Five - Take Us to Your Leader
The chapter opens with a peek behind the curtains of Domino's Pizza, whose makeover in 2009 began with the CEO offering a public apology: "We're sorry our old pizza wasn't very good."
It wasn't that the product had gotten worse over the years, but that it had not changed. The chain was founded in 1960 and maintained its product quality, but newer competitors were offering scratch-made products that were more flavorful and fresher. The firm had already taken a black eye for launching a legal battle against a competitor whose product people thought was better, and the recognized that the marketing phrase "new and improved" had been wrecked by overuse and misuse by many firms seeking to make a sale of a product that wasn't much different at all.
Instead, the brand chose to apologize - which would be shocking in its novelty, gain credibility for being honest, and get people to pay attention to their story of the effort they put into making a better product. The advertising campaign itself earned "some of the highest marks ever granted [by viewers] to a fast-food commercial." And as for actual purchasing, the chain's same-store sales leapt 14.3% the following quarter, the largest single-quarter gain in the history of fast food.
This slips onto a siding about CEOs and advertising. Very often, the CEO only appears when there is negative information about the firm, or when they have said something embarrassing that the media wants to associate to the brand rather than the person. In fact, many PR firms do everything they can to keep the CEO from speaking to the media - many of them are not polished speakers, and often coaxed by muckraking journalists into saying something that embarrasses themselves and their brand.
Unfortunately, the age of mobile and social gives the CEO no place to hide. Any time they are in public, the eyes (and cameras) of the world are upon them.
CEOs in Advertising
In psychological terms, providing a human spokesperson to represent a faceless corporate entity is called concretization, and is believed to have an impact on loyalty. While people may describe a brand or company in the same terms as a person, they do not see the two as analogous, and feel that interacting with brands and companies is very impersonal. Providing a human face to represent the brand makes it seem more accessible to them, and is believed to be significant in establishing a sense of liking and loyalty.
This is not new or particularly unique: in the early industrial era advertisements presented images of the company's owners or management and even through the television era paid spokespeople or fictitious characters were created to give customers a place to attach their loyalty. The problem is that these depictions were austere and often fake - even to the point of using cartoon characters as spokesmen for the brand. So while this has been found to be better than nothing, it still falls short of a sincere, genuine, and real person to represent the brand to the public.
Studies have shown that advertisements featuring a CEO rank above average in their effectiveness when compared to other advertising, provided that the CEO is "genuine and authentic" and delivers a message that is trust-inspiring and direct. The author names a few advertising campaigns featuring the CEO as a central character (Papa John's, Sam Adams, and Wendy's) that resounded with consumers - and in which the CEO was not a stiff and austere pitch-man but seemed to be a genuine human being interested in providing them with a quality product.
A similar study looked into the paid celebrity endorsement ad, and found that these had very poor performance, and were even outperformed by advertisements that contained actors who were not recognized as celebrities. This was consistent across age and gender demographics. (EN: There is a difference between a paid endorsement and a "plug" in which it seems a celebrity endorses a product without being paid to do so - those are actually very effective so long as it is not discovered it was a paid plug, in which case both the brand and the celebrity lose credibility.)
The author concedes that generalization about celebrity endorsements may be difficult to assess because of the covariance between the warmth and confidence of the celebrity and that of the brand. Where a popular celebrity endorses an unpopular brand, or a disgraced celebrity endorses a popular one, there is some conflict between the two, and it cannot be sorted which is more influential.
Back to CEO spokesmen: the author repeats that they must be sincere and genuine. When they are glib, polished, and arrogant they may still convey competence, but not warmth - and in fact may seem a bit cold and removed. She also suggests that there may be a net effect of CEO spokesmen - when one company exposes their CEO to the public, competitors who don't draw suspicion.
(EN: Back to the Domino's example, Papa John's had been using its CEO in commercials for years, during which period the firm increasingly gained market share against Dominos. There is no hard proof that this was a cause of the loss of market share, as product quality is often cited, but it seems reasonable to assume it had some effect.)
Transformational Leadership
The author refers to a leadership study (Bass 1990) that classified leaders as transactional or transformational. Transactional leaders are those that merely attempt to maintain the present operations of a firm, carrying on business as usual in a rational but humdrum fashion.
Transformational leaders are more heroic types, who attempt to effect major changes in organizations. Employees, customers, and investors are all more impressed by this form of leadership, which inspires hope and support for their grand schemes.
Customer experience is currently in a transformational state, and the author suggests that leaders need to be more at the forefront to lead the charge and serve as spokesmen and champions.
(EN: This really is not enough, as people are also accustomed to leaders who attempt to portray their brands as being transformational, but no actual changes are taking place. There are also some really bone-headed leaders who boldly proclaim ridiculous plans. There really must be a valid and credible plan for a leader to stand behind - and if a firm insists on business as usual, then it should keep its leaders well cloistered.)
The Value of Transparency
The traditional demeanor of brands and companies has been one of opacity and distance, to seem powerful and mysterious to the market in order to inspire confidence in the brand. This has been successful in giving an impression of competence, but utterly failed to convey a sense of warmth.
For individuals, the need to appear powerful leads them to attempt to cover up their mistakes and hope to be perceived as competent and flawless. But the world is more transparent than it once was - and mistakes are going to be uncovered. Not only will the brand seem incompetent for having made mistakes, but it will seem dishonest for having attempted to hide them.
For that reason, the author believes that being open is worthwhile: not merely to demonstrate your success, but to admit that there are areas in which you can be doing better - and then to show a genuine effort that you are making to improve. Customers do not expect perfection, and have great affection and support for those who are trying to improve.
(EN: I think this may not be true of all products. Particularly in healthcare and pharmaceuticals, it may undermine confidence if errors are exposed. That's not to say they should be denied, but proclaiming them too loudly is likely unwise in that it undermines the high level of confidence a customer must have in the competence of certain products.)
The author also refers to transparency in business operations. Companies that expose their logistics, telling the customer the progress of their order and its delivery, receive far fewer complaints than those who keep this a secret and take a "you'll get it when you get it" attitude toward customers who are impatient to receive the goods they have paid for.
Another odd bit is the way in which Domino's has sworn off of "food styling," the practice of having a professional photographer primp up their product to make the food in advertisements appear better than what any customer will ever see when they open the box. On the company's Facebook site, they share fan photos but place none of your own. "Whenever you see a picture of a Domino's pizza [on Facebook] it was most likely taken by a fan with a cell phone camera."
An incident is mentioned in which an unflattering photo was used in a national television AD, in which the CEO rather shamefully admitted "This is not acceptable ... We're better than this. ... We're going to get better." Naturally, the corporate office kept a close eye on the franchises in the areas, and product quality and consistency improved. The CEO remarked that "I basically have three hundred million people mystery-shopping for me."
The author's clever metaphor: this is making sauce out of the tomatoes people throw at you.
At the Heart of Loyalty
People do things out of three sources of motivation, and in choosing whether to interact with us, other parties consider our motivation.
- Compliance - We do what we must, or what others expect. This impresses no-one and causes them to be obsessive about the wording of an agreement because they do not expect us to do anything that is not explicitly required.
- Influence - We do what we believe is right. Others respond warmly when they share our values, but form implicit expectations of us, which they expect to be fulfilled. Our obligation is not the letter of the contract, but the spirit of what's "right" or "fair."
- Identification - We do what is in our nature. Others respond warmly because our behavior is predictable. They feel that they know us intimately and understand what we are likely to do because we have integrity.
It is implied that these can also be considered as steps in doing what is necessary to earn customer loyalty. At minimum, we must do what we explicitly agree to do - and that is the level at which many firms stop, which is the reason they earn no loyalty from customers.
Leading by Example
The author turns to the notion of the celebrity CEO, which is a person that consumers recognize and know by name. However, being a heroic figure is not the only way to achieving this status - it also goes to those who speak in terms the customer can understand.
The most common exposure that executives have to the public is in the financial press, where they talk about return on investment, growth rates, earnings per share, and other topics that are of interest to investors - which resounds with people who want to make money by investing in a company, but not those who wish to benefit from purchasing a product. If anything, it gives customers a sense that the brand has a purely mercenary attitude toward them.
While this is important, it is also valuable for the CEO to be seen in front of the public talking about things that interest the consumer - the quality of their products. It's also mentioned that CEOs that talk about topics in the interests of their employees (job creation, work-life balance, etc.) can also win sympathy from the public.
It's also suggested that leaders are held to higher standards than the rank and file employees. They need to appear not only as more competent, buy more enthusiastic, passionate, and committed to the mission.
However, a leader must have more than just good intentions, but must also provide proof in action to maintain his credibility. A leader with a history of false promises loses credibility for himself and his brand.
Tell Us Your Story
The author refers to the previous example of Hershey's Chocolate, in which customer loyalty increased among those who learned about the firm's philanthropic activities. And again, altruism will not substitute for competence, but when the two are added together it becomes a powerful hook upon which loyalty may be affixed.
In this sense, people are more motivated by stories rather than descriptions of a firm. To say that Hershey is a good corporate citizen is vague and uninspiring. To tell the story of the founder and a history of charitable activity creates a strong positive impression of a company that has a track record of demonstrating warmth.
A story does not have to be a saga, involving many events over a long period of time, but can be an anecdote of one significant event. Those sorts of stories resound with people, and are often told and re-told, passed along through social media as feel-good tales.
She does mention how some companies begin to tell their stories when they get bad press - but this is recognized as an attempt to distract from the news of the day. It is better to tell your story before you are in trouble, to be recognized for your character, and let this mitigate any negative remarks.
A word of caution that should be obvious: the stories must be truthful. There is a very sharp backlash when a company is discovered telling pleasant lies about itself - people feel deceived, trust is revoked, and it's very hard to regain.
Underdog stories are particularly valuable: people like to see someone overcome adversity by honorable means. In some instances, companies seem to have gotten away with deception. Zappos, Honest Tea, and Ben and Jerry's are all three firms that pretend to have been build from scratch by the effort of a few people of vision - but they are subsidiaries that were well-funded by large conglomerates.
There's a rather extended history of Richard Branson of the Virgin group, who started off as a middle-class kid who dropped out of school as a teenager, started a youth-culture magazine that spun into a record label, and eventually began buying into other industries that include airlines, mobile phone service, a travel agency, and other industries. Branson is quoted as saying he goes after "wolves who are dramatically overcharging and under-delivering" and his reputation for doing so leads loyalists to seek his brand in whatever industry he chooses to enter.
In spite of his smashing success (he has become the fourth wealthiest person in Britain) he is still perceived as an underdog, and given his penchant for brash media stunts, he has not been seen as part of the wealthy elite or treated with contempt for his success.
A story can even be helpful when things go wrong, as a means to helping explain how they got that way, provided that the company readily admits wrongdoing and does not try to spin the story to appear as innocent victims. The sense that the company should have known better will often lead to the opposite reaction.