Brand management is big business.
Brand management is also hard, as it deals in perceived value to
the customer. All this subjectivity means you're never 100% sure
if your marketing campaigns and brand promises are offering the right
messages to the right customers at the right time. To add to that,
these customers are fickle and their expectations are constantly
rising.
According to the Brand
Keys Customer Loyalty Index for 2006:
The average level of consumer expectation across 35 major
brand categories rose by 4.5% from last year. Over the same period
the survey, shows, the average ability of brands to keep up with
those hopes decreased 9.2%. Put another way, while brands certainly
try to meet the expectations of their loyal customers, those
expectations are nonetheless growing two times faster than the
brands' ability to keep up with them.
Apple is often wheeled out as a paragon of branding excellence but
the survey notes that even at mighty Apple there is still a so-called
'loyalty gap'. Apple do make mistakes; after all it's run by people.
There was a big hoo-hah last month when the media reported: "Apple
makes girl cry!" I guess lawyers will be lawyers. You can
see that even this was a brand experience, albeit a negative one, for
a customer via a touch point that wasn't probably covered in Apple's
customer loyalty briefing.
Nevertheless, Apple does still do
so many things right. One of those is the Apple store, of which the
latest, biggest is the one on Fifth
Avenue in NYC - it's open 24hrs. Apple knows its brand
recognition and momentum is at an all time high, so rather than sit
back and wait for the competition to copy them and catch up, they go
on the offensive to make Apple even more of an icon - Steve
Jobs explains Apple's strategy on CNBC. Forrester's Apple
case study brought up some good points. For a long time now,
we've been saying retail marketing is all about selling a lifestyle.
Well, Apple stores do just that. They don't just sell the products,
they sell digital experiences (or lifestyle solutions). The stores
are organised into solution zones, e.g. gaming, video production,
music.
We all know what they've done with music. The iPod is a
phenomenon. However, the success of the iPod is not just about the
style and usability of the hardware - that's just one third of the
digital experience. The remaining two thirds, and Apple supplied
these too, are the iTunes music management software and the online
music store. Together they make a complete digital experience. This
was a tipping point for success back when it launched. Today, this
has probably started to become a sore point with some (less
technically savvy) customers who feel locked into the iTunes online
store and AAC music format.
Anyway, back to the Fifth Avenue
store, which opened to great fanfare (see the great brand affinity of
Apple's customer base on Flickr
and YouTube)
on May 19th, 2006. The store provides training and expertise, and
crucially a community feel. Things like workshops and the Genius
Bar keeps customers coming back. Of course, all this is supported
by the online side - from a calendar of in-store events to a
concierge
service to manage bookings with technicians. Apple are focusing
on helping customers achieve their goals.
You might think all
this is pure investment in the brand and the stores don't make money.
Think again, Forrester says that Apple stores' sales per square foot
trumps those of pile-them-high retailers like Target and Best Buy.
Same-store sales are also growing year on year. They've found a
balance between being a retail and a concept store. The same cannot
be said for other experience-led stores like Niketown, Lego Store and
Sony Style.
Talking about copycats, Dell is planning
to open two retail stores. It will be interesting to see what
they come up with. Another interesting initiative by American retail
institution J.C. Penney was the
opening of a temporary (for 3 weeks) virtual
store at New York's Times Square to showcase its exclusive
brands' spring collection and to introduce customers to its
e-commerce offering. Forrester gives a good examination of the
JCPenney
Experience. I think there's something here, especially for
pure-play retailers wanting to get their products into the hands of
their customers (in the same way Apple stores create the 'ownership'
experience) and from a brand building point of view (just like haute
couture catwalk shows wow the public).
So in a long-winded way I've stated the obvious that retailers
(especially of electronic goods) are fighting hard against
commodification of their products. Many retailers still believe that
they can manipulate customer loyalty through top-down brand
management. Unless they are truly grounded to their customers, this
is plainly arrogant and insults the intelligence of consumers in the
new millennium who have grown weary of marketing propaganda. If
retailers continue on this tack, the 'loyalty gap' will never close,
as they desperately over-promise to differentiate themselves and then
disappoint when they fail to deliver.
A mind-shift is needed. Customers don't want retailers who are
trying to control them. They want retailers who are trying to help
them. Customers were never or will ever be loyal to a brand; they are
loyal through a brand. It's not us and them, it
should just be us. How can there be a 'loyalty gap' if we're
on the same side? This means customers should see retailers as
comrades fighting for the same cause. Retailers need to find common
ground with customers. Lasting loyalty is engendered through genuine
shared experiences. This might just be how Apple has got it so right.