Potholes on the Road to Brand Success

Toyota recalled nearly 1.7 million cars worldwide yesterday, this time for fuel leaks. To be fair, most of the cars were in Japan, but they also recalled IS and GS Lexus luxury models here in the United States, thus hitting another pothole while on the way to the Brand Auto Body shop to get the dents hammered out of it’s damaged reputation.

In 2009 Toyota moved from the number one spot it held in previous years on our Customer Loyalty Engagement Index to number two. The 2011 rankings will be posted the week of February 7th, but it’s not very likely that the brand is moving up the list.

Last year it was Hyundai that held the top spot in loyalty on our list, and hit maximum production capacity, with sales up 21% through the first 10 months of 2010. Oh, and an all-time October sales record – a 35% increase over last year. Few can deny their game-changing value-based advertising increased quality, and cool designs have driven driver loyalty and their success.

Ah, loyal customers! While they’re six times more likely to give a brand the benefit of the doubt in uncertain circumstances – recalls, for example, being human they don’t have bottomless tanks of forgiveness. And sadly for Toyota, the erosion of loyalty ultimately showed up on the bottom line. So correlating highly with the downward loyalty grade, Toyota sales in the United States have lagged behind an overall industry recovery.

Many in the industry believe that Toyota’s persistent drive for growth and profits hurt their quality efforts and ended up tainting the brand. Only proving that there are many brands that can figure, and so few that measure value.

On-line Noshing

As the story goes, a man hungry for a snack went down the street to the 24-hour grocery. When he got there, the manager was locking up. The would-be shopper said, "Hey, the sign says you're open 24 hours." And the manager replied, "Yes, but not in a row."”

So if you always suspected that the drivers of engagement and loyalty for grocery shopping involved Convenience, Range of Merchandise, Value-for-Dollar, and Free Delivery, you’re going to love this news: Amazon.com is starting a new service as an online grocer.

After testing the service – called “Amazon Tote” in Seattle, named for the reusable, weatherproof tote bags your order gets delivered in – the online-bookstore cum retailing website is in the process of creating a free, no-minimum-purchase-necessary, weekly, you-specify-the-day, home delivery service. Right – just like the on-line grocery purveyor Fresh Direct, but not as convenient. Not yet anyway.

Clearly, the service is designed to encourage customers to use Amazon as their main retail destination for regular household purchases as well as, well, everything else. Likely it hopes to strengthen its position as a challenger to Wal-Mart, which is currently the largest retailer in the United States—and is reported to be developing an on-line strategy for groceries and household goods, expanding its same-day, in-store collection service.

Keeping up with consumer expectations is always a challenge, driven exactly by brands reaching beyond satisfaction to delight, and changing the category as they do so. Having watched Amazon become, well, Amazonian in other categories, this is one story where consumers may write a totally new ending.

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To Be Trusted Is a Greater Compliment Than Being Loved. More Profitable, Too!

What’s the first thing that a consumer thinks of when they hear the phrase “product recall?” “Danger?” “Peril?” “Injury?” “Doesn’t Cousin Jerry handle class action lawsuits?” Whatever particular thought ran through your mind, it likely wasn’t good, right? So what would you do next?

Thomas Carlyle would have said, ‘the thought is the parent of the deed.” Brand Keys would say, “Uh oh, this is definitely going to affect customer loyalty, sales, and profitability.” We’d say that because our metrics are leading-indicators of consumer behavior and always play out in the marketplace. Currently our 2011 Customer Loyalty Engagement Index is in field and we’ll know for sure how J&J brands will rank in the OTC Allergy and Pain Relief categories in a couple of weeks. But we can tell you now it’s not likely they’re moving up from where they found themselves at the end of last year.

Tylenol (and many of their other brands) was a brand consumers loved. It headed up our loyalty and engagement lists in January 2010. But recalls of Tylenol allergy, cold, sinus. 8-hour, arthritis pain, extra strength, PM, children’s, infants, meltaways, Rolaids, Rolaids softchews extra strength, Adult Benadryl, Children’s Benadryl, Sudafed, Sinutab, Motrin Jr., IB, children’s, infant’s, Children’s Zyrtec, and Zyrtec itchy eye-drops set off a rankings avalanche that we hadn’t seen since BP tried to single-handedly kill the Gulf of Mexico. No, it’s pretty much a sure bet that these recalls guarantee that J&J brands, at the bottom of the end-of-year 2010 lists, won’t be moving up in the standings when we post the 2011 rankings.

Last year, ‘Brand Trust’ made a really high contribution to category engagement, loyalty, and profitability. Much, much more than ‘Product Efficacy,’ which is seen to be ‘table stakes’ these days. And, as we’ve often pointed out, consumers with aches and pains, coughs and colds, watery eyes, and wonky stomachs aren’t sitting around suffering waiting for J&J to get their act together and for drugstores to re-stock shelves with J&J products. No, they’re buying something else.

And, because most well-known products (in most categories) have turned from “brands” into “category placeholders,” i.e., products of which consumers are aware, but don’t really stand for anything in their minds beyond category efficacy, drugstores are taking advantage of the situation to highlight generic, usually drugstore-branded alternatives that turn out to be seen to be just as effective as any “branded” product. But cheaper with the added-advantage that it’s not part of a massive national recall and an FDA probe.

Experts have suggested that the diversity and scale of the J&J recalls are either due to a systematic failure in manufacturing quality control or the result of cost- cutting—unlike the Tylenol poisonings, which was not the brand’s fault and to which the brand reacted swiftly, keeping consumer trust. And while it may take a lot of money to ensure quality products, trying to buy back brand trust is a near-impossible and awfully expensive proposition.

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What Would You Do If You Knew You Could Not Fail? Oh, and Your Brand was Apple!

Steve Jobs, CEO, Chief visionary, and Showman Extraordinaire of Apple announced he was taking another medical leave, elevating anxiety levels of industry watchers and investors who seem to feel it raises critical questions regarding the state of the world’s most valuable tech company.

It’s worth noting – with absolutely no disregard for Mr. Job’s creative drive, vision, and force of personality – that this isn’t the first time Mr. Jobs has taken time off to address health issues. It’s happened twice before and the company has prospered despite those sabbaticals. Mr. Jobs may be the face, and even the heart of the company – much like Richard Branson, the entrepreneur’s entrepreneur of the Virgin brand – but, happily, from a management perspective, he isn’t the only talent Apple possesses.

Outside of the tech and investment arenas, names like Tim Cook, Phillip Schiller, Scott Forstall, Jonathan Ive, and Ron Johnson (COO, Worldwide Product Marketing, iPhone engineering, Industrial Design, and Retail respectively) may not cause techies’ hearts to flutter, but they are the management team that drives the company. But in this instance it’s important to remember that what drives the consumer is the brand.

When it comes to brand loyalty, Apple generally leads competitors in better meeting – even exceeding – customer expectations. According to our Customer Loyalty Engagement Index, they were far and away the strongest brand in the Computer Category. When we supplemented the mobile sector with the then newish Smartphone Category, they led there too. We dropped the MP3 Play category because despite the actual brand the consumer owned, they persisted on calling them “iPods,” which made accurate assessments really difficult.

See, people may admire CEOs, but they buy brands. Today real 21st century “brands” are products or services that are so strongly imbued with values and articulated meaning that they are easily differentiated from the competition. Or in the case of the Apple iPod, just plain out own the category, (because really, when’s the last time you saw somebody listening to their Zune or Archos?).

There’s a Russian maxim that goes “visionaries are leaders with a poorly developed sense of fear.” And while there may be only one Steve Jobs, the fact that there’s also only one Apple brand should help allay shareholder fears.

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Going Green

The Fashion and Style section of the New York Times on January 5th reported on the demise of eco-jeans. It turns out that how the jeans are made are trumped by the way they are made—namely, the way they actually fit.

Organic cotton, as it turns out, presents some difficulties when it comes to holding shape, and those manufacturers who jumped on the eco-wagon have learned it’s a bumpy ride when you mess with what matters most when it comes to blue jeans. If denim can’t hold its shape, it’s not going to hold to a woman’s, and that, my friends, is a problem.

In fact, it’s a problem we outlined in a conference on green nearly three years ago now, when this trend was causing spontaneous celebrations to erupt in the denim kingdom. We demonstrated that consumers found green low on their list of priorities when it came to this category, and that what mattered when buying automobiles and food did not automatically transfer to the buying of blue jeans. We even had charts.

Now the marketplace reality had dragged the truth out from the dressing room into a less-flattering but brighter light: what people say matters and what really does matter are not only often very different things, but also easily missed in direct questioning. Our use of emotional metrics placed the eco-quotient of denim brands far below that of fit, because our below-radar measures are able to answer awkward questions like “Do I care more about my butt-print than my foot-print?”

Predictability, it turns out, is what makes a brand fit with consumer expectations and keeps it profitable. And that’s a green that makes every brand look good, no matter what the category.

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Talk Is Cheap!

You hear a lot of companies talk about “engagement” and “loyalty.” Every research supplier, consultant, agency, and media shop has a method they talk up. Theories abound. So do snappy names. And while theories (whatever they’re named) are a good beginning, answers that pay off are what you want in the end.

There are a lot of pertinent questions CMOs, brand planners, and strategists should be asking about their research. Predictions regarding real consumer engagement and loyalty, but especially about in-market behavior, can be a risky business if you don’t ask the right questions before you commission the research. Questions like, “Is the research predictive?” “Is it validated?” And “Does it measure emotion, how, and does that go beyond check-lists of imagery items?”

But ultimately there’s really only one question you need satisfactorily answered: What happened? The research said this. . . and what happened?

Winston Churchill wisely noted, “however beautiful the strategy, you should occasionally look at the results,” so as 2010 came to an end, we took his advice, and examined how closely what we said during the year in our Tuesday and Thursday blogs, The Keyhole, actually matched up with market results. In short, to see what happened?

If you click on the ‘What Happened?’ link on our Brand Keys website you can listen to an introduction to our exercise and 21 recordings (or download a pdf): true stories that are the result of that examination – a look back at our blogs on categories ranging from sports leagues to smart phones, and copiers to cameras, and our comments about brands from Ford to Facebook, and Apple to Avis – to see if what we said would happen, did happen.

Yes, having research is good, but getting positive results for your brand is better. These days you need to walk away from the table if your research doesn’t match up with market results. Ben Franklin is reputed to have coined the adage, "Well done is better than well said” or, as you might suggest to your research providers in today’s parlance, “Don't talk the talk if you can't walk the walk.”

Because research ‘talk’ that doesn’t match up with what happens, can end up being an awfully expensive conversation.

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Being Right Too Soon

American science fiction icon, Robert Heinlein, noted, “Being right too soon is socially unacceptable.” He was, of course, talking about insights and impacts of imagined innovations in science and technology, usually set on another planet or dimension in a futuristic setting. But when it comes to the business of 21st century brand management on this planet, being right as soon as possible is not only acceptable, but of great competitive advantage.

And while science-fiction writers may have an edge on other authors regarding views of the future, marketers that have real loyalty and engagement metrics in place will always have a handle on the trends that are going to show up in their offices long before their competition.

Mid-last year we wrote in this blog about a trend our engagement survey had identified regarding the fact that the worth of a book, once measured by what the reader could carry away from it, was going to be measured in how the books are actually carried – the dawn of e-readers. And the fact that while – at the time – many regarded the devices as interesting, early-adopter gadgets, they were going to soon become the accepted, mainstream “book” delivery system.

In support of that finding, today’s USA TODAY’s Best-Selling Books list shows that e-book versions of the top six books outsold the print versions last week. In fact, of the top 50 best-selling books, 19 had higher e-book sales than print sales.

For those of you who do not feel that e-books are a sustainable trend, we gently remind you of the Sumerians and their clay tablets, the Egyptians and their papyrus, and the Greeks and their parchment. Oh, and that when it comes to predictive research you can never be right too soon!

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The Top-10 Real New Year’s Resolutions for 2011

Welcome to a new decade and to January, the namesake month of Janus, the Roman god of doorways, beginnings, and endings. Janus is often depicted as having two heads, facing opposite directions: one head looks back at the past, while the other looks forward to the future, a fitting symbol as New Year’s is the traditional time for people to reflect on changes they want to make for the coming year.

But as we’re not big fans on looking backwards, we put our predictive leading-indicator engagement and loyalty metrics to work to identify the top-10, authentic, likely-to-be-successful resolutions for 2011, keeping in mind that just like meaningful brand research, folks saying something and actually doing something are two very, very different things. This year’s list looks like this:

1. Get yourself organized
2. Do things that make you happy
3. Learn something new
4. Exercise more
5. Watch your diet
6. Find a new job
7. Better manage your finances
8. Spend more time with your family
9. Quit smoking
10. Quit drinking

People who actually make resolutions are ten times more likely to change than those with the same goals, but who don’t actively make a resolution. Yes, resolutions are more easily made than kept, but people are able to maintain their resolve pretty well. More than 75% are able to maintain their resolutions past the first week, 64% are still going strong after a month, and nearly half the people who have made a resolution are able to maintain them for more then 6 months. It’s a sign that people can successfully change their behavior, a lesson for us all.

In business, New Year's has always been a time for planning for positive change too, so as you contemplate how to enhance your brand’s performance for the coming year, we’d like to suggest one more resolution: Divest yourself of mid-20th Century, lagging, legacy measures that look backwards and incorporate real leading-indicatory loyalty and engagement metrics into your 2011 marketing toolbox. They’re predictive of the preferences, expectations, and behaviors of 21st Century consumers, and can virtually ensure brand profitability.

Of course, a new year is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us. We look forward to joining you!

All best wishes for 2011.

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