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Why Companies Need Their Customers to ‘Love’ Them

Everyone today realizes the importance of digital technology and social media. For most firms, however, the road ends with “likes” on Facebook and promotions on Twitter. According to Barry Libert, Jerry Wind and Megan Beck Fenley, these limited strategies leave a lot of value on the table when customers are looking for a company to “love.” The winners in the market will be those firms that can pivot their business model for great customer intimacy and inclusivity, they write in this opinion piece.

Every morning, like us, you probably pick up your Apple iPad, check your Facebook feed to see what family and friends are up to, and then Google something that catches your eye. If you like what you see, you probably purchase it with your Amazon Prime account and receive it the next day. All we now need is for our iPads to dispense our morning Starbucks coffee and we’ll be happy campers.

For many of us, Google, Apple, Facebook and Amazon (the GAFA four), feel as essential as the air we breathe. It’s hard to imagine our lives — working, socializing, shopping and entertaining — without them.

Sure, we may interact with other companies. But it’s less frequently and with a lot less enthusiasm. We merely “transact” with these other firms. They have not created endearing or profound relationships with us, and we don’t want to share much, if anything, with them. We save all that good stuff for Facebook.

The GAFA four are outstanding in the intimacy that they create with their customers. They make a strong effort to understand the unique characteristics and preferences of each customer and use the insights that they gain to serve the customer better. Further, they see each customer as a complete personality with needs around different facets such as work, play, socializing and self. They serve these needs wholly — and this, in turn, encourages more sharing and openness from their customers.

In short, these four companies are building a long-term, holistic and generous relationship with their customers. It’s almost as if they love us — not like our parents or spouses, of course, but by way of “unselfish, loyal and benevolent concern for the good of another.” And the result? In 2014, Google’s revenue was up 19% year over year, Amazon’s sales were up 20% year over year, Facebook’s revenue was up 58% year over year and Apple’s revenue was up 7%, ending the year with their best-ever quarter.

Likes vs. Love

Traditional brands are trying to join the game and gain that essential-as-air quality. But they find it difficult to move beyond a transactional relationship. Usually, we only see and hear from them when they want something from us. These companies are very focused on whether or not customers are loyal to them, but they rarely consider how loyal they are to their customers. Their actions often seem self-serving; soliciting Facebook “likes” to promote themselves. This short-sighted approach stems from a common view that customers don’t have much to offer beyond what’s in their wallets.

Traditional companies are very focused on whether or not customers are loyal to them, but they rarely consider how loyal they are to their customers.

For example, you have probably purchased many cars over a period of time, but it is unlikely that any car company has offered you a loyalty program that allows you to buy four cars and get the fifth for free. Nor is it likely that they have asked you to partner for the design of their next car — except, perhaps, a company like Local Motors. They probably haven’t asked you for anything other than your purchase, and haven’t offered you anything other than a vehicle. The once-every-few-years transaction you have with a dealer is unlikely to create “love.” A car company that wants a relationship with you would act differently.

For those organizations that take a new perspective and build genuine and mutual relationships with each customer, it is a win-win situation. These organizations move their customers along the spectrum of affinity from “transactors” — who have no relationship beyond the purchase, to “supporters” — who regularly interact with the firm, to “promoters” — who share their enthusiasm for the brand with friends and family, to “co-creators” — who actually feel that they are partners with the organization (Figure 1).

Sponsored Content:

Figure 1: The four types of customers

The good news is that your customers are already there, seeking to share and collaborate with corporations. For example, customers are already sharing opinions on Yelp and TripAdvisor; they are helping create advertising for Danone yogurt, designing new Nike shoes, offering products on Etsy and eBay, and creating content for LinkedIn and Facebook. And by doing so, they are offering these companies their skills and assets, plus a great deal of insight into who they are.

Need to Change the Business Model

But most established firms remain hesitant when it comes to this type of customer equality and mutuality. Our research on the business models of the S&P 500 Index companies (based on data from 1972 to 2013) indicates that at present more than 80% of companies employ older business models where customers are valued only for their dollars and not for their assets, insights and contributions. If your organization can break ranks and adopt this new way of thinking and acting, you will see that the more you share with your customers and the more you understand them, the more they will love you.

Some companies are building initiatives and the technological capabilities needed to develop co-creation relationships with their customers — lasting relationships that are mutual and self-reinforcing. Nike, The North Face, Jeld-Wen and many more firms now offer customer co-designed products, and the sharing economy is growing from cars (Uber), to lodging (Airbnb), to clothing (Rent the Runway). Many firms, however, are only building a token Facebook page and Twitter account. In the journey towards “love,” creating a social business is only a small step. The final destination is one where [both] customers and companies enjoy success, fulfillment and shared value.

So, the real question is: “What does it take to love our customers and be loved in return?” The answer: Serve your customers the way they want to be served. Fulfill their needs not just for products and services, but also for connection, community, participation, recognition and fulfillment. Of course, we recognize that customers are not heterogeneous and have unique preferences in how they wish to interact with different companies. What we suggest is that you create opportunities for those customers eager to have a relationship with you.

Changing your relationship with your customers means changing the way you interact with them. Most companies attempt to do this through marketing initiatives and social media. As mentioned above, this is a very superficial approach. The most successful and most loved companies adapt at the level of the business model and find ways to share value creation with their customers.

Changing your relationship with your customers means changing the way you interact with them.

The Winning Moves

Let’s return to the GAFA four, and see how they have created network businesses that expand the customer relationship.

  • Google: Google made the decision to make two of its most popular products open source: Chrome (a browser that is open source through Chromium) and Android (an operating system). This allows users to help guide the development and get bug fixes and desired features faster. People love Chrome so much that it dominates the browser market with three times as many users as the next popular browser.
  • Apple: Along with its wildly popular products such as the iPhone and iPad, Apple formed a developer network to help outside parties create software for its platforms. This ensures that there is a great market for the apps the customers want, and allows those with an interest to participate. In 2014, 59% of iPhone users described themselves as “blindly loyal” to the platform.
  • Facebook: The world’s largest social network, where the users create all of the content, Facebook allows users to communicate with their friends and family and share whatever they want to with the world. In Q1 2015, Facebook had 1.4 billion users, nearly 20% of the world population, and 70% of them interact with Facebook on a daily basis.
  • Amazon: The behemoth Internet retailer allows both individuals and companies to sell through its online channel. This increases the selection available to customers and probably also brings down the prices through increased competition. According to the 2014 Harris Poll Reputation Quotient study, Amazon.com had the best reputation among U.S. companies (for the second time), and it also was the leader by way of emotional appeal.

If you would like to join this movement and expand your business model, partner with your customers and cultivate “love,” we recommend a simple, five-step process, PIVOT, to build these capabilities in your own organization:

  • Pinpoint: Know your starting place. Gauge customer sentiment and how well you know your customers and how well they know you.
  • Identify: Take inventory of the places, if any, where customers contribute to your organization. Take inventory of your customers’ groups and their characteristics.
  • Vision: Envision a new future where you partner with your customers in a new business model, allowing them to participate and share in the value.
  • Operate: Begin shifting a small amount of your capital (including time, talent, and money) to this new business model. Start small, insulate from the politics of the larger firm, and prepare to iterate.
  • Track: Put in place new metrics appropriate for this customer-centered, network effort. Add key performance indicators (KPIs) such as number of interactions (sales or other), number of customer-partners, and value returned to customers, to your standard financial measures. Use these to guide rapid iteration.

Despite their incredible size, the GAFA four are still rapaciously eating up companies and expanding into new industries (see Figure 2, excerpted from FABERNOVEL, GAFAnomics, October 2014). They are gaining more and more attention from, and forging deeper intimacy with, their customers. And it’s not just Google, Apple, Facebook and Amazon that incumbents should be worried about. Their emerging and younger siblings like Uber, Airbnb, Pinterest, Instagram and Alibaba have hundreds of millions of customers the world over that spend a significant time of their day with them.

Figure 2: The industry-consuming growth of GAFA

 

The stumbling block that most companies encounter on the path to “love” is simple: Leaders believe that “love” belongs at home and not in business. Companies also believe that customer partnerships bring dangerous risks and loss of control. But that old way of thinking now brings its own significant risks as Google, Apple, Facebook and Amazon garner our “love” across an expanding industry profile.

To capture customer attention, organizations need to move beyond their everyday tactics of “faster, better, cheaper.” They also have to elevate their game beyond the current mantra of “delivering a quality experience” or the latest fad, Facebook “likes.” These steps are important, but still insufficient to compete in a world where your competitors know your customers as unique individuals and partner with them to create shared value.

In short, remember this phrase: In a world of likes, “love” matters. Companies and individuals used to believe that our business lives and personal lives are, and must be, separate. But that is no longer true. Cultural changes and technology have broken down these traditional silos, creating an environment where people want to interact with organizations in new and very personal ways. If you don’t believe us, just watch what happens over time to your top and bottom lines as customers contribute their dollars, plus their assets, skills and ideas, to the companies that listen to them, share with them and love them.

Interested in learning more? Take our Customer Type Assessment to help figure out what type of customers your organization has.

Barry Libert is CEO of OpenMatters, an angel investor, digital board member, and senior fellow at Wharton; Jerry Wind is director of the SEI Center and a marketing professor at Wharton; and Megan Beck Fenley is a digital advisor and research associate at OpenMatters. Susan Corso, a leadership consultant with OpenMatters, contributed to this article.

 

BabyCenter

BabyCenter: Creating a Social Brand (2012) Stanford Graduate School of Business Case (Aaker and Schifrin)

In 2012 BabyCenter was the largest parenting platform and parenting media company in the world. It provided expert advice to pregnant women and new mothers while connecting these women to each other online and in person. The company had 110 employees, with operations in 23 regions around the world in 14 languages. The case provides students with a practical, real world example of how to create and grow a social brand. It details how BabyCenter evolved as a social brand through implementing several mechanisms: cultivating employee innovation, creating customer communities, empowering influencers, and enabling great storytelling. BabyCenter cultivated employee innovation through its three-day “BabyCenter Innovation Days,” held every six weeks. These days involved brainstorming sessions, breaking into cross-departmental and intra-departmental teams, and presenting innovative business ideas to the rest of the company. These ideas directly benefited the company, as 60 to 70 percent of them went to market. BabyCenter created customer community online through an interactive website, and in the real world through “BabyCenter Birth Clubs.” Using the customer data it collected, the company connected women in the same stage of pregnancy to each other to form the clubs, which served as social organizations and support networks. Through its robust web analytics and surveys, BabyCenter identified its most active and trusted online users, the “influencers,’’ and worked deliberately to cultivate its relationships with them. One way the company did this was through launching a social campaign highlighting several influencer moms who worked with charitable organizations. BabyCenter also understood and embraced the power of stories to create brand value, and it gave customers the opportunity to tell their own stories through the website and beyond.

Parfums Cacharel de L’Oréal

Parfums Cacharel de L’Oréal 1997-2007: Decoding and Revitalizing a Classic Brand (2014) INSEAD Case (Chandon, Nicholas, and Wertenbroch)

Parfums Cacharel, a division of L’Oréal, used to have a dominating position on the European market with both the number one and number two best-selling fragrances: Anaïs Anaïs and Loulou. At the time of the case however, sales were declining at a rate of 15 % per year and Cacharel was a fragance brand in need of a major revitalization. The task assigned to Dimitri Katsachnias, the new general manager of Cacharel, is to turn around the business. But before doing that, he needs to understand the brand. 1. Brand identity decoding ? What is Cacharel’s brand identity? What are its conceptual and tangible components? Can it be summarized in less than five words? ? Does the Cacharel umbrella brand itself have an identity beyond that of its sub-brands? Which sub-brands are mostly responsible for creating Cacharel’s identity? 2. Brand revitalization ? What is the root source of Cacharel’s maturity crisis and how can understanding the brand’s identity help? Should Kataschnias bring the Cacharel brand closer to where the market is now? Should he focus on meeting the desires of today’s consumers or in remaining faithful to the brand’s original identity?

The Park Hotels: Revitalizing an Iconic Indian Brand

The Park Hotels: Revitalizing an Iconic Indian Brand (2014) Harvard Business School Case (Jill Avery and Chekitan S. Dev)

Priya Paul, chairwoman of The Park Hotels, an award-winning portfolio of thirteen boutique hotels scattered across India, was in the midst of a brand revitalization program. Landor Associates, a leading brand consultancy had identified three areas of concern: the shrinking differentiation opportunity provided by the boutique hotel positioning, consumers’ negative perceptions of The Park’s properties, and a lack of consistency across the hotel properties in the brand portfolio. Competition was heating up and Paul had a goal to expand her hotel portfolio to twenty properties in the next ten years. Paul knew that she had to make some major changes to her brand, including changing her positioning, choosing a new logo, and selecting the right products and services that enhanced her revitalized brand. And, she had to decide where to site the new hotel properties to best compete against global behemoths, Starwood, Marriott, Hyatt and Intercontinental. How could she best revitalize her brand to stand out in a crowded marketplace, while preserving its rich heritage? Which changes would best propel The Park Hotels into the future?

Leveraging Consumer Insights to Build the Financial Planner Brand

Leveraging Consumer Insights to Build the Financial Planner “Brand” (2010) Boston University School of Management Case (Fournier) see attached pdf in zip file

In difficult times, management returns to the basics. Are the right business models in place? Are the systems and guiding principles still valid? Is the brand properly aligned with the culture? Is marketing operating on the basis of what consumers really think and feel? This case takes us back to the starting point for all informed business strategies: the consumer. In the current exercise, we consider consumer insight into the meaning of the financial planning “brand” and the problems that besiege it in order to advance strategic ideas for creating and capturing value for practitioners and the industry as a whole. At issue are fundamental questions concerning brand meaning: What do people think about financial planners as a professional group? What is the image and reputation of financial planners? How can the Financial Planning Association and practicing planners position themselves to increase perceived value in consumers’ minds? How can marketing programs be designed to capture that value over time?

Red Bull: The Anti-Brand Brand

Red Bull: The Anti-Brand Brand (2005) London Business School Case (Kumar, Tavassoli, Linguri Coughlan)

Founded in Austria in 1984, Red Bull was credited with creating the energy drinks category. In 2004, the worldwide energy drinks category was worth 2.5 billion euros and Red Bull commanded a 70% market share. Sold in over 100 markets, Red Bull was the market leader in the USA as well as in 12 of the 13 West European markets where it was present. Central to Red Bull’s success was the use of word-of-mouth or ‘buzz’ marketing. Through its sponsorship of youth culture and extreme sports events, it developed a cult following among marketing-wary Generation Y-ers, (18- to 29-year olds) who perceived it as an anti-brand. While it purported to be a sports drink, Red Bull was mostly sold in clubs and bars as an alcohol mixer, where its caffeine doses helped revive clubbers into the early morning hours. By playing on associations with energy, danger and youth culture, Red Bull carefully cultivated its mystique, which earned it nicknames like ‘liquid cocaine’. The company used additional non-traditional marketing techniques, such as consumer education teams who drove around handing out free cans of Red Bull to those in need of energy, and student brand managers who promoted the product on university campuses. In 2004, Red Bull found itself at a crossroads, challenged with defending its market share. It faced a maturing market and an onslaught of competitive brands, some of them promoted by beverage industry giants such as Coca-Cola and Pepsi, others as private labels by mass retailers such as Asda (part of Wal-Mart). Red Bull needed to determine whether it was outgrowing its anti-establishment status. As a mature brand, it needed to assess whether the time had come to transition to a more traditional marketing approach. But this raised a critical question: would this move toward a more mainstream approach fundamentally destroy Red Bull’s anti-brand mystique?

Calvin Klein, Inc. vs. Warnaco Group, Inc.

Calvin Klein, Inc. vs. Warnaco Group, Inc. (2002) Harvard Business School Case (Fournier and Boer)

On May 30, 2000, Calvin Klein, Inc. (CKI) filed suit against Warnaco Group, Inc. and Linda Wachner, its CEO, for breaching its jeanswear licensing and distribution contract and, in so doing, diluting the equity of its brand. On June 26, 2000, Warnaco countered with its own suit, denying the major allegation of trademark dilution and justifying distribution through warehouse clubs as acceptable business practice. The countersuit further claimed that CKI had, in fact, breached the license and eroded the brand through its own strategies and practices. The lawsuits were precedent setting: This was the first time a licensed manufacturer/distributor had been charged with brand equity dilution or a designer held accountable for ineffective brand advertising. It was a case that would potentially rewrite the rules of fashion licensing and distribution, and bring into the limelight the tensions faced by every brand steward attempting to balance revenue growth goals with preservation of the equity of the brand. This case presents extensive background facts.

Naming the Edsel (Condensed) (2001) Harvard Business School Case

Naming the Edsel (Condensed) (2001) Harvard Business School Case (Fournier and Wojnicki)

Reveals the interesting and unusual story behind Ford’s selection of “Edsel” as the new brand name for its ill-fated 1957 new product launch. Noteworthy as perhaps the most extensive, creative, and politically charged naming stories on record. Although both nontraditional approaches to name generation (i.e., correspondence with a popular poet of the time) and more traditional research tools (e.g., consumer surveys exploring top-of-mind brand-name associations and opposites, advertising agency brainstorming) provide input to the naming decision, this is all put aside by the company’s chairman of the board, who makes a unilateral decision to use “Edsel” in the final hour. This name choice goes against both consumer research, which suggests problems with the name, and the beliefs of Edsel’s sons, who feel that their father may not want his name so utilized, thus revealing the aesthetic quality of the naming decision.

Security Capital Pacific Trust: A Case for Branding

Security Capital Pacific Trust: A Case for Branding (2001) Harvard Business School Case (Fournier)

A real estate operations and investment trust is considering whether it should pursue branding as a strategic investment. Through interpretation of case data and video from focus groups, students deduce the consumer (cognitive, psychological, and economic), environmental, and company factors that are conducive to branding, thereby illuminating their understanding of when it makes sense to brand. Analysis of extensive survey data allows students to consider the secondary question about how to brand as they formulate brand-positioning recommendations.

Brand Identity Exercise

Brand Identity Exercise

Description:
To learn how to analyze various brand identity elements including name, logo, symbols, colors, characters, spokespeople, slogans/tag lines, packaging design, etc.

Materials needed:

Physical samples of two brands from the same category (one of each for every two students)– one relatively rich in brand narrative with relatively strong brand identity elements, but largely unknown, especially to your students (low awareness/high meaning narrative) and one relatively poor in brand narrative with relatively weak brand identity elements, but widely known, especially to your students (high awareness/low meaning narrative). These will help you differentiate between building brand awareness and building brand meaning. This semester, I used two brands of iced-tea. My low awareness/high meaning brand was “Rob’s Really Good Half and Half” and my high awareness/low meaning brand was “Nestea Iced Tea”

How to run it:
Group students into pairs and distribute the product samples. Remind students of the various brand identity elements and the criteria by which you would like them to judge them (list on the board).

(20 minutes) Ask students to analyze the brand identity elements of each brand and evaluate them on the following criteria (introduced in a lecture earlier in the class):

• Is it memorable?
• Is it meaningful?
• Is it likeable?
• Is it differentiated from the competition?
• Is it transferable? (product extensions/brand extensions)
• Is it adaptable? (across cultures, across target markets)
• Is it protectable? (by trademark or patent)

(20 minutes) Come back together as a class and discuss what happened in the pairs.

• Which is the stronger brand identity? Why? Probe to draw out differences between awareness and meaning. Students are likely to prefer the low awareness/high meaning brand, but ask them to consider why the high awareness/low meaning brand is doing so well in the marketplace. Make the point that having a good brand narrative is not enough and that brands need to spend to build awareness. A good story that no one has heard of means nothing in the marketplace.
• How did each brand use its brand elements to build brand meaning? Which elements are contributing to the brand meaning and which are not?
• Which brand elements are most memorable? most meaningful? most likeable? most differentiated from the competition? most transferable? most adaptable? most protectable?
• How would you improve each brand’s identity?
• How important is brand meaning in this category? Why? What types of brand meaning are most important?
• How important is brand awareness in this category? Why?