venison offering “cervena” to differentiate it from deer meat sourced from elsewhere and to make a strong country-of-origin play. If you’re selling copper and everyone else is selling copper, what can you call your copper to distinguish it from what people can source anywhere. Again – renaming alone won’t be enough. In the case of cervena, the change in name spoke to an idea that consumers were interested in, and eliminated the concern, amongst American consumers, that they were eating Bambi.

6. Package it in different ways – the red meat industry is now starting to segment its offer and to assign different perceptions of value to cuts and breeds that not too long ago would all have just been beef. Angus is a classic example. Others are packaging along ethical lines to put daylight between themselves and others and to appeal to consumers who are prepared to pay more for feelgood foods. Cage-free and free-range eggs are part of this trend. (What’s interesting for those interested in moral labelling, however, is how those terms and others can be defined in some jurisdictions. It doesn’t necessarily mean what it appears to mean.)

7. Distribute it in different ways – changing the distribution channel can be a highly effective way to transform your white label product into something valued by a more specific audience. iTunes rebuilt the value of music by reinventing the concept of the single into a single digital track and allowing people to buy the music they wanted in a new way, at a new price. Tablets are having the same effect on books and magazines – redefining how consumers access content and buy it. It’s a very different value equation than it used to be – but at least it’s a value equation.

8. Price point it in different ways – This is a particularly effective approach when combined with segmentation. Go after various parts of the market with products that demonstrate various levels of value add and are price pointed accordingly – e.g. a bulk product at a bulk price, a high end or specialised product priced at a top-end price, and a consumer focused product that may even operate at flexible price points. Forced into what was close to a death-spiral for many, the airline industry repriced to find new ways of achieving yield. First, they cemented the front-end profit by giving business and first class passengers more space and more comfort to protect margins. Then they debundled their economy offering, adding new categories like Premium Economy, cramming in more seats in cattle class and instigating fees for service that have kept the asking price low whilst charging at every point for things that were once considered included. This evolution hasn’t exactly been a success from the travellers’ point of view, but it has certainly forced a rethink on what is paid for, and how.

9. Wrap a different story around it – New storylines can change how people perceive a product. Water, beer and wine have all used stories to engage consumers and to deliver a new sense of worth. Increasingly, there are opportunities to link undifferentiated products to differentiating stories around environment, supply chain, conduct, purpose and cause. Psychologist Dr Norman Holland, in an interview with Stephen Denny, explains why: “When we adopt a brand for our own use, we integrate it into the stories of our daily lives.” Once integrated of course, that storied brand has new value for buyers because now it’s personal.

A note of caution. While, as outlined above, there are a number of ways to stave off deterioration and even to restore value to goods whose value has decayed, there is also no denying that the product or brand you make has a best-before date in terms of margin. Unless you assume commoditisation, and continually look for ways to slow its advance or reverse its influence, it will get your brand in the end.

Now for the secret sauce. The key to successfully staging a resurgence in the value of your brand is to think of each of the nine tactics outlined above as a multiplier. To an extent, the more multipliers you can employ simultaneously, the greater the chances that you can relift your brand. Focus them specifically on the key needs and unmet desires of your (new) target market. So, for example:

In a market, where your brand has been painted into a corner – I might look to use these three approaches:

Think of the product in new ways x Change what it looks like x Distribute it in different ways

Or if the market you’ve traditionally targeted is treating your brand like a commodity and threatening to start a price war, I might combine these four:

Redefine who you want to be a brand to x Package it in different ways x Price point it in different ways x Wrap a different story around it

When you change how a product is viewed and accessed, you open the door to changing how it can be marketed.

Acknowledgements
Photo of “Athletes parade Celebration” taken by Berit Watkin, sourced from Flickr

What comes after “No”?

By Mark Di Somma

What comes after No

As Seth Godin pointed out recently, “no” actually means all sorts of things. The flipside of a marketplace where branding encourages people to buy for emotive reasons is that brands also need to counter consumers’ rational and irrational reasons not to buy. Or listen. Or act. Or stop acting.

Some reasons are based on legacy. Some are convenient. Others stem from ignorance, bias, self-interest, loyalty, limitation, pride or tradition. Some are supported by fact. Many aren’t.

The problem for the person or brand making the offer is that none of that matters. The problem that matters is not your opinion of why your buyer won’t buy – it’s the fact that they have this opinion for whatever reason, and they have every reason to keep thinking it until shifted otherwise.

As Bruce Turkel pointed out in a telling post this week – “No” is also how some people have to get to “Yes”. And most people want to get there. He makes some great observations:

“Because of its incomparable ability to establish terms and boundaries, “no” might very well be the most powerful word in the English language. Thanks to the naked simplicity of just two letters —‘n’ and ‘o’ — the word “no” has a raw power that can’t be enhanced with more letters or syllables … Most of us want to be positive, helpful, agreeable, and we want to be liked … But unless we’re willing to draw our line in the sand and say “no,” then we can’t really achieve the outcome we want.”

And that’s the crux isn’t it – the outcome people want. If you’re a brand and you have people saying “no” to you, you have two options it seems to me. You can say “no” back – and move on … Or you can ask what they’re really saying “no” to, and seek to shift them closer to you by shifting them or shifting yourselves. Notice I said shifted, not convinced. Sometimes, the most effective way to deal with an irrational objection is to counter with a rivetting motive to reconsider, or to use their “no” to reconsider your own position. The onus is on you as a brand to find reasons and ways for the people you want as customers to be saying “Yes”.

Acknowledgements
Photo of “Beyond the wall”, taken by Giuseppe Bognanni, sourced from Flickr

How do people want to spend time with brands (and what are brands doing about it)?

By Mark Di Somma

brands that people want to spend time with

We’ve just had Guy Fawkes here in New Zealand. In Wellington, there was a big fireworks display in the harbour as there is every year. It got me thinking about what brands consumers go crackers over, why and is that changing?

Recently, the research firm APCO Insight released its list of the top 100 most loved companies. Their study measured consumer attachment to brands based on eight emotions: understanding, approachability, relevance, admiration, curiosity, identification, empowerment and pride. There are some interesting results. Yahoo beat Google. Disney beat everyone (OK, maybe that’s not so much of a surprise) and Apple came in at ninth (which certainly would surprise many).

Most loved brands - top 25

According to the study:

  • The tech sector outperforms across all emotions, and rates especially well on relevance, meaning people see these brands as fitting with them and playing a meaningful role in their lives. But they could inspire more curiosity.
  • Retail brands are seen as highly approachable but people are less enthusiastic about wanting to be associated with them.
  • Restaurants are also approachable for the most part, but they don’t appear to help consumers feel as confident or self-assured as they could.

So what does this tell us about how we react to brands? Why is one brand more loved than another and are the criteria for loving a brand changing? (We could debate the use of the word “love” – a concern that Hilton raised with me last week. But, for the sake of keeping with the spirit of the research, let’s assume it means the brands that people feel intensely loyal to.)

My thoughts:

  • We favour the brands that help us love ourselves: the brands that we feel “get” us, welcome us and empower us. The rise of tech in APCO Insight’s research shows just how much devices have mainstreamed their way into our psyche. Machines telegraph our own currency (and therefore relevance) to others in addition to being relevant to us. More broadly, brands help us resolve things – personally and for those around us. There’s a lovely thought that explains this in this article by Joan Khoury – a good brand, she says, “is an exterior way out of an interior crisis”;
  • We look for brands that show leadership: the brands that we admire, that we identify with and that we are proud to call our own. So there is both a sense for consumers of wanting to be in control of the brands they buy but also wanting to be part of a wider community. Step inside an Apple store and there is both the celebration of the individual and a palpable sense of community;
  • We differentiate between brands that we feel welcomed by and brands that we welcome being associated with. My reading of this research finding is that we like how a great shopping experience feels but we don’t necessarily want to broadcast who and where we go. That suggests retail brands still have work to do to lift their desirability as brands as distinct from merchants;
  • We want to be guided at some level, but in ways that lift our confidence rather than telling us directly what to do. Compelling brands navigate rather than direct. They light a path and invite … and increasingly they need to do that over a multi-channelled, multi-stage buying pattern that David Armano has christened the “purchase spiral” using, I surmise, a combination of in-store, content, reviews, word of mouth recommendations and paid marketing. There’s a great article on this here. That further suggests that conversion cycles are increasingly individualised and therefore that calls to action that help consumers get to a point of comfort at each point of their personal conversion cycle, especially for considered purchases, are critical. Brands need to pay a lot of attention to who stays in and who opts out, where, when and why right along that buying process if they are to make sense of what works and what doesn’t. Each experience in that elongated pattern has a pass/fail. Each “converts” in the sense of impelling consumers forward, or it doesn’t.

That, in turn, would suggest:

  • Experience design is critical, content is now part of experience, and responsibility for experiences is becoming shared. The brands that consumers love keep giving them more and stimulating them to want more. Sounds obvious. But it reinforces the point that experiences are not isolated, that there is no one big-bang experience and that content alone doesn’t make you loveable – the full (wider) experience needs to aim to evoke the eight emotions that APCO Insight refer to: understanding; approachability; relevance; admiration; curiosity; identification; empowerment; and pride.
  • To make that happen, the experiences that brands provide to customers will need to be sourced from across the business, not just created and championed by the marketing department. This excellent PSFK article on Designing Customer Experiences clearly articulates the evolution ahead: “The new customer experience is actually a journey and it’s driven by the shared experiences of other consumers. It’s perpetual. It’s emotional. With big data, social media listening, research, customer information is more than readily available. More importantly, experiences and the emotions that people feel and share must be met with more than a listening or research team. This understanding and awareness requires a handheld escort throughout all avenues of the organization that in some way, shape or form contributes to the customer experience.”

Acknowledgements
Photo of “Fireworks” taken by Julie Stiles, sourced from Flickr
Chart of Top 25 Most Loved Brands, sourced from APCO Insight

The brand dilemma: recognition vs excitement

By Mark Di Somma

recognition and yet excitement

One of the intriguing aspects of understanding brands is that one must be prepared not just to balance but to actively address the contradictions that humans happily live with. Blogger Daniel Walsch sums up those inconsistencies beautifully: “We want to be alone. We want to be part of groups. We are benevolent. We are selfish. We want to be independent. We want guidelines. We are self serving. We are generous. We stick to the truth. We shade the truth. We have violent tendencies. We desire peace. And on and on it goes.”

Brands mirror that humanity in the pace at which they are increasingly asked to compete. And that pace is simultaneously handbrake and accelerator.

Handbrake – in that customers want consistency. They want brands they can recognise, that they feel they know, that make sense to them, that they can depend on. They want brands that they can just reach for, without giving them a second thought. They want brands that feel like part of their normal, ordinary lives. Customers look to recognition and reputation as guidelines for brand preference. They form their longest-lasting impressions from those elements, which as we all know, take years to build. These static elements underpin the very structure and nature of the brand itself: identity and story. That’s why Coke is Coke and Chanel is Chanel. We know them. They are deeply and intrinsically familiar to us as trustmarks.

But, at the same time, and in virtually the same breath, customers also want foot-to-the-floor excitement. They want brands to stimulate them, to give them new things to think about, to upgrade and improve what they get for their money. They want their brands to solve problems for them, give them things to talk about, to be interesting. This sense of excitement is part of what entices people to buy. New products and regular updates are how a brand gets noticed in a world thirsty for the new and the shiny. Which is why the world goes crazy when its favourite brands release new versions or do things they’ve never done before – like have a man front for an iconic perfume. Because, in today’s “upgrade culture”, patience is a diminishing virtue. Increasingly, as I have pointed out before, all brands, not just clothing and lifestyle brands, are adopting the speed and dynamics of fashion.

How can these contradictions work together? With the help of my good friend and creative colleague Di Fuller, I’ve sought to capture this brand dilemma in a simple but telling way.

Brand dynamicsThe ironies don’t end there it seems to me. The more often a brand iterates, the more important it is that it stays true to, and connected with, its roots. That requires amazing discipline, because the temptation is for the brand to spin off into new areas that bear little resemblance to the brand’s core business in ever more frantic searches to remain relevant and interesting. Identity, story and purpose keep a brand grounded, at the same time as offerings, news and social media ensure it remains always on consumers’ minds.

The consequences of failing to resolve permanence and centrifugal motion are harsh. Brian Solis quotes Edward Lauder in saying that 40% of the Fortune 500 companies in 2000 were no longer there in 2010, and 70% of Fortune 1000 companies will be replaced in the next few years.

GFC not withstanding, there’s a clear take-out and challenge for brand owners here. Celebrate the recognition/excitement dichotomy rather than trying to tame it. Stay wedded to a single long idea, but tease out every nuance in constant re-interpretation.

Acknowledgements
Photo of “Chanel 5”, taken by César, sourced from Flickr
Brand Dynamics diagram, from my keynote presentation “I forgot you and I can’t remember why”, designed by Di Fuller, 2Di4Design

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5 reasons why cultures don’t change willingly

By Mark Di Somma

5 reasons why cultures don't change willingly

Here’s some great insights for anyone involved in making change programmes or new ideas work. The key to successfully transforming organisations doesn’t lie in explaining what’s required. It actually lies in better understanding what people feel threatened by.

In this article in Reuters from some time back, David Rock takes the view that “People are not rational, they are social”. According to him, what we’re told is not the fundamental driver for acceptance. The key issue is that we are intuitively programmed to respond positively to social rewards, and are instinctually committed to minimising social threats.

Perceived threats to our senses of status, certainty, autonomy, relatedness, and fairness (a model Rock refers to as SCARF) will cause us to act defensively towards an event or an idea. Such threats cause people to close off the energy being passed through the prefrontal cortex, the home of conscious thinking in the bank. Change might make sense. It may even be responsible. But when information about change is conveyed to us in this manner, people react emotionally, productivity falls, and so does job satisfaction.

Which is pretty radical when you think about it, because so many change programmes actively lift collective awareness of all five threats almost without thinking. The roadshow rolls through. The CEO delivers the vision. And after it’s all over, and the management team have left the building, the talk and the spreadsheets, the explanations and fighting chat have, in real terms, achieved nothing. People are left concerned about where change will leave them; they are left feeling uncertain about what is going on, or why; they feel that matters taking place are beyond their control or influence; they often don’t relate to the reasons given for change; and they’re far from convinced most of the time that any of what’s proposed, especially if it involves job cuts or relocations, is fair.

Part of the reason is that the perceived threats are not addressed directly. Instead, those on the receiving end of change often find themselves combing through the handouts looking for the implications and speculating how what’s been announced may affect them.

That raises an important opportunity for those driving through the change. What could you be doing to make sure that the messages you’re circulating address those five key areas of threat proactively? How can you remove the doubt in order to raise receptivity?

That’s not a reason to spin yarns. They won’t help at all. But it puts the onus on those socialising the change programmes to reframe the arguments: to talk to the threats to others that change will bring before they talk to the reasons for change that they have arrived at themselves.

Start with the consequences for others – and work back to the ideas and the reasons that interest you.

Acknowledgements
Photo of “No” taken by sboneham, sourced from Flickr

The brands that dare: gamechangers

By Mark Di Somma

brands that dare

Some brands seem to rule the world. They’re big, powerful, profitable and widely adored. They talk and the world listens. They are the game-makers. They made the game and they continue to run it. Their playbook seems to pretty much decide the rules for most. But not everyone aspires to that level of success and not every market leader is at the apex of a totally satisfied segment. Which is why some brands opt for a different agenda. The gamechangers’ intentions are, quite literally, to change the world, or at least to shake the tree of the mighty incumbents.

How do you do that without getting crushed or ignored? It depends. Did your brand start out as a challenger, or did challenging the status quo become your purpose as a brand? Because the starting point drives very different strategies and storylines.

If your brand was a challenger from the start, one of the most powerful assets you have, providing it’s true of course, is a dirt-poor story. The brands that start from nothing and with nothing have been shown time and time again in market research to be the ones that consumers root for. It’s an eternal idea because it makes for such a compelling storyline: the brand that rises from nowhere, defies the threats and the odds, sets the record straight, battles its way to the front confronting injustice and barriers strewn across its path and somehow makes it to prominence whilst managing to keep its integrity, its faith and its modesty. It is, in direct allusion to Malcolm Gladwell, the classic David and Goliath story.

As David Aaker observes in a recent article, “The giant firm is really good at their business model; they are financially successful and make incremental improvements each year, which apparently make them even more formidable.” In the parlance of dance band LMFAO, [they] “work out”.

The giants’ size and their strength makes it almost impossible to take them on toe-to-toe. Playing them at their game and by their rules plays right into their hands. But that doesn’t make them invulnerable. They are still susceptible to a brand capable of bewildering the game they know so well. An outlier, to borrow again from Gladwell, can at the very least give them a good run for their money.

And if your brand becomes the voice of protest against the giants of the establishment, if it does indeed become ‘David’ in the minds of consumers, then you can turn every advocate of what you stand for into a stone-thrower, every purchase into a vote for change, every act of defiance into one that buyers support. As Nigel Hollis pointed out in this recent post, gamechangers actively look for the assumptions that govern the current brand structure and seek ways to undermine it. They attack the prevailing attitudes and price structures of industry giants. They go after what irritates customers the most. Underdog brands successfully highlight incumbent actions as unjust because, as N. Taylor Thompson has observed, “most people will punish unfairness, given the chance”.

Both Hilton Barbour and Sandra Pickering make some excellent points in the comments to Nigel’s piece. As Sandra points out, in markets with these characteristics, ways of working quickly become the de facto “market rules”. By linking their challenger brand to the resentment at what is happening, underdog brands rewrite those rules into what Sandra refers to as the “customer rules” and then provide opportunities for customers to ‘protest’ the present and endorse the rule change by switching allegiance. (Hilton has also compiled this amazing A – Z of challenger brands.)

But what if you’re on the other side of the change coin? What if you’re an incumbent now and a challenger mentality is something that comes to your brand later in life, how do you explain that change of mind to consumers in a way that makes it feel convincing not just convenient? How do you make your decision to change look deliberate, necessary, customer-motivated and prudent? How do you show that you are not just reacting wildly to falling sales because the other large players have got the better of you? Staying with the Bible theme, the most powerful way to position a volte-face is to prove to customers that you have indeed had a “road to Damascus” moment. For those of you less familiar with this event, it’s a moment described in the New Testament in which Paul the Apostle comes to see, literally, the error of his ways and begins a new life.

A brand that has had an epiphany and pursues a new, less mainstream course with renewed vigour, explaining its actions and its reasons for dramatic change, can quickly win [back] converts. This too is a powerful storyline. The inside story. The whistleblower. The pillar of the establishment that turns its back on the very actions that made it famous. We used to do this … one day we realised that it was wrong … we changed what we wanted because we recognised that wasn’t what our customers wanted … so we changed our approach … we have pursued a very different course ever since … it’s working better but there’s a long way to go. This is a very different route than the one taken by challenger brands but the admission needs to come from the top. It needs to be authentic. And it needs to point to a failure that customers readily recognise. Done properly, it is powerfully redemptive.

This approach varies markedly from the just-add-innovation manner of other incumbents because it is a story of revelation and revolution from inside the corridors of the market-makers. It restores purpose and credibility to a brand that was fading. It reignites the mandate and the energy to do the ‘unthinkable’. Marissa Mayer’s made it her mission to make such changes at Yahoo! And she’s drawn the requisite praise and ire for doing so. Howard Schultz’s resurgence of Starbucks began with his very public admission that the company had lost its love of coffee and needed to rethink its strategy. But, as Hilton Barber remarked just recently, this is not a strategy that a brand can just turn on and off at whim. A brand that decides to challenge must commit to do so – and it must stay that course or risk looking disingenuous.

Brands that seek to fundamentally change the game, no matter at what point in their history they start that, are active not reactive participants. They perceive that, if they are young, they have nothing to lose by behaving this way or, if they are well established, they have everything to lose by behaving the ways in which they have. Both will face significant barriers along the way – and all should in my view pursue their daring approach with nine questions in mind:

1. What will customers love about what we’re doing/seeking to do?
2. How do we know that?
3. What is success for us?
4. What do we believe [now] that we didn’t and that others don’t?
5. Why do we believe that [now]?
6. What has to change in order for us to triumph?
7. What are we going to do to instigate and quicken that change?
8. Why will people want to believe us?
9. What do our customers stand to gain?

Acknowledgements
Photo of “David and Goliath” taken by Scott Feldstein, sourced from Flickr

Brand messages vs branded information

By Mark Di Somma

Branded messages vs branded information

It’s easy to fall in love with your product, to believe that the thing you’ve worked on so hard for so long is the best thing going. From there, it’s a very small step to believing that everyone must know what you’re doing and, in this age of increasing content marketing, that everything you’re doing is worth talking about. And from there, it’s a very small step again to believing that everyone will admire your brand for every action it takes.

However, recent research by McKinsey reveals there is a marked divergence between the information that companies judge as important and the messages that business customers value most, and also between the intensity with which brands talk about those subjects and how much customers perceive those talking points as contributing to the brand’s overall strength.

So while global B2B brands want to talk most about:
• How they role-model corporate social responsibility in their work
• How they promote and practice sustainability
• Their global reach
• How they are shaping the direction of the market
• How they are drivers of innovation

What customers most want to hear about is:
• How much the brand cares about honest, open dialogue
• How responsibly it acts across its supply chain
• Whether it has a high level of specialist expertise
• Whether there is good fit in terms of values and beliefs
• Whether and how the brand is a leader in its field

The findings confirm something I’ve thought for some time: that B2B brands feel an obligation to disclose the good they are doing in the world and the differences they are making, whereas customers, B2B customers anyway, are much more concerned with how the actions companies take positively affect them and align with their own belief systems.

Other interesting findings from the McKinsey study:

Personal interactions with sales reps remain the most influential factor for customers. According to McKinsey, “Leading companies make extensive use of frontline interaction and market research to stay in tune with customer needs and perceptions.” In this digital age, we still prioritise human-to-human interactions;

Brand consistency and persistence are crucial as market channels continue to fragment. The wider the communications net is cast, the more consistent the messages need to be; and

Messages should continue to reflect changes in the market environment and evolving customer needs. So while the brands should remain constant, the messages need to keep pace with rapidly evolving situations and requirements.

Here’s where I get to with this. Information per se is a false god. Inclination, at least as it relates to B2B relationships, is not decided by how much you say or even how well you say it. It’s not about whose doing the most of something, where the brand can be found, or the commitment to technical advancement. Ultimately compatibility and perceived brand strength are decided by three things that are much more basic: what you talk about; who you say it to; and how closely it aligns with what people are really interested in hearing.

Acknowledgements
Photo of “Message in a bottle” taken by Sergio Aguirre, sourced from Flickr

Brands Beyond Functionality: 7 great lessons

By Mark Di Somma

Great lessons from Swiss Army Knives

Everyone talks about the need for brands to keep up with consumer demand, yet, curiously, some brands have lived on beyond their purely functional need, largely because they carry with them associations in the form of eternal ideas that continue to burn strong.

Watches – for example. Who needs a Rolex today to tell the time (did they ever?) and yet the marque is unchallenged because prestige is an idea that never goes out of style. Zippo is another brand that has outlasted the heyday of cigarettes. As this article in Ad Week explains, “Harnessing its long-standing popularity with men and its indelible associations with fire, Zippo now sells an Outdoor Line that includes everything from emergency fire starters to hand warmers.” True diversification.

In a world where so many brands lose relevance and fall by the wayside, what lessons should we take from iconic brands that have successfully passed their necessity date and continue to prosper? The issues faced by Victorinox seem to me to symbolise the dilemmas and the opportunities. Their Swiss Army knives not only remain a cultural byword for versatility, but the brand itself has continued to successfully extend its franchise and its story. There are lessons to be learnt from this by all brands.

As the current CEO, Carl Elsener explains on the brand’s website, the story of Victorinox begins in 1884 when his great-grandfather Karl Elsener made a knife for the Swiss army that offered many functions combined in a single tool. But that, he says, is not what turned the Original Swiss Army Knife into a legend. “It’s about the stories our customers experienced in which our products played a vital role: stories about memorable moments of adventure and expeditions on earth, in the sky, and in space. Dramatic stories in which our products contributed to solutions and saved lives.” Like other ‘outdoor’ brands, Victorinox has successfully relayed the stories of its customers and parlayed them into legend. Those stories, and the circumstances that surround them, have kept the brand alive in the minds of people across the world. Today, owning a Victorinox is as much about the love of what it could do, and has done, as opposed to direct requirement. First lesson: it’s not about how relevant you are to the consumer, it’s about relevant you feel for them.

Through the years, the Swiss Army knife has been threatened by forces that even the most lateral analyst could easily have missed: the rivalry for pocket space from other devices; and the security issues that followed on from the September 11 attacks. In fact, I read somewhere that sales fell dramatically after airlines banned knives onboard planes. If that’s true, it just goes to prove that in the knife business, just like in every business, sometimes situations you could never have known about or foreseen can turn into your greatest market threat. Yet Victorinox came back. Second lesson: Threats really can come from the strangest places, and survival is not always about having a plan – because you can’t have a plan for everything. Sometimes, it’s about having or finding a response. Could you deal with an out-of-the-blue event?

Third lesson: country of origin can be a powerful product advantage if it is compatible with your values and the way that people perceive you. In this case, Swiss quality and perfectionism not only fits the image of the brand, it’s also helped shield it against cheaper knives and poor imitators. That’s an important point in a world where everyone is sorely tempted to outsource to save money and where products synonymous with one country are no longer made there at all. In an article celebrating his love affair with the Swiss Army Knife, Jonathan Glancey writes, “it is still made at Ibach in Switzerland; it would surely lose much of its mystique if it were made anywhere else.” What heritage can your brand call on? What does your brand’s country of origin represent that you can capitalise on?

Fourth lesson: When the visual association with your brand is as strong as the bond that people have with Victorinox, you can diversify successfully. Victorinox now sells luggage, kitchen knives, clothing, watches and even perfume. They’ve also upgraded their knife range to include gadgets for a full range of interests and vocations. How far would your identity travel beyond your current sector – and still be recognisably yours? Why? What’s your eternal idea?

Fifth lesson: your most powerful association may not be the most important part of your business. For example, Victorinox is synonymous with the Swiss Army Knife, but actually military sales make up only a tiny percentage of annual sales. There’s an insightful article by Angela Ahrendts about how important it is to centre a diversifying brand around a singular idea. “It’s not unusual for a luxury company to be born from a single product and then diversify,” she observes. “Louis Vuitton began with luggage, and Gucci with leather goods. But even as they diversified, each continued to earn the majority of its revenue from its original core products. Surveying the industry, we realized that Burberry was the only iconic luxury company that wasn’t capitalizing on its historical core. We weren’t proud of it. We weren’t innovating around it.” That realisation would put the trench-coat at the front and centre of the revival of Burberry. How does what you are known for align with how much you actually sell?

A labour-intensive production process can be a competitive advantage. It adds to the sense of quality and it actively discourages outsourcing, thus protecting the brand’s charm and integrity. Sixth lesson: In a world where everything is mass produced, something hand-made in Switzerland is a real treasure. What gives your products value? Are the processes that you use to make them smart or convenient?

Final lesson: one of the great rewards of a great combination of legacy and idiosyncrasy is that one day another generation could discover your brand and be just as intrigued as their forebears. Who will discover you next, and why? The attraction of that thought should be tempered perhaps by this finding by McKinsey: there is no real proof that age makes a company any more profitable. In fact, their study found that of the 74 or so companies that have been in the S&P 500 for more than 40 years, only a dozen or so have managed to beat average stock market performance. Perhaps, as I have suggested elsewhere, every brand, even those that have defied the odds so far, must come to an end at some point. Have you planned for that?

Acknowledgements
Photo of “Swiss Army” taken by Jim Pennucci, sourced from Flickr

Outperforming as a brand: making the right investment in disruption

By Mark Di Somma

Changing places as a brand

Everybody professes an interest in growing. Everyone wants to outperform the market. Yet the challenges to do so are for the most part under-estimated and the appetite required to resource adequately in order to decisively disrupt is generally lacking.

An interview with Stephen Hall and Conor Kehoe, two McKinsey directors, on why companies are reluctant to aggressively reallocate resources reveals that strategic inertia springs from two sources. According to Kehoe, there is unwillingness internally to move people and/or capital to unproven initiatives. And there is resistance from investors who, even though they like the long term results, are hesitant to accept short term downturns.

The business case for redistributing strategic energy though is clear. In this study, the firm compared those who reallocate resources at a high level with those that were much more reluctant to do so. The difference was a 3.9% difference in annual incremental returns to shareholders. Over 20 years, that amounts to a doubling in total returns to shareholders (assuming all dividends are reinvested).

Companies that actively reallocated resources continued to perform better through the economic downturn, in fact enjoyed higher returns during tough times, and experienced more consistent returns over the long term. McKinsey’s conclusion: “it is more incumbent than ever on companies to make difficult trade-offs between the funding of promising growth opportunities (which require nurturing with more capital) and of mature or underperforming ones (which may need pruning). We found that high reallocators … tended to reallocate existing and new resources equally; low reallocators, by contrast, had a much harder time taking resources away from existing lines of business and tended predominantly to reallocate new resources.”

The dilemma parallels that facing brand owners. To what extent should they make the most of today and how much should they be shuffling the cards and resourcing for disruption in order to gain longer term advantage?

Perhaps the answers for where to focus resources and when can be found in another recent piece of McKinsey research. It concludes that the chances of outperforming the market vary markedly depending on where you sit in that market.

Across an economy, companies in the top 20% of sectors create almost 70 times more economic profit than the 60% of companies in the middle quintiles.

Perhaps not surprisingly, market volatility is also variable.

In terms of upward movement, nearly 80% of those companies that start in the middle quintiles will still be there ten years later. Only 11% will move into the top quintile. Meanwhile, almost half of those in the top league will drop out over that 10 year period and one in eight will fall all the way to the lowest quintile. Where companies do move up, the vast majority will do so on the back of improved economic profit-taking for their industry. On average, industry effects account for 40% of performance, while the remaining 60% can be attributed to company decisions.

My conclusions:

Everyone needs to be resourcing for change – however the approach they take will depend on where they are in the market at any given point:

Disrupt with speed. Top performing brands in top performing companies need to be the most attentive to retaining share and the most willing to shift resources in order to continue leading the market. They must drive the conversation in terms of market direction and react swiftly and decisively to changes in the market if they are to remain at the top of their game. Succeeding at this level is about being a first mover and a thought leader, restless, ambitious and iterative. The challenge for many is retaining the capital required to keep evolving whilst rewarding shareholders at levels investors feel are befitting of a market leader.

Disrupt through demand. Brands in the broad middle need to actively search for market elevators, shifting their strategic and operational resources on cue to make the most of identified opportunities and riding the uplift into the premier league. Given the resources available to these brands, these are big calls. They require courageous leaders and rigorous strategy and often a great deal of determination to combat reluctance internally. The brands that make the move north from here are often early adopters with a challenger attitude and a well geared balance sheet.

Disrupt with service. Lowest quintile brands probably need to focus the hardest on running their brands efficiently and improving their attractiveness as investments in order to gain the resources needed to move upwards. The temptation here is to run down the brand – but all that does is push the offering into the commodity category. Shifting public perceptions of a low-end brand requires patience, real skill and a turnaround mentality. My experience of working with these brands is that transformation is incremental, often operationally driven, and, because so much resource is tied up in low turn assets, returns can often pivot on developing a strong service-focused culture to attract and retain customers.

Acknowledgements
Photo of “The Elevator” taken by krnlpanik, sourced from Flickr