Return on Behavior Magazine
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Customer Experience

April 7th, 2011

Brands versus the Customer Experience

brand vs customer

To understand what is relevant and does get traction with customers, it is critical to recognize that the pursuit of market share and commodity sales are not the same thing. Germane to this distinction are the two buying personalities I have discussed elsewhere. Here is the short version that makes it especially relevant to this differentiation.

When customers are not emotionally involved or indifferent they are usually seeking a means-to-an-end. For example, gasoline is gasoline to me. I go to the filling station that offers the best trade-off between price and convenience. I am loyal to this heuristic, not a brand name. Sure, there are people who seek out a name brand gas station and are willing to pay more per gallon. For them, the brand either has meaning or they are mindlessly hung up on an old habit. Both are proving to have a tenuous hold on loyalty and profitability.

In contrast, when customers are emotionally engaged in the experience enabled by the product they are much more willing to pay more and come back often. The message here it that it is the experience or outcome of the customer, not the label that has an impact on profitability and advocacy.

Recently, Geoffrey James blogged about this distinction. To bolster his case he referred to a New Yorker magazine article that cited the iPhone as a good example: “the iPhone generates as much profit for Apple as Noika’s entire cell phone business, even though Noika sells 20 times as many units.

Back to Gerzema and Lebar. Their research indicates that beginning in 2004, consumer attitudes about all sizes and segments of brands were in serious decline. Trust in brands had dropped from 52% in 1997 to 22% in 2008.

That was before the recession. A Nielsen survey (see James) now indicates more than 60% of consumers think that store brand products are equal in quality to brand name ones. The indifferent buying personality, not seeing any meaningful differentiation, is leading customers to switch to the lower prices generics.

The notion that the brand name and visibility will generate sales and profits is generally a pursuit of diminishing returns. It is not however, true for all brands. Gerzema and Lebar shed to light on this. According to their research, what sets successful brands apart is Energized Differentiation.

This energy comes from 3 sources ( I quote):

  • the vision the brand presents to consumers, often originates from leadership, conviction and reputation of the company.
    was the invention consumers perceive in the brand through product or services innovation, design or content.
  • The dynamism consumers feel – how the brand creates a persona, emotion, advocacy and evangelism among consumers through marketing and other forms of conversation with them.

Brands that rank high on the energy metric are: Adidas, iPhone, Nike, JetBlue and Virgin Atlantic. These brands don’t focus on logos and visibility – they do focus on communicating and delivering a differentiated experience that is meaningful to customers. Think of it as a focus on mindshare not market share.

 


About the Author

John Todor

John is the managing partner of The Whetstone Edge, LLC (www.TheWhetstoneEdge.com). He is a psychologist and business strategist who looks at the world from the customers’ perspective, especially how changes in technology, the marketplace and society impact what customers’ value and how they make decisions. Based on these insights he helps clients create programs that lead to sustainable and profitable, win-win relationships. He has written three books spanning winning mindshare, the psychology of the customer experience, and strategies for using Social Media in Business (see Amazon.com). As a founding director of the Social Media Academy he is heavily involved in analyzing and educating the business community on the strategic business use of social media. 


As an Advisory Board member of CustomerThink.com, he helps direct one of the world largest online communities focused on customer-centric business practices. His clients range from small and midsized companies to Hewlett-Packard and IBM. John speaks frequently on related topics. 


Follow him on Twitter @johntodor

 






 
 

 
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