January 29, 2014
RETURN ON LOVE (R.O.L.): A new way to look at the power of Brands
I know in this world of big data, everyone wants an exact measurement of everything you do. It’s all about immediate Return on Investment (R.O.I.) and that does make sense given the economy. If you can’t measure it, then don’t do it.
But I want everyone to have just a little bit of faith. Keep in mind, marketing is still half art and half science. You have to have some instincts in your decision-making but also creativity to ensure you stand out and connect. There’s a reason Apple made their desktops look like furniture, Starbucks started doing red cups at Christmas and Nike makes TV ads that give us goose bumps, not because of the immediate ROI it produces, but rather the love it creates between the consumer and the brand. They were in fact, investing in the Return on Love (R.O.L.), knowing all that love would be the fuel to driving power and profit in the long run.
R.O.L. leads to more R.O.I.
The big idea behind RETURN ON LOVE is that the work you do on the brand is first and foremost focused on creating a strong bond between your consumer and your brand. Once you have that bond, you can use it as a source of power versus all the stake holders of the brand. If we think back to porter’s model, the brand’s bond gives you added power over customers, suppliers, competitors and even the very consumers you have the bond with. Beyond Porter’s forces, the brand would also generate added power with the media, key opinion leaders and employees. Once you have power, you can drive growth and profit, using that power to drive up price, drive down costs, gain market share and enter new categories.
Look at the brands mentioned above: Apple, Nike and Starbucks. They are some of the most beloved brands with a very strong, emotional and loyal bond with their consumers. And each has used that strong bond to wield power in the market. Starbucks took their loyal morning coffee drinkers into the lunch-hour. Nike has been able to use emotional to gain share and tame dominant Adidas brand. And Apple has used power to drive price, share gains, new categories and even cost management. These brands then used this power to drive profit, Apple is the best example, where sales have gone up 10-fold and at the same time, margins went from 10% to 40%.
If your finance person asks “so what is the ROI on this”, I’m not recommending you say “we are focused on ROL buddy, not ROI” but what you should say is “we are investing in building a bond with our consumer that will give us more power that we can then wield much greater profit for our brand”
Love = Connectivity = Power = Profit
5 Ways Brands can CONNECT with consumers
I keep hearing brand experts debate that it’s not the advertising, it’s the product, or the new one is it’s the company culture–people don’t buy what you do, they buy why you do it. Debate all you want, to get to a Beloved Brand, you need all 5 of the following ways to be working very hard to CONNECT with customers
- The brand’s promise sets up the positioning, as you focus on a key target with one main benefit you offer. Brands need to be either better, different or cheaper. Or else not around for very long. “Me-too” brands have a short window before being squeezed out. How relevant, simple and compelling the brand positioning is impacts the potential love for the brand. Apple goes above just their product with a promise of simplicity that allows everyone to experience the future through technology.
- The most beloved brands create an experience that over-delivers the promise. How your culture and organization are set up can make or break that experience. Hiring the best people, creating service values that employees can deliver against and having processes that eliminate service leakage. The culture attacks the brand’s weaknesses and fixes them before the competition can attack. With a Beloved Brand, the culture and brand become one. I love the Starbucks experience that has been created with coffee as the base, but they have gone so deeper to enable magical moments for their consumer.
- Brands also make focused strategic choices that start with identifying where the brand is on the Brand Love Curve going from Indifferent to Like It to Love It and all the way to Beloved status. Marketing is not just activity, but rather focused activity–a focused target, a focused message, focused strategic choices, focused activities always with an ROI mindset. Where you are on the curve might help you make strategic and tactical choices such as media, innovation and service levels. Find those who are most motivated to buy what you do best. I love how Volvo is so singularly focused on the safety message since 1954. Yes they have leather seats and a great radio, but the message is always safety first.
- The most beloved brands have a freshness of innovation, staying one-step ahead of the consumers. The idea of the brand helps acting as an internal beacon to help frame the R&D. Every new product has to back that idea. At Apple, every new product must deliver simplicity and at Volvo, the innovation must deliver the safety promise.
- Beloved brands can tell the brand story through great advertising in paid media, through earned media either in the mainstream press or through social media. Beloved Brands use each of these media choices to connect with consumers and have a bit of magic to their work. John Lewis out of the UK, is an employee-owned store growing double digits right through the recession because of their commitment behind amazing story telling around the simple message of the gift of giving.
12 ways to turn the CONNECTION into generating POWER for your Brand
A brands connection between consumer is a power. And that power translated itself into 12 forces of a power that a Beloved Brand wields, (show below).
A Beloved Brand with a loyal group of followers has so much more power–starting with a power over the very consumers that love them. These consumers feel more than they think–they are e-rational responding to emotional cues in the brand. They’ll pay a premium, line up in the rain for new products and follow the brand to new categories. Look at the power Starbucks has with their base of consumers, making their Starbucks moment one of their favorite rituals of the day and how consumers have now added sandwiches and wraps to those rituals. All day long, Starbucks has a line up of people ready for one of their favorite moments of their day.
Using Porter’s 5 forces, we can see that the love also gives Beloved Brands power over channels, substitutes, new entrants, or suppliers. People rather switch stores than switch brands. Apple has even created their own stores, which generate the highest sales per square foot of any retailer. These brand fans are outspoken against competitors and suppliers will do what it takes to be part of the brand. In Apple’s case, Intel has given them the lead on new chip technology.
Beloved Brands have a power over employees that want to be part of the brand and the culture of the organization that all these brand fans are proud to project. People at Starbucks love working there and wear that green apron with a sense of pride. Brand fans know the culture on day 1 and do what it takes to preserve it.
Beloved Brands have a power over the media whether that’s paid, earned, social or search media. Apple generates over a billion dollars of free media via the mainstream media and social media. Competitors complain about Apple getting a positive media bias–they are right, they do. Even for paid media,beloved brands get better placement, cheaper rates and they’ll be the first call for an Integration or big event such as the Super Bowl or the Olympics. Nike did such a great job with social media during the London Olympics that people thought they were the main shoe sponsor–when it was Adidas.
Beloved Brands have a power over key influencers whether it’s doctors recommending Lipitor, restaurant critics giving a positive review for the most beloved restaurant in town or Best Buy sales people selling a Samsung TV. They each become fans of the brand and build emotion into their recommendation. They become more outspoken in their views of the brand. And finally beloved the Beloved Brand makes its way into conversation at the lunch table or on someone’s Facebook page. The brand fans are everywhere, ready to pounce, ready to defend and ready to say “hey, you should buy the iPhone”. The conversation comes with influence as crowds follow crowds. This conversation has a second power, which creates a badge value. People know it will generate a conversation and are so proud to show it off. After all, they are in the club. All twelve of these forces combine to generate further power for the brand.
The next time you’re meeting your brand leader, ask them how they are turning all the work marketing is doing into generating power for the brand? They’ll likely be stumped, but without this power, there is no real reason to have a brand. The love you generate between customer and brand should start to replicate the power of a monopoly. Who would you rather invest in right now, Apple or your local utility?
8 Ways to turn CONNECTION and POWER into more PROFITS for your brand
With all the love and power the Beloved Brand has generated for itself, now is the time to translate that into growth, profit and value. The Beloved Brand has an Inelastic Price. The loyal brand fans pay a 20-30% price premium and the weakened channels cave to give deeper margins. We will see how inelastic Apple’s price points are with the new iPad Mini. Consumers are willing to trade up to the best model. The more engaged employees begin to generate an even better brand experience. For instance at Starbucks, employees know the names of their most loyal of customers. Blind taste tests show consumers prefer the cheaper McDonald’s coffee but still pay 4x as much for a Starbucks. So is it still coffee you’re buying?
A well-run Beloved Brand can use their efficiency to lower their cost structure. Not only can they use their growth to drive economies of scale, but suppliers will cut their cost just to be on the roster of a Beloved Brand. They will benefit from the free media through earned, social and search media. They may even find government offer subsidies to be in the community or partners willing to lower their costs to be part of the brand. For instance, a real estate owner would likely give lower costs and better locations to McDonald’s than an indifferent brand. Apple get a billion dollars worth of free media, with launches covered on CNN for 2 weeks prior the launch and carried live like it’s a news event.
Beloved Brands have momentum they can turn into share gains. Crowds draw crowds which spreads the base of the loyal consumers. Putting the Disney name on a movie generates a crowd at the door on day 1. Competitors can’t compete–lower margins means less investment back into the brand. It’s hard for them to fight the Beloved Brand on the emotional basis leaving them to a niche that’s currently unfulfilled. Walk past an Apple store 15 minutes before it’s open and you’ll see a crowd waiting to get in–even when there are no new products.
Beloved Brands can enter into new categories knowing their loyal consumers will follow because they buy into the Idea of the Brand. The idea is no longer tied to the product or service but rather how it makes you feel about yourself. Nike is all about winning, whether that’s in running shoes, athletic gear or even golf equipment. When Starbucks went for pastries and sandwiches the consumer quickly followed.
The Return on Love (R.O.L.) The new measure that turns connectivity into money
To read more about how the love for a brand creates more power and profits:
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