denise lee yohn: brand as business bites™ / stuff for your brain to chew on

Like so many others, the fitness club industry is suffering these days.  The Denver Post recaps some of the difficulties chains like Life Time Fitness and the YMCA are facing.

Michael Robinson, chief financial officer of Life Time Fitness Inc. is quoted as saying, “When somebody looks at that Visa statement and they know that times are tougher, they’re making a decision a little bit quicker to leave the club if they’re not utilizing it.” The article reports, “Attrition rates are rising, forcing clubs to offer steep introductory discounts and spend more on advertising and marketing.”

I question whether those tactics are going to turn fitness businesses around.  These companies don’t need to increase their marketing budgets or promote the heck out of their prices — they need to deliver a better in-club experience.  Said another way, they shouldn’t be investing more in brand communications; they should be focused on brand operationalization — closing the gap between what they say and what they do.

Awhile back, I did an analysis comparing the image fitness clubs want vs. the reality of what members experience, as told on review sites like eOpinions.  The disparity was startling:

• the brand image clubs intend to project about their staff:

  

• the reality prospective members are reading about them:

-  “dishonest, unprofessional from club personnel to phone reps”
-  “when I went in to use my 2 week pass, they immediately tried to get me as a member using high pressure tactics.”
-  “the accounts rep was more than eager to sign me up and take my money. Shortly after joining and frequenting the gym, I discovered the staff was some of the most unfriendly and pretentious snobs around.”

• the brand image clubs intend to project about their facilities:

• the reality prospective members are reading about them:

-  “the locker rooms are not regularly cleaned. The locker room floors and showers continue to be consistently dirty. Simple ongoing maintenance is neglected. The floors are dirty and corroded.”
-  “Certain lockers are worn, damaged, or missing parts.”
-  “only one or two of the six showers in the ladies’ locker room work properly at any given time, or they’re missing a soap dispenser off the wall…The lockers also don’t all work properly.”
-  “the scale in the ladies locker room is probably STILL broken.”

• the brand image they intend to project about their equipment:

• the reality prospective members are reading about them:

-  “equipment is not maintained…[it] remains unusable for extended periods of time.”
-  “there is usually always something broken, worn out, ripped up.”
-  “machines that wobble, come unhinged, or remain un-repaired for months (they just frequently change the date of the “do not use-broken” notice)”

These are just a few of the disconnects my analysis revealed.  Indeed there is a rather large “say-do” gap when it comes to fitness club brands.

Because of the increasing availability of reviews for everything as well as the power of social media in general, fitness clubs — like all businesses — can no longer hide behind splashy advertising.    Plus, why wouldn’t clubs want to feed and leverage the power of positive word of mouth, particularly in a category that benefits from friends belonging together?!  What’s more, I’m sure the cost ratio of attracting a new member vs. retaining an existing one is quite significant.

Investing in delivering a great brand experience for their members seems a much more powerful approach than spending more on advertising and promotions. Tools and methods for delivering a great brand experience — for how to close the “say-do” gap — will be featured in a forthcoming post.  But for now, I hope this prompts a reconsideration among all business leaders who are deciding how best to combat the effects of the economy.

Last week, Whole Foods announced its dismal 4th quarter results — net income for the quarter fell 96% to $1.5M and comparable store sales (the key metric for retail business health) increased only 0.4% vs. an 8.2% increase in the prior year.  My colleague, John Moore, said it best when describing the results as “downright ugly.”

The news made me wonder how Whole Foods’ brand nemesis, Trader Joe’s, is doing in these tough times for retailers.  Since TJ’s is privately held, it’s difficult to find any information about their current performance.  But a BusinessWeek article last February reported TJ’s sales at an impressive $6.5 billion in last year and said the consulting firm TNS Retail Forward estimated the chain generates sales in the neighborhood of $1,300 per square foot, double the supermarket industry average.

And if my local TJ’s is any gauge, the company is weathering the economic storm just fine — the aisles are still packed with savvy shoppers pretty much any time/day I’m there and I haven’t seen the price increases that other retailers have tried to sneak in.  If anyone has any information on TJ’s business performance, I’d love to hear it.

For now I thought I’d use this post to submit what I believe has made TJ so successful that it appears to be recession-proof — and that is, of course, it’s brand. The company has carefully and consistently built its brand using 3 levers:

-  discriminating selection — like any specialty retailer, the value of the TJ brand is primarily its editing — that is, reducing the number of millions of choices in the world down to the ones that are right for its target market — in some cases, that means selecting the one offering that will meet the needs of most (you’ll find just one kind of laundry detergent at TJs); in others, that means providing a wide selection in a hot category to provide innovation and choice to its customers (they have 10+ kinds of hummus — including a chipotle variety which I highly recommend!)  TJ’s demonstrates its customer intimacy by getting its selection right.

-  superior private label — TJ’s has known all along what most retailers are just now figuring out — that is, private label is not just a way to provide lower priced products to customers — it’s a means for introducing products that are innovative, higher-quality, and most importantly, exclusive to the outlet.  The lower price is just the icing on the private-label-as-brand-builder cake.  Through these offerings, TJ has established the eco-friendly, wholesome/natural, and ethnic taste attributes of its brand.

-  “no-fluff” personality — from its quarterly Fearless Flyer published on newsprint to those hand-written shelf talkers to its zero-attitude products like Two-Buck Chuck (er, I mean, Charles Shaw wine), TJ’s no-frills, no-fluff brand personality comes through everything they do.  By operationalizing their brand attitude through their products, merchandising, employee uniforms, service approach (e.g., the way they conveniently pack 100 things into one shopping bag without mis-handling or squashing any of them), etc., TJ’s creates a distinct and compelling shopping experience.  Have you ever noticed that no other store looks or feels quite like a Trader Joe’s?  And don’t you feel a little smarter, a little more in-the-know when you shop there?

So, as a customer and a brand person, I’m a TJ’s brand fan — I suspect there might be a few million others out there as well.

A journalist recently posed some questions about free shipping.  With the holiday shopping season upon us, there’s a debate between those who say free shipping is imperative,a cost-of-entry for any serious e-commerce player, and those who say it really isn’t a good idea because companies have to absorb the exorbitant costs and buyers will go for other types of promotions like free shipping on orders over $50 or whatever.

Here’s my take on the issue:

Free shipping is a marketing tactic along the lines of 99¢ value menus or coffee shop punch cards.

While it may stimulate trial for high-risk purchases and serve as a “tie-breaker” between 2 outlets that are perceived the same, it’s a dangerous tactic to begin using because it’s very difficult to stop (remember Amazon’s rocky transition to super saving shipping a few years back?)

Consumers will take it for granted and feel a sense of “entitlement,” so you risk alienating them when you discontinue it.  Plus, if free shipping is the primary reason why people buy from you, you don’t have a sustainable competitive advantage and you’re not building brand equity.

If companies feel they must offer free shipping, they should do so on a limited-time-only basis and make it clear they are doing so.

But generally speaking, companies should seek out other ways to differentiate themselves and add value for customers.  For example, if the company operates in a high-risk category (whether the risk be due to the high price of the product or due to its nature e.g., shoes), the company should consider offering free return shipping and/or crediting the original shipping costs if a product is returned – or even better, it should provide personal advisors available 24/7 to help shoppers select the right products and feel confident in their decisions.

What do you think?

Bond is back!  Quantum of Solace

will launch in theaters beginning this Friday, 11.14.08.  While my, um, affections for the “spy who loved me” are generally pretty visceral, I do believe there are some important lessons for marketers to learn from the famed movie franchise.

In fact, I wrote an article a few years back providing insights and ideas about brand extensions that brand managers can learn from entertainment “brands” like  James Bond.  In honor of the upcoming release, I thought I’d resurrect the piece — I think the points are still as relevant today and may actually explain, at least in part, the success of Casino Royale the last Bond blockbuster.

Hope you enjoy the article, the movie, and Daniel Craig!

Much of the blame for John McCain’s loss in Tuesday’s election is being laid on the 2 people he was most closely associated with –  George W. Bush and Sarah Palin.  The impact of these associations — one he did not want but was nonetheless stuck with; the other he masterminded and milked in an attempt to improve his image — got me thinking about the importance of associations for brands.

Partnerships, sponsorships, affiliates, co-branding, co-marketing, co-ops…there are many ways two or more brands form an association.  In some cases the associations are unintended or undesirable, perhaps the consequence of an “hostile” M&A; in others, brands actively seek out other brands to associate themselves with in order to achieve a certain goal.

In all cases, it’s important to identify all the possible benefits that a brand association may yield, and pursue the ones that make the most sense for your particular situation — here are 10 possible benefits (organized into 5 categories):

VALUE PROPOSITION

1.  Strengthen your value proposition –- integrate with partners which provide complementary customer experiences to deliver a stronger value proposition

CONSUMER ACCESS

2.  Obtain “permission” from consumers to enter/play in new arenas or with new segments/audiences, particularly arenas well outside your core competence

3.  Access valuable prospects through partners’ databases/customer profile data

BRAND IMAGE

4.  Strengthen your core brand attributes by association with complementary brands

5.  Support a re-positioning through association with brands that have the desired attributes

6. Access an avenue through which to increase your cultural capital — e.g., partner with a brand representing the latest “in.”

MEDIA EFFICIENCY

7.  Extend your media dollars with co-op advertising money or bartering agreements.

CORPORATE

8.  Develop new products/services/technologies by leveraging partners’ technical expertise and resources.

9.  Obtain business strategy and process expertise.

10.  Optimize corporate relationships – reinforce alliances with business partners and stakeholders (suppliers, customers, agencies, etc.)

By being clear about the benefit(s) you seek by associating your brand with another, you can better evaluate potential partners, shape the programs, and measure their effectiveness.  And while McCain might not have been able find the silver lining in the Bush cloud, if your brand is ever suffering from an unwanted association, perhaps you can make the best of it by exploring the full range of possible benefits.

Amazon has launched a new initiative I’m just thrilled about.

The initiative, “Frustration-Free Packaging,” is “designed to make it easier for customers to liberate products from their packages.”

Amazon’s press release explains, “Frustration-Free Packaging is being launched in the U.S. with 19 bestselling products from leading manufacturers…In addition to making packages easier to open, a major goal of the Frustration-Free Packaging initiative is to be more environmentally friendly by using less packaging material.” Jeff Bezos, founder and CEO of Amazon, is quoted as saying, “I think we’ve all experienced the frustration that sometimes occurs when you try to get a new toy or electronics product out of its package.”

Woo hoo!  I’m excited about this latest development on 2 levels.  First, as a consumer, I can totally relate to what Bezos is talking about.  Just the other day I had a heck of a time trying to open the clamshell on a new USB hub I purchased (through Amazon, ironically) — I had to hold my frustration in check, though, as my previous hasty encounters with hard plastic and sharp cutting materials have yielded a couple mishaps involving bloodshed.

As a brand person, I’m also delighted to see Amazon take this step because it’s so beyond what is expected from an e-commerce company and yet such a wonderful example of the customer service innovation that the Amazon brand has become known for.  From its launch, the site has consistently developed and delivered innovations that have improved the shopping experience — innovations like advanced filtering technology to make their huge selection manageable and “Search Inside The Book” to reduce the risks of online shopping.

On its own each one of these innovations might be easy to copy, but in aggregate they come together to produce a superior shopping experience.  And in turn, this extraordinary shopping experience has created a brand that has no rival.

Amazon says its mission is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”  Frustration-Free Packaging is a great example of how this company has made customer-centricity more than just words on a page.  They’ve made it their “brand as business.”

The development and management of a corporate brand is often a stumbling block for companies.  the same business leaders who understand the role of brand when it comes to products, grapple with applying it to the corporation.

Thankfully the brilliant international business school professors Mary Jo Hatch and Majken Schultz have provided some help. Their latest book, Taking Brand Initiative, serves as a culmination of the decade-long research and analysis they’ve conducted on corporate brands.

A particularly useful framework from the book relates to assessing the strength of a corporate brand by determining whether or not there are “Vision-Culture-Image” gaps.  They define Vision as top management’s aspirations for the company; Culture, the organization’s values, behaviors, and attitudes; and Image, the outside world’s overall impression of the company.

By identifying where gaps may lie, companies are in a better position to develop strategies that develop their corporate brands into assets for competitive advantage.  There are some other great tools and frameworks in the book as well as examples from companies like LEGO, Intel, Nissan, and Johnson & Johnson.

I hope those of you who employ a corporate brand approach in your brand portfolios find the book helpful.

A colleague of mine alerted me to an article reviewing a talk given by Cheryl Heller, the founder and CEO of Heller Communication Design, at Pop!Tech the technology and design conference held in Camden, ME, every year (it’s like TED, but off steroids.)

My interest was piqued by Heller’s opening thesis, “Most of us think of our brand as a tool for communicating who we are and what we do. We think of logos or catchy names — totems that convey the mission or identity of our businesses…A good brand does express identity…But great branding goes one step further.”

This is almost verbatim the way I begin talking about brands, so I expected the rest of Heller’s talk would resonate with me.  But unfortunately it didn’t.

According to the write-up, she went on to recommend “Four Tips on Persuasive Branding:”
1. Be brief. Be clear.
2. Don’t clutter your brand promise with references to how you differentiate yourself.
3. Avoid common words used by other companies.
4. Speak to all your constituents: customer, partner, investor, or employee.

She also provided a simple case study based on the Ritz-Carlton Company.  She praised the renowned hospitality brand for its brand promise:

Ladies and gentlemen serving ladies and gentlemen.

She explained this phrase “tells investors: Ritz-Carlton serves a distinguished clientele. It tells employees: A high level of behavior is expected of you and you can expect a high level of treatment from Ritz-Carlton. It tells customers: You can expect a certain experience when you stay at a Ritz-Carlton hotel.”

While this all sounds great and I generally agree with Heller’s advice, I believe it misses the most important point about a great brand.  Her recommendations and her case study speak only to communicating a brand.  It’s even more important to operationalize a brand –- that is, to put it to use, bring it to life, make it more than words on a page.

The thing that has made Ritz Carlton so successful is not its cleverly phrased brand promise – it’s that the company has operationalized that promise.  For example, every R-C employee is given the freedom to expend $2000 to resolve a guest complaint.  By operationalizing its brand through this practice, R-C makes its employees “ladies and gentlemen” –- that is, by definition they are people who respect others, who know what the right thing to do it, and who have the power to do it — and it facilitates the promise of “serving” their guests as “ladies and gentlemen.”

Other ways the chain operationalizes its brand include:

-  implementing “Scenography,” a program hotel managers use to create integrated “scenes” or guest experiences unique to the hotel’s locale

-  using Mystique, a computerized customer-relationship management system that allows employees to enter informal observations about guests (like whether you like your martini with 1 or 3 olives) so that other employees can serve them well in the future

-  investing a whopping 10% of payroll on employee training!

The company has adopted an entire management approach that is its brand, its way of doing business.  Its brand is central to everything it does.

I realize I’ve been posting a lot on the subject of operationalizing your brand lately and so forgive me if I’m repeating myself.  It’s just that, like many other speakers I’ve heard and authors I’ve read, Heller started in the right place – she just didn’t go far enough.  Companies need advice on how to do more than express their brands.  They need to understand the importance of operationalizing their brands and they need to learn how to do it.

That’s why I focus my engagements and my speaking on helping business leaders understand what operationalizing your brand means and developing tools that facilitate its implementation — my site lists some examples.

According to a study by the Association of National Advertisers, 64% of CMOs and brand managers say their brands do not influence decisions made at their companies.

What’s up with that?!  If companies are not going to use their brands to guide decision-making, then what’s a brand for?

The way I see it, a brand is a bundle of values and attributes that define a product or service’s value delivered its customers and the way of doing business that is the basis of a company’s relationships with stakeholders.  As such, a brand should be more than symbol of the business — it should be its driver.

I’m not sure what to think of the study results — do they mean that most companies are pouring millions of dollars into marketing and advertising without really basing their business on the values and attributes they’re communicating?  If so, they’re limiting their businesses by relying only on the expressive value of their brands.  Companies that want to leverage the full value of their brands must express AND operationalize them.

Brands can — and should — guide and power the business.

Sunday’s NYT featured an insightful analysis of “Survivor,” the reality-show pioneer from CBS, currently in its 16th season — the piece recaps the show’s rise to popularity and its current slow decline.

Once again, Hollywood has provided an excellent lesson in brand-building (see a piece of mine “The Brand Ultimatum” published this past summer by the American Marketing Association about how a deep brand identity – one with rich, multiple layers of associations – fuels successful extensions the way a deep hero character like Jason Bourne or Harry Potter fuels a successful movie franchise.)

This time the lessons from “Survivor” are about creating and managing a brand hit.  The show is a worthy case study.  In its second season (early 2001), the show ranked #1 in prime time and sustained 20MM weekly viewers for 4 more years.

The factors contributing to its success, according to NYT’s Brian Stelter (whom I’ve quoted liberally here), were:

-  its ground-breaking nature — it’s hard to imagine a world before reality TV, but we have to remember how “audacious” the concept was –”when it started, it was almost inconceivable that regular people could be prime-time TV stars”

–  for brand development, the lesson is the importance of innovation — truly innovative brands challenge norms and change the way we think, feel, and/or live

-  CBS’ risky investment — “Given the first season’s success, CBS made the daring decision to schedule the second season on Thursdays at 8, the first hour of network television’s most lucrative night. ‘Survivor’ was facing the NBC sitcom ‘Friends,’ then TV’s most popular program.  Mr. Probst [the show's host] asked Kelly Kahl, head of scheduling for CBS, why the network seemed to be setting up “Survivor” to fail. Mr. Kahl’s reply: ‘When you have a sledgehammer, you have to use it.’”

– for brands, the lesson here is about taking risks — bold investments are necessary to generate bold results — if you believe in your brand, swing for the fences

-  telling a compelling story and holding key attributes constant — “Citing ‘The Hero With a Thousand Faces,’ the mythological study by Joseph Campbell, [Mark Burnett the show's producer] said ‘Survivor’ adopted classic storytelling styles and devices that ‘just work.’”  The show’s attributes are “easy to explain, have high production values and generally stay true to an original idea…[it] never strays far from the template the producers have painstakingly created. The host never changes. The time slot never changes. The tribal council never changes.”

– for brands, the lesson is about storytelling — consistent storytelling.  People love stories.  Whether it’s the reluctant warrior, inspirational figure, or scrappy underdog — different types of roles are appropriate for different types of brands but the emotional resonance of a brand is best derived from the power of plot in which the brand plays the role of the hero.  Likewise, elements of the brand’s story may evolve or mature over time, but its fundamental attributes should not.

In the article there are many other gems of wisdom for brands based on ‘Survivor’s’ success but I’ll close this entry out with the most significant one — it’s about the show’s decline (50% drop in viewership over the last 8 years.)

Essentially the article’s point is that while the show may be down, it’s definitely not out.  Stelter states, “CBS would be foolish to let ‘Survivor’ retire, at least until it comes up with something that will deliver higher ratings in the time slot.”  So it seems, “The task for Mr. Burnett’s staff, then, isn’t to expand the ‘Survivor’ brand. It’s to manage the decline.”

Similarly, brand managers need to know when their brands have reached a similar point — when, rather than pursuing desperate, expensive, and fruitless attempts to keep a brand alive, they should acknowledge the brand’s time has clearly passed.  And, while executing a graceful exit for one brand, they should channel their creative energies into developing a new breakthrough with another.

As the brand world turns…