Death of a brand

Terrific article on the rise and fall of AT&T Wireless. It's a shame to see a strong brand like AT&T driven into the ground through poor execution. But this is a good example of a recent post on brand management that advocates not to take brand equity for granted.

Former McCaw Cellular executive Bill Malloy remembered that around 1992, when the company got into the discussions with AT&T Corp. about some form of cooperation, McCaw employees' excitement at that prospect revolved around AT&T's "revered" brand.

"We just saw this great opportunity that if you ever took on this brand of AT&T and attached it to wireless, you'd just live out the dream: to become absolutely the wireless company that customers stayed with and trusted," he said.

"So when you ask, are you disappointed (with this outcome), well, absolutely, you are, because I never wanted to see AT&T Wireless go away. That's just not the way you would have wanted to end the movie."

GE Brand Central

Thanks to CC-Tnewsblog for the link to GE's Brand Central, a "comprehensive guide to using the GE brand in print, online, for products, at events and in public spaces." If you create brand identity guides (or need to create one), this is an example of 'best practice.'

Typepad

In case you were wondering why my last post appeared in your RSS feed 6 times...

I discovered something new about saving posts in Typepad. If Typepad's server is busy, don't hit "Esc" and "Save" again. As my RSS subscribers have probably noticed, Typepad will save your post every time you hit Save... even if the operation times out and it doesn't appear to have been saved. So now I know not to be so impatient. :-)

Loyalty programs

McKinsey Quarterly has a brief article called Better Rewards for Hotel Loyalty that outlines how to improve hotel customer loyalty programs (free registration required). The bottom-line advice is appropriate for all businesses:

In fact, a hotel can learn a good deal by conducting a better dialogue with its guests and by giving frontline staff members an incentive to note their observations...

Hotel operators should also search for innovative ways to distinguish programs from those of the competition and to make them more appealing to frequent travelers. Free meals aren't much of an incentive to anyone on an expense account. Instead, these customers want their rewards to be personalized with things that matter to them: benefits such as upgrades to concierge floors or offerings (including free movies or minibar items) not covered by their expense policies. Moreover, some guests may be planning special events (such as weddings, honeymoons, vacations, or large parties) that could not only serve as the focus of innovative rewards programs but also use up lots of points—if hotels were aware of them.

This article got me thinking about loyalty programs. As I see it, there are three kinds of customer repeat business (sometimes known as loyalty):
1. Repeat business due to monopoly. Telecom and energy services pre-deregulation, and Microsoft Windows & Office, are examples of repeat customer business driven by lack of choice. When new choices become available, customers eagerly seek out alternatives if they're not satisfied with their current provider. Microsoft is beginning to face serious threats from Linux on the OS front; it's also losing share in the browser category to Mozilla and soon to Google (who recently registered gbrowser.com).

2. Repeat business from loyalty programs. A good example is my so-called "loyalty" to American Airlines. I fly AA because I have a bunch of frequent flier miles. And after hitting Gold status, I do enjoy a better experience than I did previously. However, this does not mean I'm loyal to AA. My bad experiences far outweigh the good ones and I wouldn't recommend the airline to anyone. I just fly them to get free trips. My last experience was bad enough that I'm tempted to use up my miles and start flying with another carrier... except I'm a bit stuck with AA as they have the most direct flights out of Dallas.

3. Repeat business due to true loyalty. This is where customers love their interactions with a company and eagerly refer others. For a lot more info on this subject, visit Ben and Jackie's Customer Evangelism blog. The reason why Linux, Apple and Google are making inroads into Microsoft's territory is because their customers are passionate about these brands.

The McKinsey article is attempting to get hotels to start thinking in terms of #3 instead of #2. The transition starts with dialoguing with customers and learning what's important to them. A free room isn't compelling to someone on an expense account; a free movie or a mini-bar item is. If American Airlines wanted to create true customer loyalty, they'd get serious about what customers really want: on-time flights and friendly, helpful staff. If Microsoft wanted to transition from monopoly to loyalty, it would stop pushing one-size-fits-all products and start giving customers what they really want. For example, a fitness trainer doesn't need (or want to pay for) the same functionality as a corporate marketing director. They could start with unbundling Office programs, or creating versions with less functionality at a lower cost, etc. Just skip the idea of a loyalty program altogether.

American Airlines' frequent-flier program birthed the misleading idea that companies could buy loyalty. Because it appeared to work, companies in all industries started creating their own versions. IMO, there is no such thing as a "customer loyalty program." Look at any company that has true customer loyalty and you'll find that they don't need a loyalty program. Starbuck's has enough loyal customers that they don't need to distribute "buy 10 and get 1 free" punchcards.

I'm not saying that there's no place for heart-felt thank-you's. Effective customer programs are those that trade value for value in acknowledgement of the relationship that's been built over time. Think about it in terms of a personal relationship between individuals: everyone knows that you can't buy love. But in a strong relationship, each party offers gifts -- tangible and intangible -- that reflects the value placed on the other party. And the gift should be something that's valued by the recipient. A gift that's selected simply because it's cheap and easy for the giver is worse than no gift at all. I'm thinking about a Sienfeld show where George buys Elaine a cashmere sweater for Christmas with a red stain on it, and he catches hell for being such a cheapskate.

So are you buying customers with a 'rewards' program? Or are you showing your appreciation to loyal customers by trading value for value? There's a world of difference.

B2B advertainment

Check out Covad's VoIP: The Movie. The plot's a bit forced, but it's certainly an engaging and entertaining way to get the word out. This is the first time I've seen advertainment for a B2B offering, and I applaud Covad for thinking outside the traditional B2B box.

Customer-Centered Brand Management

There's a terrific article in this month's Harvard Business Review entitled "Customer-Centered Brand Management." (You can purchase and download the article here for $6.)

The focus is on how brand management still trumps customer management in most large companies. A good example is Oldsmobile; the brand managers tried to keep the brand alive by repositioning it through the slogans, "This is Not Your Father's Oldsmobile" and "A New Generation of Olds." Neither campaign was effective in bringing younger users to the brand, and in 2000 GM announced that Oldsmobile would be phased out.

Why did General Motors spend so many years and so much money trying to reposition and refurbish such a tired image? Why not instead move younger buyers along a path of less resistance, toward another of the brands in GM's stable -- or even launch a wholly new brand geared to their tastes? ... We know why not, of course. It's because in large consumer-goods companies like General Motors, brands are the raison d'etre. They are the focus of decision making and the basis of accountability. They are the fiefdoms, run by the managers with the biggest jobs and the biggest budgets. And never have those managers been rewarded for shrinking their turfs.

The article goes on to promote a reinvention of brand management that puts the brand in service of the larger goal: growing customer equity. Amen to that. A brand is is an idea in the minds of its customers, and it's extremely difficult to change customers' minds. The path of least resistance is to fully understand your customers and determine if your brand can meet them where they're at. Unfortunately, most marketers try to make customers come to the brand instead of vice versa.

Johnnie Moore has some terrific thoughts on brand co-creation with customers, and how brands are emergent rather than 'managed'. You can read his thoughts here, here and here. He says in one post:

I think it helps to think of brands as emergent. Not things that unfold according to the master plan, but that emerge as a result of all the encounters between people who belong, with varying degrees of enthusiasm or loathing, to the community around a brand.

That doesn't mean, that there is no role at all for strategy and planning but to my mind it should shift attention towards responding rapidly to what's going on at the chalkface (I hate that word "touchpoints"). Because your brand is not created in the boardroom or marketing department, it's being created by us ordinary folks who stack your shelves or pick our cornflakes off them.

So if brands are emergent and fluid, what are the implications for the idea of brand equity? The HBR article answers:

Assigning an average value to brand equity is dangerous because it obscures the fact that brand value is idiosynchratically assigned by the customer. Managers begin to believe that the value of their brand is somehow intrinsic -- that, like a diamond in a necklace, the brand has an objective, inherent value.

Which leads to some great questions. How 'set in stone' do you believe your brand to be? How open is your company to bringing the customer into the brand management process? Do you see the world through a compartmentalized brand/business unit lens or through a customer lens?

Airlines headed for a crash

While it's fresh on my mind, I'll share my terrible customer experience on American Airlines. The plan was to fly from DFW to Zurich to Copenhagen, then hop on a train for 30 minutes to arrive in a small town in the south of Sweden. So we boarded the plane and sat in purgatory (the interminable time between boarding and take-off) for an hour until the pilot announced that the plane was officially out of service and they're trying to find us a new airplane. Knowing (along with most of the other passengers) that I wouldn't make my connecting flight, I was fortunate to get at the front of the line at the ticket desk to find out my options. The two gals working the ticket desk were 1) either new or incompetent, as they kept having to ask supervisors how to get things done on their computers, and 2) flat-out rude. One of them actually turned to the supervisor and audibly said, "Can I go work at another ticket counter? I just can't take it here anymore." (Excuse me? Isn't this your job?) No apologies to the passengers, nothing. We were treated like hassles to be endured, not valuable paying customers who had been greatly inconvenienced by their airline. Anyway, they finally got me on a flight to London/Gatwick, where I then spent almost 4 hours transferring over to Heathrow before continuing on to Copenhagen.

Is it any wonder that the airline industry is in the toilet and in need of a major overhaul? A recent commentary on MotleyFool shares another bad flying experience and says:

These businesses (major airlines) are largely failing for two reasons. One, their antiquated structure makes it exceedingly difficult to bring costs in line with revenues. Two, they provide a commodity product in a service industry, yet overall they offer an abhorrent level of service to their customers...

Is it really a surprise that US Airways is likely heading for its second bankruptcy filing, or that Delta (NYSE: DAL) is knocking on the default door as we speak? How about American (NYSE: AMR)? Are Northwest (Nasdaq: NWAC) and Continental (NYSE: CAL) looking good to you these days?

Certainly these companies have -- with your money -- helped to build the infrastructure that makes modern air travel possible. But it would take a complete rewrite in order to make these dinosaurs competitive with the JetBlues (Nasdaq: JBLU) and Southwests (NYSE: LUV) of today (not that I'd recommend those stocks either).

Personally, I believe a fundamental change is taking place in the airline industry as we speak. Further, this change will ultimately create a completely different view of what it means to travel by air in this country, and the major carriers simply won't be able to reinvent themselves in time.

When you're operating in a commodity industry, you've got two choices. Either create a new disruptive product or service that takes you out of commodity status, or differentiate on service. The major airlines are doing neither of these. MotleyFool author Matthew Emmert is right: the airline industry is going to get blown apart in the near future. JetBlue and Southwest have started the shakeup, but there's more ahead. Thank goodness. I don't think change could come fast enough for most of us travelers.

Yes, I'm alive...

but barely. Went to Sweden last week on business; no internet access in my room meant no blogging for me. Came home jet-lagged, caught some nasty cold/flu bug and was basically down for the count all of last week. Still coughing up my lungs but feeling infinitely better this morning, so I thought it was high time for me to update this blog. More to come...