May. 25 Why Creativity is Not Enough
Posted by Mark Morris in Brand Wisdom

Combining Process, Creativity, and Customer Input for Innovation That Delivers

“Innovation is the central issue in economic prosperity,” says Michael Porter of Harvard Business School. Many companies use an innovation process that relies on ideation and brainstorming to generate creative, high-level concepts that are tested through market research. But even the most creative new products and services may be unsuccessful if the company uses an approach that lacks rigor of process, customer perspective, and scientific experimentation.

Too, creative brainstorming doesn’t work as well for smaller changes that can help companies serve their customers better in an incremental way.

Even though innovation is critical for gaining competitive advantage in a highly global marketplace, an unstructured innovation process is not guaranteed to result in long-term value. A structured innovation process helps companies take innovation from the boardroom to the trenches.

RDE: Let the Customer Innovate

In their best-selling book Selling Blue Elephants, Howard Moskowitz and Alex Gofman outline a structured innovation process that consistently delivers high-impact results. Using this process, which is known as rule developing experimentation (RDE), to move companies beyond traditional innovation techniques such as brainstorming and focus groups, The Brand Consultancy helps companies innovate for long-term success.

RDE is “a systematized solution-oriented business process of experimentation that designs, tests, and modifies alternative ideas, packages, products, or services in a disciplined way so that the developer and marketer discover what appeals to the customer, even if the customer can’t articulate the need, much less the solution.” Moskowitz and Gofman note that many well-known innovations, such as the iPod, chunky tomato sauce, and brown mustard, were not developed using focus groups and polling, but “through research and development labs and marketers developing the products they knew customers would want, before customers knew they wanted them.”

How can your customers help you innovate if they don’t know what they want? The RDE process helps uncover untapped consumer needs. Rooted in psychological theories of customer perception and behavior, it relies on experimental research designs, statistical analysis, and proprietary algorithms.

There are a variety of approaches to RDE, but the process usually involves:

  • Understanding how a product works
  • Identifying customer needs
  • Developing and testing new product concepts and ideas
  • Developing multiple prototypes covering a wide range of options
  • Conducting large-scale customer experiments using the prototypes
  • Adjusting the strategy based on customer feedback

This type of structured, rules-based process protects companies from the perils of guesswork.

Case Study: HP

HP experienced significant market share erosion in the late 1990s for its consumer electronics products. The company’s product development process was sound—its products were as good as or superior to its competitors’. Marketing efforts, on the other hand, fell flat—HP’s approach focused on product features while its competitors focused on product superiority.

Instead of using classical marketing research tools such as focus groups and surveys, HP adopted an RDE-based approach to develop, test, and optimize new concepts and ideas among its target consumers. The company found that its products appealed to two broad customer categories—tech-savvy consumers who wanted customized products based on desired features and those that were less inclined to DIY and wanted an already-built bundle.

HP used this knowledge to test various combinations of product features and measure how each combination impacted consumer satisfaction. With the outcomes from these RDE-driven experiments in hand, HP reengineered its computer marketing—making changes to product pricing, offer structure, and rebates, and targeting its advertising to the appropriate customer segments. As a result, the company was able to increase product sales and improve market share.

Golden Rules for Guided Innovation

How can corporate leaders guide innovation within their own organizations? According to Diane Beecher, The Brand Consultancy’s CEO and Senior Strategist, suggests the following Eight Golden Rules for Guided Innovation.

  1. Understand the customer. Listen to your customer’s thoughts and ideas, in their own words. Don’t ask questions; let them respond to ideas.
  2. The customer is the boss. The customer’s ideas should carry more weight than senior leadership teams or even the CEO. The Brand Consultancy’s process involves capturing the senior teams’ hypotheses and validating them with the marketplace. If a concept doesn’t fly, evolve the seed idea in a way that resonates with customers.
  3. Listen to all organizational levels. Internal brainstorming should not come only from the R&D and senior teams. Solicit and consider the perspective of employees with customer touch points throughout the organization. A cross-functional support perspective is also valuable.
  4. Include external ideas. Internal perspectives are valuable, but ideas generated internally may be created by those wearing industry or organizational blinders. Solicit ideas from a variety of external constituencies, including current, lost and prospective customers; vendors; creative panels; and any other relevant audience. Optimized idea selection should be limited to current and prospective customers.
  5. Be practical. You must be open to all ideas, but practical in response. Feasibility filters (time, money, resources, and impact) and competitive perspective must be applied to the ideas selected by customers.
  6. Create a replicable, scalable process. The innovation process should be replicable and scalable, to encourage and advance a culture of innovation within the organization.
  7. Get leadership buy-in. As with any organizational change, leadership must embrace the process for it to be successful and generate tangible, measurable and profitable results.
  8. Make a business case. The process must always include making the business case. If profit is not considered, then the process and the outcomes are not sustainable.
Oct. 28 GROWTH FROM WITHIN
Posted by Mark Morris in Brand Wisdom

Jumpstarting and sustaining growth

In a recent poll conducted in 2009 by Ernst & Young and The Economist Intelligence Unit, 90% of companies indicated that they planned at least one reshaping activity within the year in response to the recent economic downturn. Some of these activities included:

  1. Cutting working capital to boost cash
  2. Investing in shared service centers to cut costs or build scale
  3. Moving operations to lower cost locations
  4. Increasing the use of outsourcing or co-sourcing

During this same period, while many organizations were focused on ways to cut costs and mitigate loses, a handful of organizations enjoyed significant growth.

  1. For the fiscal year 2009, Sysco, a marketer and distributer of food products to restaurants, healthcare and educational facilities, reported net earnings of $1.1 billion, the company’s second most profitable year in its 40 year history.
  2. In May of 2010, Southwest Airlines declared a quarterly dividend to its investors…the 135th consecutive quarterly dividend in the company’s history. Southwest is one of only a few U.S. carriers to report growth during the previous year.
  3. In 2009, Walgreens achieved its 35th consecutive year of record sales and raised its quarterly dividend for the 34th consecutive year.  What’s more, Walgreens has paid quarterly dividends every quarter since 1933.

These companies are in different categories, yet all have experienced growth in an unfavorable economic climate. So what do they have in common? How do they continue to smash the ceiling in earnings and sustain growth year after year? The difference is a focus on growth from within.

Achieving sustainable growth from within

A company that emphasizes growth from within (also known as organic growth) does just that; they start building the business from the inside out.

Edward Hess, Professor of Business Administration at the University of Virginia’s Darden School of Business, conducted extensive studies of public companies. After examining 800 companies, Hess found that just 22 consistently created significant economic value for their shareholders and excelled in their industry through organic growth. Rather than relying on smart acquisitions or clever marketing, these companies grew from within by focusing on building their customer base, creating new products, and operational efficiencies.

Based on his research, Hess defines six characteristics of companies that grow from within:

  1. They relentlessly pursue a simple, easy-to-understand business model – Employees at all levels can easily understand and explain the mission of the organization. What’s more, employees understand how their job helps the company to execute that mission and are committed to achieving it.
  2. The “soul” of the organization is entrepreneurial – The organization provides employees with an environment that focuses on entrepreneurship. Each person is accountable for the success of the organization and shares in its rewards, resulting in high employee satisfaction.  When employees are highly satisfied, customers will be highly satisfied, leading to greater profits.
  3. Measurement is king – Performance measurement is essential. It helps track the organization’s financial results as well as operational and behavioral objectives in a way that is open and objective, providing everyone in the organization with a common dashboard.
  4. They build talent from within – Employees of organic growth companies are evangelists for the organization. As a result, turnover is typically low because employees are passionate about positively impacting the goals and objectives of the organization.
  5. Leaders are committed to engaging employees and customers – CEO’s understand that business operates “through and with people.”  Leaders of organic growth organizations devote a significant amount of time and energy to communicating with and engaging employees and customers.
  6. They focus on execution excellence – Most organic growth organizations do not provide uncommon products or services. What they do offer is consistently good performance. By utilizing technology to provide up-to-the-minute measurements, they quickly and effectively keep the company on course.

QVC is one company that instinctively understands the value of growth from within. As one of the largest multimedia retailers in the world, QVC has enjoyed sustained growth ever since it went on the air in 1986.  The only exception was in 2008. That year, while other retailers were taking heavy loses, QVC had zero growth year over year.

So what makes QVC different from its competitors? According to Steve Valin, Manager of Culture and Brand Development, the difference is “…relentless execution of one really, really good idea…serving the customer and providing an incredible shopping experience. We are absolutely passionate about that in all levels within the company.” For QVC, building the customer base means clearly identifying and executing on that “one really, really good idea.” “Once you’ve identified that as a company…you have your grounding point as a brand for how you can deliver upon that and be bold and obvious that’s what your potent point of view is.”  QVC makes sure they consistently deliver on that grounding point by actively listening to customers and engaging employees in continually finding better ways to meet customer’s needs. “For long term growth, I think more people have to be motivated by the long term proposition of what the brand is, what they represent and how the work they do contributes to that piece.”

Organic growth vs. growth by mergers and acquisitions

So if an organic approach provides sustainable growth, why isn’t every company choosing to grow from within? The answer may lie in the general perception that mergers and acquisitions quickly generate synergies and economies of scale, expanding operations and cutting costs. While this may be true for many M&A’s, a recent study by A.T. Kearney analyzed 175 mergers and found that, while return on sales increased slightly, sales growth actually slowed by 6 percent.

A second study by Business Finance magazine examined trends in mergers and acquisitions from 33 large M&A transactions in Europe, Canada, and the United States from 2002 to 2007. According to the study, these large deals reduced value over 60% of the time.

James Kenefick, Co-founder and Managing Director of Working Excellence, an investment/private equity firm, believes many mergers and acquisitions fail to produce sustainable growth because cultures aren’t effectively integrated together. For Kenefick, successful mergers require that an organization has the right people, the right strategy, good execution and plenty of cash. This can be especially challenging for small and mid-sized companies. “A lot of small and mid-sized companies don’t necessarily have the cash or don’t have the stock price. So they are forced to grow organically to become attractive enough to become an acquisition candidate or if they have some unique value proposition or technology that’s so compelling that….they would be valuable.” In order to achieve that growth from within, Kenefick believes that small to mid-sized companies must follow a clear progression:  first, get the right people in place, then define the right strategy and then implement the right execution.

The advantages of growth from within

A recent article in the PEO Insider, the official newsletter of the National Association of Professional Employer Organizations, outlined some of the advantages of a strategy that relies on growth from within.

  1. Organic Growth is Less Expensive Than M&A’s – the initial requirements for capital outlay tend to be lower
  2. Higher Investor Confidence – sustained growth often results in higher P/E ratios
  3. Greater Internal Harmony – no time and energy is required to merge two clashing cultures
  4. Can Build A Stronger Customer Base – organic growth companies can invest in new products and services to strengthen their customer base
  5. Cultivation of Internal Talent – internal growth means new advancement opportunities are available for current employees
  6. Carrying Less Debt – organic companies typically carry less debt…debt that may accumulate as a result of M&A’s

Is a growth from within strategy right for any organization?

As defined so far, a strategy that emphasizes growth from within clearly impacts long term growth. So if an organization is experiencing zero or negative growth, is an organic growth strategy the answer?

Allen Schiffenbauer, Chief Research Officer at The Brand Consultancy believes that it may be, if the organization is willing to examine two key issues. “One is to assert an objective understanding of why there is no growth…the next thing is establishing a true understanding of the capabilities of the organization, capabilities from a branding perspective…and then focus on using those capabilities.”

From Schiffenbauer’s experience, companies sustain growth either through expanded distribution or product innovation. While expanded distribution often results in more steady growth than product innovation, it may not always be a viable option. Instead, growth comes as new products are introduced to the marketplace. These introductions result in growth “spurts.” To achieve long term growth, companies must continually introduce new products…an approach that requires high levels of flexibility and discipline. “If you’re going to try new things and you have to be prepared for back-ups…not all things work. So there has to be a tolerance for acceptable failure and there has to be a process in place that controls investment.”

Building growth from within

In order to successfully build an organization organically, senior management must start by taking an honest, in-depth assessment of the people and strategies of the organization. While a few organizations are able to do that internally, Kenefick believes that many find it to be an uphill battle. “Senior management has got to get the right people in place. The only way to break through that is to have somebody come in, like a corporate strategic firm, in order to assess the people, the strategy and then help leverage the opportunity to execute with the amount of cash that they have.”

The advantage of this approach is that an outside company can help facilitate organizational change and shifting cultures through effective communications plans. That helps employees at all levels of the organization understand the new direction of the company, so that they can become part of the process of change. “…you see how some people say, ‘Oh, I work out,’ but those that work out with a trainer produce phenomenal results in a short period of time. And there are other people that spend hours toiling at the gym…with mediocre results. So I think, any professional athlete, any professional organization, employs somebody who is going to advise them with strategies on how to become the best in their game.”

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Oct. 28 Why did the customer cross the road?
Posted by Mark Morris in Brand Wisdom

Building a customer obsessed brand culture is no joke

Steve Van Valin, July 2010

I only see it once or twice every couple of months if the timing is just right. The experience is provocative and memorable and even seems to increase with intensity each time it happens. The “it” is having an eyewitness encounter to one of the great moments symbolizing our QVC brand and culture.  It is when the customer crosses the road.

Leaving Studio Park, the global headquarters for multi-channel shopping juggernaut QVC, my first concern is putting on my seat belt, and whether or not the traffic will be brutal on the way home. I coast leisurely through the curvaceously wooded drive that feels more like an arboretum than a corporate park. One last feature snaps me to attention before exiting the campus. I must navigate around a well-landscaped island in the middle of the road. The island creates a large triangular intersection and a thought provoking convergence of traffic from three directions. This is where it takes place.

Pedestrians should feel very wary at any spot within this tricky triangular intersection since it’s impossible to determine which way cars will be angling.  Plus, I have noticed that employees tend to throttle-up when they get to this zone seeming to sense that home is their next stop and dinner is getting cold. It is dangerous and unnerving to say the least to risk crossing these roads. Yet, our customers do it all the time, and yes, the corny punch line is true… to get to the other side.

What seems to be worth risking life and limb for on the other side of the road is a prominent Q logo sign designed to welcome visitors to the land of all things Q.  It is carefully tucked within shrubbery and has a backdrop of large Locust trees.  Our customers actually stop their cars, cross the road, and climb through the shrubs to have their picture taken next to the sign.

When I see it happening, my heart skips a beat like a big game hunter spotting the elusive and prized trophy.  “Yes!  There they are!”  I have made it a personal and mandatory act of privilege to always stop, put on my flashers, get out, and say hello.  And, of course offer to take their picture. Once they realize that I am not Security intending to chase them off the island, they instantly lighten-up. The first thing I notice is the satisfied looks on their faces that say they have truly arrived in more way than one. Weary travelers from afar reenergized by finally being at the Q. It reminds me of the time my Mom teared up at Disney World when we came into view of the iconic Cinderella’s Castle in its full glory for the first time. These folks are tickled to be there and down right giddy to meet a real live QVC employee. Oh wow. “Are you on the air?” That is the universal and expected question I receive every time. They study me closely for any sign of recognition. My rehearsed and punky response makes them laugh, “Heck no, I’ve got a face for radio, not 90 million viewers.” They are now very happy they crossed the road. How many other people are having their picture taken next to the Target or Wal-Mart sign today I always wonder. Crossing the road is very special indeed.

So, why do they cross the road?

Understanding this death-defying act of brand adoration is something I have always wanted to fully comprehend. Like a fleeting emotion, you can sense it, but never totally grasp the reality. Trying to articulate it is even harder. Going back to Branding 101, I could explore the rational aspects of our brand, our USP’s and competitive advantages and still miss it completely. When I stop to quantify the rational reasons, I realize there just aren’t that many to explain why our customers continue to engage and shop with QVC at this level of ferocity. The rational factors surrender to an emotional context that would make any data-head go bald. Placing the customer emotional connection factor on top of all the left-brain data makes the entire thing unravel. Our customers have connected with us deeply. We have made their life better somehow, and it has become personal to them. Along the way QVC has evolved into an essential touchstone that lifts their spirit. We have opened a door for them into a welcoming comfort zone. They engage QVC for the love of it.

How did this happen?

Not even QVC founder Joe Segel could have envisioned the connection would run this deep when he started the company in 1986. Mr. Segel’s agape-like customer focus put into motion the personal touches and trusting elements that came from hard rigor to the philosophy. At the time QVC was born, the entire category of TV shopping was very ugly as a brand. The terms schlock, hucksterism, hawking, and hyper-selling were fair labels applied to the other shopping networks that came before QVC. Being called an infomercial channel would have been considered a compliment back then. It was a monumental task to separate QVC from the rest of the pack in the minds of investors, but fortunately the customers picked up on it early on.

As employees we knew that we had something very special as a strategic foundation, and it helped us built a lot of confidence to do even more of the right thing. Staying true to our core customer philosophy was the key.

Essentially, the philosophy came down to, “Do right by them, even if it means sacrificing in the short-term, because they will be loyal to us in the long-term.” Mr. Segel and QVC never wavered from this approach. A true faith in human nature applied to hard-core entrepreneurial capitalism. For an entrepreneurial venture to be this bold took a lot of grit and guts avoiding the temptation to hop on the quick money in favor of a long-term and patient strategy. Our leadership has continued to be so strong and obvious to this strategy that it would be nearly impossible for the culture to not fully absorb it into our DNA as an organization.

Philosophy in action

The most prolific example of long-term customer focus came from the decision to be “soft-sell” with a warm neighbor over the backyard fence approach. The natural repartee that ensued from our hosts quickly allowed them to become familiar friends and confidants to customers. Our representatives reflected the same spirit and made it a unified experience for the customer. Just as Johnny Carson used to tuck people in bed every night with a laugh, or Walter Cronkite was a daily after-dinner guest in people’s homes, our hosts and representatives became like best-friend shopping buddies available 24-7. Admittedly, we originally thought that QVC would be all about product, that simply delivering Q, V, and C would be the primary ticket. The magic of the emotional connection and affinity to QVC as a love-to-do “sport” was a surprise beyond our wildest imagination.

Our selling strategy has made a profound difference in the way customers view us. Getting down to the nuts and bolts of it, QVC has always been about communicating emotional right-brained benefits first, and then the features that allow that to happen. The price feature is always placed in the context of being a value instead of “must-have steal”. Treating customers as smart consumers and being openly transparent to the customer have clearly paid off. Ironically these are attributes that all brands are desperately trying to achieve right now 20 plus years later. Every company covets the brand perception of being transparent and authentic mostly because they are forced to do so via product reviews, and the advent of social media. We were way ahead of game on this and have earned the hardest to come by brand attribute of all. Customers trust us. Each encounter is meant to reinforce that brand promise.

Making a dramatic difference

To witness how the philosophy won out for QVC was both positive proof and inspiration to our culture. Within our first10 years we had surpassed HSN in sales even though they had both a three year head start on QVC, and had become the generic brand name for the entire category. Home Shopping Network was the Kleenex and Jell-O of the TV shopping channels at the time. Ironically, nearly all of our systems, processes, distribution, and service platforms were essentially the same. The dramatic difference came from the “How”. Treating the customer with respect, seeking higher quality products, and building a culture prepared to innovate and execute, made the ultimate difference and widened the gap.

When QVC announced its first vision in 1995, to Change the Way the World Shops, I don’t think we knew how far we had already taken it by being true to the customer. Indeed we were doing it one customer at a time, and never had a revolutionary advertising or PR campaign that moved the needle in a wholesale fashion to get us there.  Success came from incredible rigor to the philosophy applied to the three crucial touch-points of the customer experience trilogy. The on-air/on-line shopping experience, the ordering and customer service experience, and the receiving experience designed to surprise and delight the customer by getting it there before they ever expected it. The vision became a very influential “what” in the over-all strategy especially because it was coupled together with the newly defined “how” called the QVC Difference Values. For the first time, we officially put a stake in the ground declaring how we needed to operate together to create a culture that would become a strategic advantage.

The QVC Difference values became a powerful decision making guide for us as a company both internally and externally. In a sense, it served as a GPS system to steer us in the right direction at a very crucial time in our company’s history. It also worked to give us a strong sense of purpose and pride for what we stood for and what made us special to the customer and as an employer. There is no doubt our customers have been able to look through the window here at QVC and see the values in action for themselves. It has made a difference in our relationship.

True community

When we looked at our brand under a microscope in 2007, we identified that when we were at our very best, QVC was able to engage, entertain, and enrich the customers’ shopping experience. This is our ultimate goal and our designated brand experience. Our new vision capitalizes on taking the idea of being at our best to the next level by becoming A Global Multimedia Shopping Community.

You would think it is somewhat cocky to call ourselves a “community” doesn’t it? But, when you stop and consider how appropriate that descriptor is for our customer base and their relationship to us and each other, it begins to make perfect sense. We have been the number one shop-opera on television over the past 24 years. Where else could you hear a lIVE unedited, unscripted caller speak directly about a product in front of other potential customers? Ironically, QVC was reality TV way before reality TV was cool.

One amazing statistic that supports the idea of QVC as a community is the fact that we receive nearly 4 times the number of product reviews on our site than other retailers. Our customers not only are actively engaged with QVC but also want to communicate their opinions to the rest of the community.  We have over 160,000 QVC fans following our every move on Facebook.

Q what you love.  Love what you Q.

When you think about the concept of what we do at QVC, we invite customers to vote with their credit cards 24 hours a day in the greatest LIVE retail experiment of all time. We get instant feedback. Do they love it or not?  America is voting right now! QVC could be considered the equivalent of America’s end-cap in the multichannel universe.

For 6 to 8 minutes on the air, a product is on the end-cap in front of 90 million potential viewers with the greatest sales people in the world exploring its potential with you. That is powerful and compelling especially to anyone with a sense of the value of the end-cap shelf space in traditional retail. There are thousands upon thousands of viewers taking the QVC off-ramp from the multi-channel super-highway at any given minute. All of them are driving by our end-cap for a moment of fun and a break from stale TV. On the floor in studio and in the control room there is a palpable sense of energy from customers heating up the phone lines and internet when a product is hot. It may seem bizarre, but somehow this energy builds into a sales velocity that is transmitted to the customer’s psyche further turbo-charging additional sales. It is almost like going fishing in the piranha pond when that happens.

When I take visitors or candidates on a tour and show them what we are doing, their eyes get as big as saucers.  If they have even a single drop of marketing blood flowing through their veins you can feel their excitement build.  You know they belong here if they have that built-in passion and spark. The unique sport we have created seems to be about living LIVE. That is what our customers are doing through us by engaging in the action. When our culture reflects that same positive attitude we create a natural synergy. It is the ultimate example of living a brand on the inside and expressing it on the outside with our customers.

Living LIVE

I have watched the most successful teams and endeavors here at QVC reflect this attribute of living LIVE together. The easiest way to describe it would be a total commitment to communicate and collaborate with speed, agility, and openness with each other. Working effectively as a team creates a positive vibe that takes on a life of its own. The real difference is evident in the way the way people capitalize and thrive on change instead of being crushed by the never ending pace of our 24/7 business. The mode of Living LIVE as a team seems to elevate the vision for the outcome (which is always about the customer experience), and lowers the crippling effects of hierarchy and bureaucracy in the execution of the work. The powerful teams that are living LIVE have a certain buzz. You can sense it, feel it, and see it in action by the way they execute. They are the ultimate brand warriors for QVC, and we are fortunate to have so many of them making the difference every day. I am blown away by their positive spirit and highly energized passion to chase something big here at QVC. It is compelling, and automatically raises the game of every one they encounter.

Positively Q

One of my very favorite learning’s here at QVC came from the research that IDEO did during our efforts to retool our brand in 2007. IDEO famously institutes an “observer approach” within their research practice to uncover the hidden gems that lie below the obvious. In our case, they spent a lot of time with groups of QVC customers and non-QVC customers having dinner and freeform discussion. They designed these sessions as “wine and dines” with an open agenda. They started making some curious observations about the difference between the energy and spirit level of these dinner parties. One group consistently made the event feel like a party while the other group made it feel uneventful and downright normal. Even though the two groups essentially shared similar demographics (women, higher than average income, TV watchers, shoppers, suburbanites, etc.), the experience of the events were vastly different. The QVC customer groups were electric, full of energy, fun, and positivity. They seemed like they were full of life, had more mojo, and were seeing the glass beyond half-full. By the way, they didn’t know they why they were there specifically and only made the QVC connection with each other on their own. For me, this is the epiphany that explains who we are as a company. It is by the customers we keep. We attract customers with this unique and highly sought after attitude and help to perpetuate it! Crossing the road is simply an acknowledgment of that truth.

QVC is not of the ilk of the New York Yankees or Dallas Cowboys as a brand, or are we? The affinity is strangely similar. We are world champions of the customer in their favorite personal sport; shopping. Here is another perspective. It is conceivable that our customers view us like the way Harley owners revere “all things Harley”.  Did you ever wonder why a mild mannered accountant Monday through Friday would enjoy terrifying mothers and small children on a Saturday, all leathered up on their fire breathing Harley machine? Most people say, “You have to own a “hog” in order to get it.” Otherwise, don’t even bother trying to understand. Ok, I think I get that concept now, because just like Harley, QVC’s brand connection runs so deep and strikes a well-spring of intrinsic emotions that it is nearly impossible to fully convey the sense of it all.  I have spoken to so many brand and marketing experts over that years that expect me to tell them in one or two factoids what our brand experience is all about, and I simply shake my head and tell them about the customer crossing the road.

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Jun. 3 The Importance of Branding in a Changing Retail World
Posted by Mark Morris in Brand Wisdom

The FOOTWEAR retail landscape has changed dramatically in recent years.

Formats that didn’t even exist are now doing billions of dollars of business (think internet, shopping networks, and smart phones). How consumers receive and process information on goods and services has also changed. But some things remain the same.

“Consumers follow the same thought process no matter what the retail format. Yet the way they receive and process information about products and services has changed dramatically. Combine an understanding of how consumers think and act with an equally strong understanding of what your brand means to them to be successful in any retail format,” notes Barbara Scott, a partner with The Brand Consultancy, who held senior marketing and merchandising positions at Keds, Stride Rite, Hush Puppies, and Laura Ashley.

Consumers Now Have More Options

In the past retail was organized around three tiers: upper, mid-tier, and discount, with upper being traditional department stores like Macy’s and Nordstrom as well as independent specialty stores; mid-tier, including Sears, JCPenney, and Kohl’s; and the discounters dominated by Wal-Mart, Target, and Kmart. Every retailer knew where they fit, brands generally sold in one of the three tiers (maybe two) and it’s probably safe to say that consumers identified more closely with one of the tiers.

But today that’s not necessarily so:
  1. Discounter Target is selling brands like Converse and designer exclusives from the likes of Isaac Mizrahi
  2. Department stores like Macys and Nordstrom have strong private label programs that are no longer just margin builders but are brands in their own right
  3. Off-price retailers like TJ Maxx and Marshalls are selling the same brands as department stores
  4. Big box retailer DSW is doing the same under a different format
  5. With the demise of the family shoe store, independent retailers have become more specialized (comfort, walking, outdoor)
  6. Whole new formats have arisen. The internet includes pure play internet sellers like Zappos, Shoebuy.com and Shoes.com, as well as brick and mortar retailers with robust web-based businesses
  7. The broadcast selling format has been developed and refined by QVC and HSN, which are now multi-billion dollar retailers
And the changes keep coming. New technology is being developed at lightning speed. Today consumers can not only make purchases with their mobile phones, but they can compare prices by looking up the bar code, find a retail location, and even tell a friend. Soon consumers will be able to point their cell phones at other people to find out what brand of footwear they’re wearing, the price, and where to buy it. (Neil Weilheimer, What’s in Store: The Future of Retail, Footwear News, February 8, 2010.)

The Consumer Decision Making Model at Retail

How are consumers navigating this brave new world? What has changed and what has remained the same? We can gain insight into these questions by looking at The Brand Consultancy’s Consumer Decision Making Model.

Consumer Decision Making Model

Consumer Decision Making Model

The first thing consumers do is to put what they’re looking for into a category such as athletic shoes or shoes to wear to work. This helps organize the shopping effort and tells them where to look for what they want. Then they define for themselves a consideration set, or those brands and products they might purchase. They will select brands that they identify with on some level or those they have information about. Then they will determine which products meet their needs, screening for features such as price, size, color, etc. Next they add in the nice to haves, which include personal preference for a certain color or style, or perhaps added features and benefits. The final selection is triggered by a deal maker, which could be the fit, a special deal, or some other attribute that is important to them. A satisfactory purchase builds trust and can lead to repeat business. The steps in this decision making process tend to stay the same in all channels of distribution and for all categories.

This sounds simple, and it is. However the power for manufacturers and retailers is in taking a thoughtful look at each step in the process, and determining the various ways in which they can influence consumer’s decisions along the way.

What has changed greatly is the way consumers get information about brands and products. While they still respond to traditional advertising and publicity, word of mouth transmitted electronically is increasingly important. The rise of the internet has led to the dissemination of more information in general, both “official” information put out by the brands, as well as that put out by third parties and consumers themselves. Product reviews, blogs, and Tweets abound and are readily accessible. Consumers trust reviews written by strangers as if they knew them personally. Shopping is now largely transparent with consumers holding extensive knowledge about product performance, pricing, and where to buy. Consumers shop multiple channels, sometimes going to one channel for information (say a website) while making the actual purchase in another (perhaps a retail store).

For both retailers and brands, it is more important than ever to be consistent between distribution channels (brick and mortar and online) as well as communication channels (website, social media, and paid media, for instance).

The QVC Experience

Let’s take a look at the role that brands play in the consumer decision-making process at one of the most successful, newer retail models. First some quick facts about QVC:

  1. QVC is a $7 billion multi-media retailer
  2. Over 60 million people have shopped with QVC
  3. On Black Friday (November 27, 2009), $32 million of merchandise was sold in one day

We asked Steve VanValin, QVC’s Manager of Culture and Brand Development, to comment on the key elements that make brands successful in the QVC format. Steve provided us with insight into the following questions:

  1. Given the phenomenal success stories such as those listed above, getting a feature on QVC is coveted by many brands. What criteria do buyers at QVC use in selecting which brands to feature?
    Our buyers begin with the customer in mind. They’re always thinking about the customer experience. They look at the brand’s reputation, and then think about how the brand will be presented on air. What’s the handle? What story can be told? With a strong brand, we like to begin by telling the brand story, then talk about the product features, and end with the brand story again. It’s like an Oreo cookie with features sandwiched between the brand story. The brand story is the emotional connection, and the features appeal to consumer’s rational side.
  2. What role do brands play in decision making for QVC customers?
    Brands create trust. If consumers have a good experience, they will tell others and come back again themselves. A strong brand is what we call a showstopper. It can literally stop a consumer who is channel flipping. A good brand story, together with strong features and benefits, builds velocity, which is how we can sell so much so quickly.
  3. What can footwear (and other brands and retailers) do from a branding standpoint to be successful on QVC?
    In some ways QVC is the ultimate test of a strong brand. You must have a strong brand story that can be told simply and quickly in a compelling manner. Also, establish an emotional connection with the consumer. Combine that with tangible features and benefits. Consumers today want to feel smart, not guilty.

Putting It All Together

The QVC experience is consistent with our own findings on branding and consumer behavior. According to Allen Schiffenbauer, Chief Research Officer at The Brand Consultancy, great brands have the following in common:

(1) they have a compelling promise this is functional and emotional, and (2) they keep that promise.

Given what we know about the consumer decision making process, the impact of technology on consumer decisions, and the changing retail landscape, what steps can brands and retailers take to ensure success? It is valuable to take a look at the holistic experience consumers have with your brand beyond the product itself. Our research shows that there are many other touchpoints – or interactions – consumers have with your brand that are equally, if not more important, than the product itself in some cases. This holistic experience has a major influence on initial purchase intent, repeat business, and on marketplace buzz – what consumers are telling each other about your brand.

The Top FOUR Things a Brand or Retailer Can Do to be Successful in Any Environment

  1. Be clear on what your brand stands for
    Branding is a process and there are steps you can take to determine this.
  2. Execute consistently across all touchpoints
    Your consumer encounters your brand in many ways and in many places – remember, it’s about more than your product, it’s about the experience they have with your brand.
  3. Use all branding platforms and play off their strengths (retail store, website, social media, publicity, paid media)
    They all work in different ways and working together can create momentum for your brand.
  4. Establish an emotional connection through storytelling
    This will make your brand memorable and will set you apart.

If you do these four things consistently over time, you will have a strong brand that is instantly recognizable in any setting. And best of all, as consumers have a positive experience with your brand, they will carry the message for you.

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Apr. 30 Internalizing & Operationalizing The Brand
Posted by Mark Morris in Brand Wisdom

According to a survey of more than 700 business professionals across the U.S.:

  • Over 90% “don’t understand how to effectively represent their company’s brand”
  • Over 75% “don’t support their company’s branding initiatives”
  • Over 50% “don’t know what a brand means”

According to the survey, the problem is that “companies unintentionally keep employees clueless about branding and its significance internally by not relating their external branding efforts back to their employees or customers and by not connecting their employees to branding initiatives, decisions, and results.”

Enter survey #2, another study, which similarly found that “the concept of brand strategy is too often paid only lip service.” Out of 90 global corporations surveyed, just 19 had a long-term brand strategy they were “very satisfied” with. Moreover, 62% of those surveyed “cited lack of senior management support as the most pressing threat to brand’s long-term success.” This study blames a lack of operationalization for the failure of brand to have a real impact. Meaning, that “business needs to…make it more of an organization-wide driver of business decisions—if they expect to reap the full extent of its top- and bottom-line benefits.”

What is the difference between brand internalization and brand operationalization? Why does the difference matter? How can each help the brand succeed? And most importantly, how can a well-integrated brand drive corporate strategic goals?

Let’s begin by defining these terms.

Brand Internalization

We view internalizing the brand as communicating the brand to all employees. Initiatives that simply target senior executives miss the mark, because although their buy-in and support is critical, a handful of employees can’t possibly touch enough constituents to have a real effect on the brand. Messages associated with brand internalization have three distinct purposes:

  • Education—helping employees understand what a brand is, why it is important and what its relationship is to the organization’s reputation.
  • Definition—communicating what the brand stands for and how it is unique and differentiating.
  • Action—helping employees understand what behaviors are expected of them, and how their performance of these behaviors will have a desirable effect on external perceptions of the organization.

In addition, these communications must be inspirational, not just informational, if they are going to be effective. The idea is for employees to gravitate to the brand, rather than think of it as yet another initiative they must comply with.

Brand Operationalization

Separately, operationalizing the brand ensures that it is driven to all functional areas of the company, and is used as a driver for decision making. For employees, this means ensuring that two key elements are in place:

  • Motivation: “What’s in it for me?” is a logical response to the behavioral change that branding requires. Consequently there must be a reward for living the brand. This is accomplished by infusing it into performance and compensation programs and setting a platform of rewards and retribution for compliance.
  • Tools: If employees are going to be responsible for living the brand, they must be adequately equipped to do so. Everyone, whether “on-stage” (customer-facing) or “backstage,” must be given sufficient resources to infuse the brand into their own day-to-day functions. Since operationalization is such a comprehensive endeavor, it is most effectively executed step-by-step. This means holding workshops division by division, functional area by functional area, until the brand promise becomes so specific that each employee finds it meaningful to their role in the company. Building on the level of knowledge and understanding that employees already have about the brand, these workshops should provide:
    • Specificity: A detailed understanding of the connection between the brand’s external promises (in advertising, PR, and so on) and what it means to actually deliver on those promises every day.
    • Reality Check: A comparison between the brand promise and the actual experience that constituents are having with the brand. Here employees are asked to consider whether the reality of the brand supports the promise—and what the consequences are for the organization.
    • Integration: An expansive, but also very specific, view of how the organization will look once the brand is fully integrated into all processes, including product and service development.
    • Filters: A set of tools that help the employee continually and effectively discern whether their actions are “on-brand” or not. These tools are critical if the brand is actually going to be used as a basis for daily decision-making.

The overarching intent of both internalization and operationalization is to progressively strengthen the brand. This is accomplished by reviewing, improving, and focusing the quality of the organization’s relationships in very specific ways, including ensuring that its reputation is “on track” with its desired brand state. In this view, to produce maximum return on investment, the brand must become an integral part of the culture, inspiring the workforce to collectively support the organization’s vision, strategic direction, and tangible goals.

As Diane Beecher, Senior Partner and Chief Brand Communications Officer at The Brand Consultancy, puts it: “Internalizing and operationalizing your brand can have many positive internal effects. It can align the organization against your strategic goals; motivate a complacent workforce; provide leadership and an inspirational voice; increase retention rates; and even jumpstart recruitment efforts. In the process, you strengthen your reputation with external stakeholders, as well as your relationships with internal stakeholders. It’s a win/win scenario.”

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Dec. 29 Be Careful How and When You Use the “B” Word
Posted by Mark Morris in Brand Wisdom
Whether it’s sagging sales or the need to understand and address your customers new buying behaviors in a recovering economy – focusing on the business issue will better serve brand and marketing executives … without encumbering the conversation with “brand” jargon and terms that lead to misconceptions.

Brand can be a bad word. It is certainly misunderstood. Put 10 executives in a room and you are likely to get 10 different definitions – from a logo to an ad campaign to a product’s packaging. Let’s face it, the haze of jargon surrounding “brand” make it difficult to make a proper business case to invest in brand-related initiatives that will drive a return. Without a direct link to strategic business goals, it is difficult for business leaders to buy into the need or the expense.

Let’s face it, very few business people will likely think of “brand as business.” Brand professionals have done little to help themselves by leading with brand terminology that has a low probability of success in a cross-function business meeting that includes financial, operations and sales executives. Leading with terms like brand essence, brand mantras and brand salience, for instance, in a conference room filled with hard minded business executives, expect responses from the mildly interested to the amused to the totally dismissive.

Of course, these terms have their place and are important elements of the larger universe of brand management. But if your audience includes the CFO and director of operations, caution is advised.

Brand strategy starts with a solid focus on identifying the potential business issues and does not require the “B” word.

In order to get the attention your “branding” initiative requires for lift-off, it is better to address the business issue at hand rather than representing the solution set in a brand wrapper. But the point is that the “B” word should only come once you have identified the real business need and, further, should be used sparingly until after you have engaged your senior team in a strategic decision making process to move from issue identification to issue resolution.

Let’s start with a definition that might help illuminate our thinking.

First let’s think about branding in terms of strategy:
Brand strategy is the process of proactively managing your reputation with the constituencies you serve. This is accomplished by systematically monitoring your performance with them, making fact-based decisions to continually improve your performance along key value drivers and then aligning the resources of your organization to perform and improve them consistently

A focus on the business issue means asking the right questions first.

This will target results and align business resources faster. Are your sagging sales the result of changes in customer buying behavior or is it because of the performance of your product or service? Is it because there are new competitors that are infringing on your territory or is it because your managers and employees are not on the same page? Ask the hard questions first. Then offer the solution in the form of a process that informs the decision making of all those responsible for developing the solution. Get everybody on the same page. Cut though the anecdotal with facts and test the hypothetical solutions of your executives with solid research.

Once the real problem and the solution are identified, take the same team through an exercise to build a top-line strategic roadmap for implementation of the solution to ensure that everyone understands what it is going to take, what the dependencies are, how performance is going to be measured and how success will be determined and rewarded. Enlightenment comes with the realization that branding in its most powerful form is an installed process that becomes core to an organizations ability to efficiently make decisions and consistently deliver solutions that accomplish its business goals.

What do you think of these ideas? Have you seen any articles worth posting? Share your opinion, comments and suggestions by e-mail to mmorris@thebrandconsultancy.com.

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