Today’s global economy and internet infrastructure have lowered costs dramatically. This makes it possible for Amazon and other operationally excellent organizations to achieve scale that affords them significant cost advantages and the ability to squeeze competitors steadily by driving down prices across categories. At the same time, product leadership is harder to claim and maintain, as features are easily copied and patent infringement is common.

As a result, brands that are not the cost leaders in their categories need to try the third way – they need to understand how to win through customer intimacy.

A New Interpretation Of Customer Intimacy

Customer intimacy has always sounded a little creepy, like a relationship with a stalker. In today’s economy, intimacy is about more than a one-to-one relationship. It’s about shared values and community. It’s about brands standing for (and behind) how their product and service offerings make their customers’ and other stakeholders’ lives better. It encompasses providing real human connection through a brand’s physical presence in their communities, and through its employees, who are members of and understand these communities intimately. Alignment through intimacy allows brands to side-step the race to the bottom that can occur when facing low cost competitors that win on price by offering interchangeable products and a no-frills, no-aspirational experience.

Competing On Community

Consumers’ decision criteria for brand choice have broadened. Forrester research in April 2017 shows that “consumer decision making is changing: Shoppers increasingly evaluate products and brands based on a company’s ethics and values.”

Research with consumers in the US, China and elsewhere shows that buyers increasingly are willing to spend more for green products, support environmentally friendly companies and seek out experiences that will enrich their lives. According to the 2015 Nielsen Global Corporate Sustainability Report, “Sixty-six percent of global respondents say they are willing to pay more for sustainable goods, up from 55% in 2014 (and 50% in 2013). And it’s no longer just wealthy suburbanites in major markets willing to open their wallets for sustainable offerings.” Similarly, The Boston Consulting Group recently reported that “80% of Chinese consumers feel that brands and companies should be environmentally responsible. A separate study of Alibaba’s customers—conducted by AliResearch—found that 66 million (or 16.2%) bought five or more “green” products in 2015, up from just 4 million in 2011 (3.4%). Notably, they are willing to pay a price premium—up to 33%—for those products.”

Making Competing On Community Work

To compete based on intimacy and succeed against Amazon and other low-price leaders enabled by operational excellence, brands need to do three things:

1. Build community into their brand positioning in ways that truly serve customers
2. Elaborate the elements of their offering that make this commitment believable
3. Leverage their unique assets – their people and locations

Here’s a starter list for how to build community with current employees and customers, and entice newcomers:

1. Walk the talk with products and offerings that are consistent with your values. Big food is overhauling its entire lineup to get in sync with changing consumer values around real ingredients, minimizing spoilage and ‘good-for-you’ claims. Meanwhile, brands like Honest Tea and Annie’s have been promoting their goodness since day one. Audit your portfolio to identify gaps and shortcomings relative to your core values and put addressing them at or near the top of your product/service offering roadmap.

2. Build your values into your operations. Walking the talk is about more than products. If you claim to be committed to sustainability, then you should be looking for ways to reduce your brand’s use of energy, packaging, water, and other inputs and generate less waste. Sustainability resonates with consumers as well as with business leaders (particularly CFOs and Risk Managers). As McKinsey anticipated in 2010, increasingly volatile input costs, driven by the emergence of bigger, fewer suppliers and natural-resource shortages make it a business imperative.

3. Get transparent in your pricing. Help customers understand why your products cost more than Amazon’s. Show how paying a living wage with benefits, paying rent and property taxes on your locations, and sourcing local or domestic inputs all cost more, as do design details that improve product quality. Everlane and Elizabeth Suzann are doing this now as are Starbucks and Costco, to some extent. It’s time for more organizations to get on board. Think in terms of unit costs. Deconstruct competitive offerings to identify differences between yours and theirs. Find the best ways to communicate your costs while also exploring opportunities to improve them in ways that are consistent with your values.

4. Ensure your customer experience is competitive in and across channels. Many brands have not yet integrated e-commerce with the rest of the business. Some, but not all, have optimized their web presence for use on mobile devices. Few have mastered social media as a two-way marketing and communications channel. The omnichannel imperative is real, and it’s now. Audit your cross-channel customer experience and identify the low hanging fruit to address. Optimize for mobile ASAP. If you’re a retailer, figure out how to allow customers to pick up online orders in-store, and get smart about your shipping offerings.

5. Foster a company culture and employee experience that reflect your values. Amazon, Apple, Facebook, Google, and Netflix are scooping up top talent as fast as they can. For everyone else, it’s getting harder to attract and retain the best people. Culture change is a huge undertaking that may be worth pursuing. Meanwhile, organizations can take smaller steps to engage employees and help them feel appreciated. One example is to encourage employees engage with their local communities (geographic, interest-based, etc.) in ways that are on-brand for you and personally rewarding for them. Inventory your employee offerings (benefits, training, matching contributions, volunteerism) to identify opportunities to better reflect your core values and engage employees.

6. Create on-site events to draw customers and prospects into your brand community. Use events to showcase the ways your brand makes the community a better place to live. For example, make the first Monday of the month new product demonstration day where employees or suppliers share what’s new with consumers who value being in the know or treated like insiders. Every other Tuesday could become “How-To Tuesday” where employees showcase a new way to use an existing product, adding to the perception of the product’s value (and of your commitment to helping customers maximize the value of your products). And when you put on your own events and participate in others’, ask participants to capture and share them on social media.

7. Call out Amazon and others who use arguably predatory pricing, early and often. Highlight your organization’s commitment to its core values (pricing transparency, ethical sourcing and community involvement) and use them as a platform for raising the hard questions about Amazon’s values. Make it obvious that Amazon’s aggressive pricing is designed to drive competitors out of business obvious. Use your pricing transparency to raise questions about Amazon’s sources, costs and margins.

There is no silver bullet here. Chasing or imitating the low-cost competitor in any industry is a sure way to fail. Product leadership is hard to sustain, and success is not guaranteed. The surest path to success requires brands to understand who they are, what they do and why it matters to employees, customers and the communities they serve. The route to intimacy takes aligning offerings, programs, promotions, communications, pricing, and distribution to the brand’s shared values and community.

Contributed to Branding Strategy Insider by: Judy Hopelain of Brand Amplitude

The Blake Project Can Help: Please email us for more about our brand community and brand culture workshops.

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Most retailers have well-publicized sustainability programs aimed at reducing energy and raw material consumption and lowering their carbon footprint. They also are proponents for a living wage, humane working conditions and prevention of human trafficking because these efforts serve two important goals that support their profitable growth: they reduce costs and show consumers their brands share their values.

By flying under the radar on all of these issues, Amazon has not incurred the costs its competitors bear, nor matched their leadership.

Where Is Amazon’s Leadership On Sustainability?

About 70% of companies listed in the S&P 500 share their data on carbon emissions with the Carbon Disclosure Project. CDP is a nonprofit that gathers that information on behalf of big institutional investors worried about how their assets will fare in a warming world. Walmart and Costco earned a B and a C, respectively, in 2016. CDP gave Amazon an “F” for nonparticipation (the company hasn’t responded to CDPs questionnaires since at least 2010).

As home delivery of everything has become commonplace, cardboard packaging has become the largest component of human-created waste. Sanford C. Bernstein estimates that Amazon shipped about 608 million packages last year. The company claims its own sustainability initiatives reduced its cardboard consumption by about 83 million corrugated boxes in 2016. If that’s roughly right, and assuming each package includes 2 boxes on average, then Amazon’s efforts to reduce its cardboard package use have produced single digit results. Surely, Amazon’s disruptive thinkers can dream up ways to turbocharge industry’s packaging reduction efforts.

Where Is Amazon’s Leadership On Working Conditions?

Most consumer goods manufacturers and retailers have committed to fight human trafficking across their supply chains and ensure some standard of safe working conditions and a living wage for those who make the goods they sell. Brick-and-mortar-free Amazon, on the other hand, rings up billions in sales in cities like New York and Washington, D.C., without having to abide by local minimum wage laws. And as a reseller of manufacturer’s brands, Amazon has not been directly accountable for the working conditions of the people who produce the goods they sell.

Now Is The Time For Amazon To Step Up

There are two big factors that may cause Amazon to up its sustainability leadership in the near term.

The first is Amazon’s initiative to launch its own brands, like its Lark & Ro women’s apparel line. A move that exposes Amazon to the same market expectations as Starbucks, Nike, Gap, Walmart and others who have worked hard to address this for years. Improving working conditions and compensation for the people that make their products, as well as for their own employees, has cost these companies billions. Amazon has not yet been held accountable for its contingent workforce of warehouse and delivery people, much less the people working in what will inevitably become a far-flung supply chain to provide its apparel, food and other products under its own label.

The second factor at play is the company’s bid for Whole Foods. Whole Foods is all about shining a bright light on the ills of the “big food” value chain and promising a better way that’s both better for consumers and for the people who supply the products. Those values arguably add cost. If the deal goes through, will the values that Whole Foods represents survive?

General Mills is using Annie’s to build environmental responsibility and ethical sourcing into its supply chain, its operating model and its culture. Amazon has an opportunity to use its acquisition of Whole Foods in a similar way.

Meanwhile, Amazon Is Vulnerable And Can Be Challenged

Consumers haven’t demanded Amazon step up, …at least, not yet. Perhaps Amazon will embrace sustainability leadership before being forced to. Until then, competitors would be smart to use its sustainability vulnerabilities against it.

If you are a brick and mortar company that competes with Amazon (and who isn’t?), focus on what you have that Amazon lacks: a physical presence and employees who understand the community intimately. It’s time to get specific about what Amazon is NOT doing in your community to contribute to sustainability.

Here’s a starter list of ideas to highlight to expose Amazon’s sustainability shortcomings:

1. Quantify and publicize the number of tons of Amazon boxes filling your local recycling centers and the cost to the community to collect all that packaging. Help consumers see that as an added cost of Amazon’s products.

2. Quantify and publicize your own alternative energy usage (solar panels on the roof), water conservation (drought-tolerant landscaping), and packaging reduction efforts. Help consumers see these as benefits of buying from you.

3. Show how your employees make the community a better place to live. Be explicit about Amazon’s absence in these efforts.

4. Make your organization’s commitment to ethical sourcing and a living wage known.

5. Challenge customers to ask hard questions about Amazon’s sourcing strategy and use of sweat shops in faraway places.

Amazon is more vulnerable than it may seem. It’s time for brick and mortar businesses to use their advantages to level the playing field and challenge Amazon to step up the leadership standards consumers expect and deserve.

Contributed to Branding Strategy Insider by: Judy Hopelain of Brand Amplitude

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Brand Identity is the tool marketers use to articulate the rules for brand gestures. It explains how the brand will support the organization’s overall mission and objectives, and forms a bridge to making decisions about more than just marketing. Successful companies use the brand as a filter for determining whom to hire, which businesses to participate in, what partnerships to pursue and more. As a result, creating a brand identity is one of the most important steps a company can take to ensure a consistent, enduring brand.

Brand Identity is meant for internal consumption. Once developed, the best practice is to internalize it up and down the organization, so that everyone making decisions that impact the brand is working from the same understanding. Strong brands have well-defined ‘edges’ – everyone in the organization knows where the edges lie and how to respect them. Disney Cruise Lines does not have a casino and never will, despite the potential for generating revenue. Ronald McDonald will never march in a gay pride parade. These are extreme examples, but the difference between a clearly defined brand and a fuzzy one often rests on the ability to discern boundaries.

Our Brand Identity Model

There are many different ideas about the best way to define a brand identity. After reviewing several, we concluded there is no one right way, but there are elements that are important to include. All brand identities have at least three components: rallying cry, capabilities, and personality. But some brands need more elaboration. Our Brand Identity Model is an adaptation of Jean-Noel Kapferer’s “Brand Identity Prism.” It offers these three elements and four more, a reflection of the fact that the brands that are richest in meaning define themselves on more than just three dimensions.

A comprehensive Brand Identity fully elaborates each element of the prism, describing what it means and just as importantly, what it does not mean. Elaborations can include images, relevant quotes, evidence from customer research, third party endorsements or product claims. The resulting Identity forms the basis of the brand expression guidelines, communications and internal brand activation programs, so it’s worth taking time to get it right.

Here is a brief description of each element:

Capabilities: What do we do?

Capabilities describe what the brand has to do well to win with customers. This usually means how it performs relative to what customers want and need from the category. Capabilities often include ideas like ‘quality’, ‘innovation’, ‘reliability’, ‘service’, and ‘selection’, and are what should come to mind first when stakeholders think of the brand.

Personality: How do we deliver?

Capabilities describe what a company does, Personality describes how.  Most brands in a category have similar capabilities, and differ in their ‘personality’, or the way they deliver. Jennifer Aaker identified five primary dimensions for describing brand personality: sincerity, ruggedness, sophistication, excitement, and competence. Each of these ‘Big Five’ has a number of sub-dimensions. Some brands include additional traits, such as ‘humor,’ ‘social’ and ‘compassion’ in their personalities.

Internal Values & Culture: What do we care about most? How do we treat one another?

Company culture has always been important to iconic brands, such as Nike, Apple, Google and Harley-Davidson. Passionate, engaged employees also explain much of the success of legendary service brands such as Ritz Carlton, Southwest Airlines and Nordstrom’s. It is the key to understanding the difference between these brands and their competitors. Many company founders were also customers – that is, highly engaged users of their products or services with a clear and aligned set of values. As companies grow, it is imperative that they ensure employees and other stakeholders are inspired by the brand and want to live its values. This facet of the Brand Identity ensures that culture is genuinely nurtured by internal branding efforts as well as customer-facing activities.

Shared Values & Community: What do we have in common?

Our Brand Identity model takes into account the growing importance of shared values and experiences in brand building. Leading brands create, inspire, support and embrace ways to engage customers in immersive experiences. Harley Davidson’s HOGs emerged independently from the company and express the freedom of the open road. Patagonia adopted Dirt Bags as the embodiment of the Brand’s rugged, outdoors, minimalist values. Today, digital and social media are redefining community and providing brands with tools that make it easier than ever to help their users to find one another, compare notes and share their stories.

Noble Purpose: Why do we exist?

Noble Purpose answers the most important question addressed by the Brand Identity. Asked another way: ‘What would customers be missing if the brand didn’t exist?’ Anne Bahr Thompson calls this question the ‘CEO Test,’ meaning what would the CEO say when asked, “So what is this brand/organization really about?” For Kashi, the answer to the question is Seven Whole Grains on a Mission. For Virgin it’s Consumer Champion. For Pampers, it’s Happy Baby. For Innocent, it’s No Poisons. These are more than phrases, they are compelling forces that resonate with customers, inspire loyalty and motivate internal audiences. David Aaker writes:

“Shared value suggests that profits that are imbued with a social purpose can enable companies to grow while advancing society. It frames the enterprise mission and objectives in a new way. All profits are not equal. Those that advance society are better and those that detract from society are inferior.”

Today, most strong brands address customers’ quest for meaning by becoming cultural champions, demonstrating their alignment with one or more causes that resonate with the values of their customers. Brands that offer a larger vision of the world create a kind of ‘ideological glue’ that invites customers and prospects to express their solidarity by identifying and engaging with the brand. In his book, We First: How Brands and Consumers Use Social Media to Create a Better World, Simon Mainwaring refers to these brand communities as ‘brand nations’ and suggests that in the future, purpose will be essential to creating emotionally invested customers.

Rallying Cry: What does it all add up to?

A rallying cry (sometimes called ‘brand essence’ or ‘brand mantra’) summarizes the identity in 3-4 words. It should be internally motivating. For example, the Payless ShoeSource rallying cry is “Democratizing fashion footwear.” This is a far cry from its origins as a store for cheap plastic shoes, and provides an inspirational reason for employees to go to work every day. The rallying cry should summarize the most important facets of your model. Here are some classic brand mantras.

• Nike: Authentic Athletic Performance
• Disney: Fun Family Entertainment
• Ritz-Carlton: Ladies & Gentlemen Serving Ladies & Gentlemen
• BMW: The Ultimate Driving Machine
• Betty Crocker: Homemade Made Easy

Applying the Model: Zappos

Zappos started out in 1999 selling shoes online, grew to over a dozen merchandise categories and over $1 billion in revenues, and was acquired by Amazon in 2009. From early on, the team recognized that Zappos was a service company that just happened to sell shoes. The Zappos rallying cry and noble purpose reflect the brand’s commitment to service. For Zappos, going to extremes to delight customers is a brand capability. As a result, Zappos enjoys a reputation for legendary customer service. This capability informs decisions regarding returns, shipping upgrades, and speed of service. When expressed as part of the Brand Identity, capabilities challenge employees to reach higher. In the case of Zappos, a representative once even helped a hungry caller who was away from home find a place she could get a late-night pizza!

The Zappos brand was launched with very clear culture and set of core values that permeate every function, from recruiting to the call center to the warehouse. Zappos interviews people for fit. Unlike most retailers, who focus on product and valorize the merchants, “Zappos wants people who are passionate about service, and don’t care if they’re passionate about the product.” The Zappos culture shapes the Brand Identity.

Brand Identity Should Be Motivating and Enduring

Unlike positioning which is inherently comparative, it is not necessary for the Brand Identity to be differentiating in each and every facet. Differentiation can occur in any of the facets and ideally should occur in more than one. Today, differentiation is as likely to result from a deep recognition and participation in a subculture or a sense of shared purpose or community as from a product feature or functional benefit.

Brand Identities are meant to last. They are not buffeted by changes in competition, product or consumer trends. While specific products and messages may change with the times, the underlying Brand Identity needs to be stable, to ensure coherence and to allow the accumulated impact of brand decisions to be felt. An identity should stay in place five to seven years or even longer if there is no compelling reason to revisit it.

When is the last time you looked closely at your Brand Identity? If you can answer many but not all of the questions raised by each prism element, you may simply need to add to what you already have. If you cannot answer most of the questions, it may be time to revisit your Brand Identity.

Contributed to Branding Strategy Insider by: Carol Phillips and Judy Hopelain of Brand Amplitude

The Blake Project Can Help: Please email us for more about our purpose, mission, vision and values and brand culture workshops.

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

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 “Netflix has decided to can Qwikster, the DVD-rental spin-off it announced to unlimited screaming last month.” –-Wall Street Journal, 10.10.11

“Barely a month into Meg Whitman’s tenure as chief, Hewlett-Packard announced on Thursday that it would not sell the company’s dominant personal computer business — closing off a strategic path offered by her predecessor.”–New York Times, 10.27.11 

These stories might be laughable if they weren’t such a tragic waste of shareholder value.

Most every company says it values its customers, and hates to ‘walk away’ from them. Leaders are called on to make tough decisions they believe are in the best interests of their companies. And sometimes, these decisions advantage some customers at the expense of others. That doesn’t make them bad decisions, just risky ones.

But leaders of some of our greatest brands act like they have forgotten (or never knew) what every junior brand manager surely knows — to test potentially risky messages and find ways to mitigate their negative impact. Instead, senior leaders are acting like bulls in a china shop, awkwardly and prematurely broadcasting their strategic decisions in ways that destroy their company’s (and their own) reputation and value.

HP’s announcement last August that it was considering selling its PC business could be read as either the hubris of a short-timer CEO or a strategically important move to free up resources for higher margin and/or growth opportunities. Either way, the already struggling stock lost nearly 1/3 of its value upon the announcement, dropping to $22.60 from $32.61/share in one day HP’s stock price has languished around $25 ever since.

Netflix shot itself in the foot multiple times last year – and its stock price has suffered the consequences. Shares have fallen from an all-time high of $298.73 on July 13 (just 4 short months ago) to close up 10% at $91.80 today. The mail order DVD model may in fact need to be phased out for Netflix to continue to reign pre-eminent in home entertainment or media or whatever business they see themselves in. Surely, they could have used their prior market capitalization better to help achieve their vision, rather than see precious capital and valuable customer relationships squandered by leadership ineptitude.

The latest episode of self-inflicted damage came last September from Bank of America who announced a monthly charge for checking account customers to use their debit cards. This controversial move follows years of encouraging and rewarding debit card usage (and reaping the cost savings over paper check processing) and is part of what is fueling the Occupy Wall Street anger. Already reeling from other challenges, it’s hard to attribute any Bank of America stock price change specifically to the announcement of the new $5/month charge on September 29 or its reversal on October 31. The point is, if it was the right business decision, it should have been handled differently.

What has happened to the instincts of corporate America? Have the leaders of these companies become so insular, so arrogant, or so detached from reality that they don’t bother developing a customer-focused plan to communicate their decisions effectively? Do they assume that, like diamonds, a customer is forever?

These days, there is no excuse for this type of leadership blunder. Testing messages with customers is faster, cheaper, and easier than ever. So is building a communications plan that manages risk and avoids patently value-destroying moves. Testing messages with customers is not just a “marketing ploy” or “spin doctoring”. Although it’s the fashion to malign them, simple focus groups and surveys are very effective at identifying truly bad ideas. They cost little and take next to no time. They should be considered the equivalent of spell checking for customer-facing decisions.

Being in touch with customers is the antidote to company hubris at all levels – and these days particularly for CEO’s as well as those who advise them.

Contributed to Branding Strategy Insider by: Judy Hopelain of Brand Amplitude

The Blake Project Can Help: The Brand Positioning Workshop

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

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