One must contemplate the distinction between branding and rebranding. Rebranding is often miscast as an exercise in repairing one’s reputation. Some rebranding efforts focus on mitigating a negative image (such as Philip Morris’s name change to Altria or AIG’s move of their advisory business to Sagepoint). Yet rebranding may also represent subtle changes in positioning, or the recasting of visual identify, such as Starbucks recent move to a more contemporary look.

If you’re thinking about rebranding your company, bear in the mind the following considerations:

Seek out simplification-Today’s rebranding efforts are often a function of providing clarity to the marketplace and removing brand confusion. Citi’s recent rebranding removed a single word (if the word bank is in your name, it may not be a bad idea to remove it). Our cluttered market values simplicity.

Leverage Social Media from the ground up- Within our firm, we recently rebuilt our website, refreshed our brand, and printed new business cards (including a QR code). All of our marketing includes embedded social media components, with the intent of driving traffic to our website where prospects can experience various multimedia tools that are featured online.

Use emotional triggers-Google famous Parisian Love ad (when an American finds love in Paris) is a classic example of using emotional messaging to capture the imagination of your audience. All marketing should utilize emotional triggers.

Enter new markets- Pabst Blue Ribbon, perceived as an also-ran in the U.S. rebranded in China as an ultra-premium American lager (PBR) and is selling for upwards of $44 a bottle (the Chinese may not have everything figured out).

Reshape perceptions about quality-Rebranding should not appear cosmetic or contrived. Harley Davidson’s slide in perceived quality in the 80’s was magnified by stiff competition from Japanese competitors.  The company’s drastic repositioning included a return to its core products and the formation of the Harley Owners Group (HOG’s),  which reestablished Harley a bad boy brand.

Identify unmet needs- Your offer may need to change as the utility of your product or the benefits that differentiate it may shift over time.  Marketers will often use a tag line when they wish to preserve their brand equity, and point out new features or benefits.

Use professionals- Rebranding can back fire when companies draw attention to their marketing.  Many smaller companies try to utilize self service template web sites and similar home grown tools that come off as……home grown. Marketing requires constant investment. Hire people who can assist you with both messaging and technology.

Understand the hard and soft costs- Change can be expensive, given the need to reprint, re-sign, change email addresses, etc. Consider all your hard and soft costs (including management team band) with as you refresh your brand.

Organizations often under appreciate the importance of branding. In this world of hyper-competition, the way you communicate the nuances of your brand are more important than ever.

One of the bi-products of our caffeine crazed, media blitzed economy is that we have virtually no attention span. It is as if we have a collective form of ADD. Over time, customers get bored with their vendors, alliance partners and trade associations. Client relationships have a natural tail.

The ability to continuously delight customers is a skill mastered by few. Clients need some type of stimuli that reinforces the value we provide them and it needs to come in different forms at different times. Variety is not just the spice of life; it is the remedy for overcoming the dreaded- inevitable customer fatigue.

Entertainers understand the element of surprise all too well. We all have a lot to learn from that ingenious management mind; Jerry Garcia. In the 60’s, the Grateful Dead had a Board of Directors and a call center. Whenever “the Dead” where touring, “Deadheads” who had gladly forked over their phone numbers would receive outreach about upcoming performances. The Deadheads would do something extraordinary; they would follow the band from city to city. As every show was an ad lib (jam), no two were alike, and no one knew what the Dead were going to play. Most businesses would kill to have the raving fans of the Dead.

The problem of customer fatigue is exacerbated by the fact that challengers are incented to barrage prospects with new offers and discounts in a way that an incumbent is not. In relative terms, the incumbent can easily become complacent and offer clients much of the same. As the old adage goes, “if it isn’t broke…”.

I heard of a guy who gave a business review presentation to a client on an iPad. At the end of the presentation, he said to his client “thank you so much for your business” and handed him the iPad. Giving such generous gifts may not be as accepted as it once was, but imagine the shock value of the meeting. It is one the client will never forget! We need to find ways to maintain our clients’ attention span.

Customer fatigue only magnifies themes we have often shared in this space. The number one rule of customer relationship management is to take better care of the customers you already have than new ones you might attract. Offering our best discounts to new customers flies in the face of this principle. Organizations often position their best people as hunters, and then delegate customer service to others (who may not be empowered to make customer retention decisions). An organization can easily lose sight of its most precious possession, its most profitable customers.

Customers should be treated differently based on their lifetime value, and perhaps even receive different benefits based on their tenure.  One of my clients recently calculated their average client retention cycle (and at what time they lose the average client) and is now taking steps to change their approach over the span of the customer relationship.

Find a way to shake things up and keep customers coming back for more.

Businesses often fall in the trap of thinking that because their customers are happy, that they will remain in the fold.  Global competition has brought about switching options that did not exist before the world was flattened like a pancake. Businesses who serve other businesses (B2B) must go deeper than the occasional sales call, Christmas gift and customer satisfaction survey; they must find ways to box customers in.

I often travel on behalf of clients, who arrange rooms at the Marriot, Hyatt and upscale locations such as the Four Seasons and Ritz Carlton. If any of these chains solicited my feedback, I would give them high marks; I am satisfied. Yet given a choice, I will go out of my way to book a Hilton. As experts at J.D. Power and elsewhere have pontificated, there is a chasm between satisfaction and loyalty.

I find it fascinating that the term Customer Relationship Management (CRM) has become synonymous with overpriced and monotonous software.  The CRM revolution offered the promise of analytics that promoted tracking the most profitable customers as calculated by their lifetime value. The premise of CRM is to treat valued customers differently than less profitable ones. Somewhere along the way, many organizations lost sight of the point.

While frequent flyer programs and the like are popular, few realize the promise of customer loyalty. In the case of Hilton I receive free breakfast, cocktails, bottled water, Internet and frequent upgrades. Hilton truly treats me like a VIP, and they have boxed me in at a very low incremental cost.

So how can a B2B enterprise apply such thinking to deepen their customer relationships? There are certainly ways to provide special benefits to your best customers. The definition of best should not be limited to the customers that buy the most. It could mean who pays on time, participates in key programs, attends vendor events, etc. Special rebates can be paid to customers who demonstrate their loyalty and are easy to do business with.

There are also other intangible benefits such as direct customer service lines and faster cycle times that can be extended to those who meet certain thresholds. Companies that utilize distributors should evaluate, score and incent those that represent their product best, and meet specific performance criteria.

Your best customers are worthy of this investment, as they are the ones that are most apt to look beyond price when making decisions about their vendors. Treat your best customers like VIP’s.

The concept of a business cycle is something of a misnomer, as every company operates with an economic cycle, monetary cycle, industry cycle and company life cycle. The trajectory of these cycles, as well external forces and factors combine to provide a unique set of characteristics for every industry at any given time.

The maturity of an industry shapes its acceptance of innovation[i]:

Phase 1 Innovation- occurs when a new entrant exploits a white space.  When Under Armor burst on the scene it focused on a niche market; undergarments for football players. The brand was rugged and authentic.  As Under Armor gained distribution and awareness, it spread to new segments including baseball, tennis and golf and gained distribution in national chains such as Dick’s Sporting Goods.  The incumbent (Nike) ignored Under Armor deeming the niche as too small and the entrant as a non-threat.  Big mistake.

Phase 1 innovation is high risk, high profit

Phase 2 Innovation- occurs when a market is maturing but not saturated, and an incumbent or entrant provides new features or benefits that improve utility.  Frozen yogurt has been popular for a decade, especially in warmer climates such as California where healthier lifestyles are emphasized.

It was not until roughly 2010 that the market moved towards self-serve yogurt shops (fro-yo as the industry is called). Entrants such as Menchies provided a disruption in the form of a better delivery system (consumption is higher, and labor is lower).  The product offering itself hardly changed at all.

Phase 2 innovation tends to be moderate risk, moderate profit

Phase 3 Innovation- occurs when an industry is approaching saturation. Generally, a well funded competitor will invest heavily in supporting the status quo, making subtle changes in terms of efficiencies and distribution. At this stage, the product is commoditized and prices erode sharply.

When McDonalds began offering its McCafe coffee line in an effort to combat Starbucks, it did not offer new varieties of coffees or espresso. McDonalds leveraged its massive scale and distribution to undercut prices.  In this case, sameness plays to their strategic advantage. McDonalds lacked motivation to offer a “leap of innovation” in terms of new products.

Phase 3 Innovation is lower risk and lower profit

As an industry matures, the motivation of its participants varies based on their ambition for growth, profit or strategic position.  Time your innovations wisely.

[i] Adapted from Seeing What’s Next by Christensen, Anthony and Roth Harvard Business School Press 2004

Being Opportunistic in a Volatile World

Last week my post drew considerable attention, perhaps because of its shock value at a time when the news was truly shocking. While the tsunami was a natural disaster, the response on the part of the Tokyo Electric Company was a human calamity. Lack of preparation will invariably lead to unintended consequences, if you are managing a nuclear power plant or any other business.

The reverse is also true. The entrepreneur capable of understanding seemingly unrelated external forces, and weaving them into a thoughtful strategy, will clearly realize strategic advantage. How might the strategist consider social, technological, economic, ecological and political factors to gain insight on how to take advantage of ever changing market conditions?

Scenario planning is a methodology whereby the entrepreneur considers converging factors that (in combination) creates a tipping point. Consider some of the following predictions, based on facts already in evidence today.

In the next decade, we are likely to see:

Predicative Modeling-Cloud computing enables the migration and cross-referencing of large institutional databases.  For example, actuaries, using sophisticated algorithms are able to model ailments based on lifestyle choices monitored in real time. They are able to calculate your risk of a heart attack based on which smoothie you tend to order at Jamba Juice, your frequency of exercise, prescriptions you use, etc. Offered as a benefit of a health care plan, the member is offered incentives to opt-in and receive preferential rates. Such tools slow down rampant health care inflation.

A Cashless Society-The majority of transactions amongst big banks are managed by exchanges where no money actually changes hands. Coins of small denomination are nearing extinction. Today, you can download an iPhone app that serves as a debit card, and can be swiped within Starbucks locations.  For most transactions, cash is already irrelevant.

Smart Infrastructure- Automobiles come preinstalled with all of the features of an iPad (the 2011 Hyundai Equus will come with one) and all the benefits of the internet. Smart grids control the flow of traffic, directing drivers to particular lanes at a given speed to optimize drive time and reduce accidents. Traffic signals are regulated based on traffic volume. Sensors predict bridge and rail failures.

Of course, rapid change will occur in every industry, and the strategist must weigh various opportunities based on an organization’s ability to take advantage of them. As a general rule, organizations should seek to achieve scale and reach within its core (at least 30% market share) before expanding into new endeavors. As Jim Collins points out in his sequel to Good to Great (How the Mighty Fall), many companies fail because of an “Undisciplined Pursuit of More”.  In their zeal for diversification they often leap too far from their core competency.

Each opportunity must be assessed within the context of the organization’s resources, bandwidth, and human capital.  For every opportunity there is a cost, and an opportunity cost. To pursue any new opportunity an organization must leverage resources which dilutes focus on the core business.  Choose your opportunities carefully.

One of the bi-products of our caffeine crazed, media blitzed economy is that we have virtually no attention span. It is as if we have a collective form of ADD.

Over time, customers get bored with their vendors, alliance partners and trade associations. Client relationships have a natural tail.

The ability to continuously delight customers is a skill mastered by few. Clients need some type of stimuli that reinforces the value we provide them and it needs to come in different forms at different times. Variety is not just the spice of life; it is the remedy to overcoming the dreaded inevitable customer fatigue.

The problem is exacerbated by the fact that challengers are incented to barrage prospects with new offers and discounts. In relative terms, the incumbent can easily become complacent and offer clients much of the same. As the old adage goes, “if it isn’t broke…”.

Customer fatigue only magnifies themes we have often shared in this space. The number one rule of customer relationship management is to take better care of the customers you already have than new ones you might attract. Offering special discounts to new customers flies in the face of this principle.  Organizations often position their best people as hunters, and lowly customer service agents as the face of the company with current clients. An organization can easily lose sight of its most precious possession, its most profitable customers.

Vendors should track the average length of their relationships and take actions to prolong them. The element of surprise is understood by entertainers and magicians. Similar tactics can be applied from our business gifts, customer reviews, plant tours and the like. Customers should be treated differently based on their lifetime value, and perhaps even receive different benefits based on their tenure. Find a way to shake things up and keep customers coming back for more.

At the current rate of job growth, it would take 20 years to return to the level of employment before the downturn[i].  Over 2% of Americans have been out of work for a year or more, and with the gradual elimination of their unemployment benefits, their future looks bleak. It is believed that another 10% of the U.S. workforce is “underemployed”, surviving on part time work, and under the table side jobs. Unlike past recessions, it is not only the factory workers and retail employees who have been cut back, vast numbers of white collar (skilled) people, find themselves seemingly unvalued. What a tragedy.

Things are not much easier for the fully employed. They have been bludgeoned over the last two years, as their salaries, overtime, and pensions have been cut. A recent study revealed that amongst employers, “work life balance” slid from 4^th to 16^th in a ranking of employer workforce priorities. Measuring workforce performance rose from 9^th to 4^th (don’t ask me how it was ever 9^th) reflected the move to more bottom line business results. American employers have a bit of a hangover, as 28% predict further salary reductions and 52% expect lower retirement plan contributions to continue. [ii]

As the promise of lower costs is now flowing through to the bottom line, many business owners are returning to prosperity.  We all need to be mindful of the sacrifices made by our employees. Lost in the health care debate is the fact that health care inflation is rising twice as fast as wages. It has been a two year grind, and people who have not taken vacations and are fighting pay check to pay check are becoming physically and emotionally exhausted.

At the very least, employers should consider reinstating lost benefits and being more proactive in completing performance reviews and the like. Just because business is sluggish is not a good reason to stop giving feedback and honoring the work of people who have given themselves to their employers.

In fact, if your business has only posted modest results, the very best thing you can do is to communicate with employees. They know business is bad, and their fear is often worse than the reality.  Exuding confidence is extremely important, and asking for employees to participate in the success of a company creates unity and teamwork. As business improves, sharing the fruits of your labor with the people who got you there is just good business.

[ii] New Priorities for Employers-Bloomberg Business week September 13^th, 2010

Double and triple bottom line companies were all the rage a few years ago. As quickly as they peaked our interest and fed our social sensibilities, they faded into the depths of the great recession.

Many have long assumed that to serve the public good yields some type of opportunity cost. That is to seek any other outcome besides profit robs an organization’s ability to deliver the highest return on investment. Yet some of the world’s hardest charging enterprises such as GE and WalMart consistently lead global movement towards sustainability and similar pursuits. They do so not only because of the obvious public relations benefits but because they view such initiatives as driving some form of competitive advantage.

Thus there is a movement underfoot to understand how our businesses make our communities better, and how our communities (including government) can support economic development. One lesson of our economic malaise is that cities and small towns are drowning as a result of failed businesses; a reflection of an environment in which business and government can be in conflict with one another.

We have a number of clients such as People’s Care, Lincoln Training Centers and the L.A. Fireman’s Relief Association that blur the line between profit and non-profits. These are financially responsible organizations that also provide shared value; i.e. they contribute social benefit to our communities.

I once completed a project for Rio Tinto, one of the world’s largest mining concerns. They were extremely committed to reducing their consumption of water in North America, and invested heavily in seeking out solutions that reduced their impact on the environment, while reducing their cost and risk. My point is that these goals do not have to be in conflict, and can actually be synergistic.

Brands such as Starbucks combine their economic and social interests in a way that enhance their brand and positioning, and promote higher perceived value. Our penchant for spending $3 on a latte instead of a $1 coffee at McDonalds or Dunkin Donuts is due in part to our interest in being part of a social contract (precipitated by Starbucks).

Give some thought to how your enterprise can augment its thirst for profit with the ability to deliver shared value.

Inspired by “Creating Shared Value” by Michael Porter and Mark Kramer HBR January 2011

Amongst my favorite Seinfeld episodes was that of “The Soup Nazi”.  As you may remember the story line, The Soup Nazi banished Elaine from his soup kitchen with his announcement “No Soup for You!” While the Seinfeld clan’s attraction to the Soup Nazi may have been soup of extraordinary flavor, the episode offers marketers a more compelling recipe.

In her brilliant book “Different”, Youngme Moon points out that in a mature market, added features that are not highly relevant to the customer offer little incremental value.  She offers the concept of differentiating strategies through “reverse and hostile brands.”

While the Soup Nazi’s fare was surprising good, the service was shockingly bad. I am not suggesting that our clients start insulting customers anytime soon, but there is lesson to be learned from the Soup Nazi.  Disrupters understand the need to find separation, even if it means not offering services and benefits offered by the competition. Southwest Air offers no amenities, but does offer free baggage.  Where United and Delta says yes, Southwest says no and vice versa.

Menchies and similar self serve yogurt shops have exploded on the scene.  Eat all the yogurt you want and we are not going to serve you.  By the way, you are going to spend about a third more than you would otherwise. The model is distressing to our waist line but stimulating to our business sensibilities.  Tart yogurt flavors are particularly hot as they offer the opposite of what we have been conditioned to expect; as sweet is ying, tart is yang.

For a good laugh with clients, I have occasionally handed out calendars from despair.com.  A spoof of the overused motivational posters, they have similar imagery that says things like “Consulting: Why find a solution when you can prolong the problem?” The calendars are popular because they are funny, but also because they are a shock to our senses.  When ordering such a calendar you get an email to the effect of don’t bother calling us. 

To be different may require the marketer to be entirely counter to the marketplace.  The iPad is revolutionary but lacks USB ports and other goodies.  Apple is unapologetic, as consumers intuitively understand the tradeoff.

We are drawn to things we can’t have, and thus one potential strategy in value creation is “the take away”.  To suggest that your product or service is only available to a select group of customers increases its value. When clients ask us to do Executive Coaching we say no (it is not in our core competency) which makes our Strategic Planning services worth more.  Customers know that to get something really good, they may have to give up something in return.

While I am not encouraging anyone reading this to go negative, I am suggesting we need to think more provocatively about creating products and brands that are not only innovative and different but counter to our thinking.  That may include cutting out benefits that we naturally assume are necessary, but may just be redundant. I wonder if George would go for the vanilla tart or caramel latte?