9: Game Changer 6: Build Equity
Brand equity is generally considered to be the credit that is associated to a brand - it's no always positive, though great effort is made to keep it so. Aside of its power in attracting customers on a day-to-day basis, brand equity functions as a life preserver in times of crisis: where a brand has a long-standing reputation for good ethics and fair play, people are more likely to consider any scandal to be out of character.
Brands build equity by building trust with all constituents - employees, customers, partners and regulators. Trust, in turn, is developed by being open, authentic, and honest. Faith in the brand's future behavior is based on its behavior in the past: a firm that has made good on promises is expected to continue to do so.
As such, when a brand build equity in advance of a crisis, it will benefit from greater credibility (the benefit of the doubt) in times of crisis, and be able to effect a faster turn-around while taking less damage.
Why Brand Equity Matters
The equity of a brand is its most important element. An impressive mission statement, a snappy jingle, a clever logo, and all the more visible elements of a brand are merely signals that remind the audience of the brand and what it stands for. A brand that has no equity stands for nothing, and doesn't function as a brand. A brand with negative equity is a brand that does its stewards more harm than good.
The equity of a brand is more than just a stamp of product quality, though that is how it began. In the present market, a brand is an impression that is build from customer expectations - not just about the product, but the entire experience of interacting with the brand, and their sentiment toward the brand for the way it interacts with others.
The days in which brands controlled information have passed: thirty years ago, they could control the message by controlling the medium, and word of mouth was background noise. Today, with the Internet and social media, the brand is only one voice in the crowd. (EN: and other sources have mentioned that it is often the least credible to a media-savvy public, who are aware that all firms want to present a positive image rather than a fair one, and expect deception in any message a company seeks to spread about itself.)
Southwest Airlines is mentioned as a brand with great equity. It is not immune to mishaps - but the fact that the firm acts quickly to resolve issues, and has done so in the past, means that incidents such as an emergency landing or fines for maintenance violations do not resound or resonate with customers.
Nike is another example - during a time when the media were collectively campaigning against the use of child labor in overseas factories, Nike's operations in Cambodia and Pakistan were exposed. Apologies were made, the situation was addressed, and the brand kept chugging along. During the same time, other brands whose response was just as prompt were broken by similar scandals.
A brand with good equity may even find it has a Teflon shield. Consider the egregious behavior of Bill Clinton: his supporters remained devoted to him, even when overwhelming proof was uncovered about his infidelity, financial wrongdoing, and abuse of the privileges of office.
The Source of Brand Equity
The source of brand equity is external to the firm: it derives from the number of loyal friends and fans, the level of their compassion and conviction, and their willingness and ability to champion the brand to others.
On a day-to-day basis, the strongest evidence of a brand's equity is the number of customers who choose to "buy" it - whether through the literal purchase of a product or service, contribution of time or money, or even their attention. In times of crisis, the evidence of a brand's equity are the number of people who will continue to do so - and the number of people who are willing to go further: to publicly defend the brand against detractors.
The author documents some of the ways in which the task of building brand equity has changed in recent years:
- Information overload. Researchers assert that consumers in the present day "encounter" up to 5,000 marketing messages every day, compared to as few as 500 in the 1970's, and there's a great deal of clutter. (EN: I've seen such studies in the past and they are grossly exaggerated - every time I look at my watch, it counts as a commercial message because the maker's name is on the face, if I pass a taxicab that has an ad on it, it counts even if I don't notice it. And every spam e-mail I delete without reading counts too.) This is a barrier for new brands that want to get attention, but a benefit to brands that have made the connection and are worried about competitors' attempts to draw people away.
- Shrinking attention span. Studies suggest that the attention span of Americans is shrinking: advertisers found that people gave attention to 60-second spots decades ago, then shrunk to 30 seconds, and currently trending toward 15 seconds, meaning that marketers have less time to get their message across (EN: a counterpoint to this notion of attention span is that information overload is causing customers to make decisions about what they will give attention to, and very quickly assess and dismiss messages that don't interest them. Getting attention isn't about being brief, but about being relevant. If you can quickly establish relevancy, people will pay attention for longer periods of time.)
- Millions of voices and channels. Some thirty years ago, most people had a choice of three television channels, half a dozen radio stations, and a couple of local newspapers. Today, cable television and satellite radio offer hundreds of channels apiece, and the Internet adds a massive variety of news outlets. Advertisers simply cannot blanket the media to carpet-bomb the population the way they used to be able to.
- The viral effect. Word-of-mouth is more powerful with the Internet, and messages spread faster via the social media than through traditional media. The problem is, unofficial and inaccurate information can spread just as quickly as authentic and accurate.
- Permanence. Most broadcast news is forgotten moments after the broadcast ends, and newspapers are compost within a day or two, but any content online is there forever. It is replicated in multiple places and archived, so that even if you take down a story or convince someone to remove an inaccurate post, it's still out there somewhere, and people can and will find it.
- Appetite for drama. What's true of traditional media remains true of the Internet: people are drawn to a scandal, and find accurate information to be boring.
The author provides some basic advice - such as using free online services to get alerts when your brand is mentioned online, having a game plan to react quickly and in a consistent and controlled manner, etc. (EN: The advice is very superficial here - there are other books on the topic of online reputation management that are more thorough, so I'm skipping the details in this book)
Engagement and Dialogue
One of the benefits of the Internet is in providing a direct line to your customers, and the ability to engage with them directly. Not only can you data-mine to find out what people are saying about you, you can also engage in the dialogue directly. This is valuable in directly confronting your critics, as well as in building a base of supporters.
The case study provided is Pampers, which launched the Dry Max line of diapers and soon found that people were complaining that the diapers were causing severe diaper rash. Words like "chemical burns," "wounds," "sores," and "blood" were used in online forums by parents whom the company assumed were aggrandizing the issue, and these terms were quickly picked up by the media. It wasn't long before a class-action suit followed against P&G as a result.
It took months for the firm to dig itself out of the situation - and while the brand did so gracefully, it took much more effort for the firm to play catch-up after, and included reaching out to the angry "mommy bloggers" to answer their questions and address their concerns.
Since the incident, the firm has in place social media monitoring to catch these complaints quickly and respond before the situation spins out of control.
And to tie this all back to the notion of brand equity: Pampers already had a Facebook page and a web site full of helpful tips and parenting information and is well known for its charity work - so it's likely that when company representatives reached out to angry bloggers, their overtures were received as an earnest attempt to understand the problem and find a solution, rather than merely to cover up.
Transparency: The New Trust
The concept of transparency has been frequently suggested for online and social media channels. The notion is that a firm that has nothing to hide will allow the world to peek behind the curtains to see things that are normally kept hidden. Or conversely, the fact that companies do not disclose information is interpreted to hide unflattering information.
(EN: The author seems to buy into this notion, though the assumption that companies try to hide things is often more paranoia than legitimate concern. Does a company that "refuses" to put a camera in the employee break room really trying to hide something sinister? Is it worth the cost to the company, and ultimately the consumer, to install a camera there and set up a live feed? Is there a trade-off in the privacy rights and workplace morale for workers to be constantly observed? Transparency advocates seldom consider these factors.)
The desire for transparency also includes the need to avoid doing anything covertly. In the instance of a company who pays bloggers to post positive reviews without disclosing that they have been given incentive to do so, the attempt to conceal and deceive is less arguable.
The author encourages companies to consider these practices:
- Make full disclosure. When you're paying someone to endorse a product, disclose that it is a paid endorsement.
- Truth in labeling. All the facts that might be considered relevant should be clearly disclosed: where a product is manufactured, what its ingredients are, its nutritional data, potential side effects, etc.
- Use disclaimers openly. Where any statement needs to be qualified, the disclaimer should be legible and clear (not in tiny type, phrased in a way to prevent understanding).
- Truth in advertising. Any dishonest claim, misleading communication, and incomplete disclosures ultimately diminish the credibility of the brand.
- Admitting mistakes. Brands are reluctant to appear less than perfect by admitting mistakes - but doing so is received as a sign of strong character and honesty, which supports rather than detracts from trust.
(EN: The final section in this chapter was about maintaining a constant presence, but provided little information before spinning off onto another case study that did not seem to have much relation to the topic.)