LEARN FROM THE MISTAKES OF OTHERS

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Almost 30 years ago, Peter Senge, a systems scientist and lecturer at MIT’s business school, developed the concept of the learning organization. This idea became a big wave in organizational development and thinking. Basically, a learning organization is a company that enables the learning of its members while continuously transforming.

According to Mr. Senge and his peers, a learning organization develops because of the pressured business landscape and helps keep businesses competitive. Others, such as Harvard’s business theorist, Chris Argyris, saw learning as being keenly aware of what competitors are doing; recognizing and keeping abreast of changes and innovations in the marketplace; and, then responding with creative solutions.

When people think of learning, they often focus only on learning only from successes. Some marketers call this the “transfer of proven success.” Others refer to it as “copying with pride.” But, it is just as important to learn from mistakes. Learn from your own mistakes and learn from the mistakes of others. Learn from your close competitors’ mistakes.

Last winter, Automotive News, the auto trade press bible, reported that Lincoln would be changing its model names from letters to names. Owners and customers were confused as to which brand was which. Its brands were named MKS, MKZ, MKT, MKC, and so forth. The head of marketing, sales, and service said, “There’s a lot of challenge associated with the letters and putting those together.”

Luxury car brands tend to use letters or alphanumeric combinations.  The more mass-market vehicles tend to use names. So, for example, Toyota uses names while Lexus uses alphanumeric branding.

However, it was not just the letter names that put Lincoln in the hot seat. The vehicles were not differentiated enough to make the labels meaningful. Mercedes and BMW have highly differentiated models that are segmented by class (C-class, S- Class) for Mercedes, and series for BMW (3 series, 7 series).

Cadillac introduced a cavalcade of products. They have not learned from the mistakes of Lincoln. Cadillac had a model called ATS (a compact sedan), which was supposed to be the “BMW fighter.” It is being replaced by the CT5. Cadillac’s CTS will also be discontinued and replaced by a midsize sedan also under the CT5 nameplate. There will be the CT4, a small vehicle like a BMW 2 series. A CT6, also a sedan, will be differentiated by GM’s Super Cruise hands-free driving system. There will be the XTS, a large sedan. And, there will be the XT4, a compact cross-over, and a larger model the XT5, as well as a three-row crossover, the XT6. Is all this clear to you? The only named brand is the Escalade, which, by the way, is the only brand that actually makes money for Cadillac.

If you go on the Cadillac website, the coupes and sedans with the alphanumeric names and similar designs are just as confusing as the Lincoln models. The engines differentiate many Cadillac models. But, when parked in a lot, no one sees the engine; people see the vehicles. Striving to be a luxury brand is about more than labels and names. It is about meaningful differentiation. Mercedes, Audi, BMW, Lexus are successful not because of how they label their vehicles but by the relevant, differentiated experiences they promise and deliver.

It remains to be seen if the influx of new Cadillac models will raise the luxury image of the Cadillac brand. Unless the Cadillac models are clearly differentiated, Cadillac may find that the problem Lincoln had was not a Lincoln problem. It was a brand management problem. Learning from someone else’s mistake is far better than making the same mistake on your own.

 

THE SIX RULES OF BRAND REVITALIZATION: ETSY’S BRAND RECOVERY

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Recent news about Etsy indicates that the new leadership under CEO Josh Silverman has implemented a successful brand turnaround. The online crafts seller was in dire straits just a year ago. There was consensus among many that Etsy was doomed, a victim of not only Amazon, but also other direct to customer selling on sites such as Instagram.

However, today, Etsy is thriving. As Financial Times so clearly stated: “The results suggest that the problem was not the threat from a Seattle e-commerce giant but rather its own mismanagement.” Brands do not die a natural death. There is no natural brand lifecycle. Brands can live forever but only if properly managed. Brands under inept leadership falling under the spell of common tendencies for trouble such as losing sight of the core customer, letting bureaucracy and processes take over, playing not to lose instead of playing to win, failing to adapt to changes in the marketing world, or not having a clear direction, inevitably move into the death spiral. Mr. Silverman followed what we call The Six Rules for Brand Revitalization.

Mr. Silverman did the following:

Rule #1 Refocus the organization: Mr. Silverman refocused the organization around a clearly articulated brand direction. He gave employees a vision of a possible dream, a common ambition that all could buy into and implement.

Rules #2 Restore brand relevance: Etsy had evolved to an “eccentric” crafts fair avoiding fundamental marketing approaches, and had favored its craftspeople over the customer. And, although the headquarters still retains its quirky character, there have been substantial brand changes designed to attract new customers. One of the top brand priorities is making and keeping core customers happy.

Rule #3 Reinvent the brand experience: Etsy’s website was cumbersome and off-putting, especially for novices. One of the first changes made was to improve the website to make the site easier to find and easier to use. Marketing the experience is now a priority as Etsy indicates it will increase its marketing budget to communicate the Etsy experience.

Rule #4 Reinforce a results culture: Mr. Silverman focused on stopping the bleeding. He implemented job cuts but also increased commissions, keeping these below that charged by Amazon. The focus is on generating high quality revenue growth. Furthermore, Etsy is solvent enough to begin reinvesting in the brand.

Rule #5 Rebuild trust: Etsy’s craftspeople made a record US$1billion in gross merchandise sales over the last holiday season in 2017. Even though sellers were miffed about the increased commissions, it is clear that the new approach is working, offering them a better platform for their goods. As for customers, an easier, more comfortable, consistent brand experience that delights is fulfilling the promised brand experience. Consistent delivery of the promise to employees, sellers, and customers builds trust. Be consistent.

Rule #6 Realize global alignment: Through Mr. Silverman’s focus, the brand has a common, global direction. Now, that the brand is on solid footing, Etsy is expanding its global presence. Etsy closed a deal with the German crafts site DeWanda, whereby DeWanda shuts down and refers its craftspeople to Etsy.

In speaking with analysts and fund managers, the problem at Etsy was a “classic” management problem. The previous CEO was a technical engineer rather than a brand-business focused leader. And, although there were technical difficulties at Etsy, brands need classic brand management even in our techno-obsessed, digital, online and mobile world. Brands can be murdered by misguided marketing practices. Brands die when they suffer from self-inflicted wounds of mistaken marketing actions.

The turnaround at Etsy has demonstrated that if properly managed, it is possible for brands to thrive in an Amazon-dominated business environment. It is all about winning and keeping customers every day. Brand leadership is a never-ending commitment. And, as Etsy shows us, brand success does not just happen; we must make it happen.

 

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Photo Credit Etsy

FUTURE PROOFING BRANDS

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Many big holding companies are reexamining their organizations. Activist investors are urging many of their holdings to sell businesses for immediate profit. Advertising holding companies are also considering sales of businesses along with the consolidation of agencies into a more cohesive whole.

General Electric, WPP, P&G, Nestlé are just some of the companies that are working towards leaner, more immediately profitable profiles. These brands see divestiture as the means to future proof their businesses and generate cash in a fast-changing world.

But, there are other ways to future proof. One of these ways is to generate deep customer insights, translate these insights into ideas and actions, and create a new future scenario in which your business will win. There is a one brand that is taking the opposite approach to divestiture, all in the name of future-proofing the business.

An article in Irish Independent, details the plan of Maxol. Maxol is an Irish fuel company that owns a lot of filling stations. Maxol also owns retail sites, car-washing sites, and it is a partner with a brand called Mace, a convenience store group. It is not a surprise that filling stations and convenience stores have symbiotic relationships. For example, in the US, there is Wawa, a chain of convenience stores and gas stations operating in 6 East Coast states, and the District of Columbia (Washington).

The CEO of Maxol, Brian Donaldson, sees the growth of current fuel-efficient vehicles, and electric vehicles. He also knows that the margins for food items are better than the margins for fuel. And, as fuel sales decline, food sales can grow.

Mr. Donaldson is not sitting still. He is beginning now to ensure that Maxol remains a relevant brand tomorrow. He says that his view is 2030. Where do we want the brand to be in 2030? It is urgent to start putting Maxol’s strategy in place today. And, having an “open mind” is critical. All options are on the table, as it were. In pursuit of the world in which Maxol will win, the brand has hired analysts and others to get a grasp on tomorrow’s possibilities.

CEO Donaldson has decided to create a brand that will stretch across fuel and food. Mr. Donaldson told Irish Independent,

“We’ll be extending our name and label to milk, bread, cheeses, fresh produce, snacks.  What we’re looking at in terms of our in-store offering is almost trying to set that Avoca-type standard in terms of the ingredients and the quality of ingredients that go into our sandwiches, our prepared meals. And, as well, it’s about the provenance of those ingredients… we’re trying to connect into local supply chains….” (Avoca is another Irish brand that started as a wool mill and is now a clothing manufacturing, retail, and food business selling a range of Avoca-branded items across soft furnishings, ceramics, books, soaps, perfumes, food and woolens.)

Rather than complacency, the vision for moving forward is expansive.

“What we’re looking at is: do we go into new energy markets, do we take ourselves onto the high street, do we start looking at standalone dry sites, do we look at taking a food franchise and taking that to the high street, do we look at supply chain and actually strengthening our supply chain by taking a shareholding? “We’re looking at everything. I think it would be wrong of me to focus purely on what we’re doing [at the moment].”

CEO Donaldson will reimage 70 stores, while deciding on whether some may evolve as food only, fuel only, or sites to be sold off or used to build apartments.  His over-arching vision is to grow Maxol for the future leveraging any and all opportunities that appear to offer high quality revenue growth.

CEOs cannot forecast the future with certainty. Brands and their leaders want certainty about tomorrow before making decisions today. Yet forecasting is fallible. A futurist once stated, “The objective is not to fore-cast the future, for no-one can tell what the future will be. The objective is to take responsibility as an organization for the future.”

Being prepared for the future is called future proofing. Future proofing is not foolproof, but it is a serious step in the right direction. Leaders like Brian Donaldson understand that brands can be future-proofed by leveraging the best opportunities that may be available.

 

AND THE REST IS HISTORY: THE ECONOMICS OF A BRAND BACKSTORY

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When it comes to brands, history is a valuable asset. A brand’s heritage or backstory is a signal of four things: content, clarity, consistency, and credibility. Some brands have been around for centuries while some brands are relatively new. Regardless of the age of your brand, recent research (Pecot, Merchant, Valette-Florence, De Barnier, 2018) reinforcing a brand’s heritage is of economic value. Whether you call this provenance, heritage, or history, a brand’s backstory signals quality, and can help a brand command a price premium.  A clear, compelling, and consistent backstory helps overcome unfamiliarity. A backstory provides information for fuller, richer brand understanding.

A brand backstory is a formidable source of knowledge about a brand’s identity. A brand’s backstory generates confidence. The brand’s backstory engages customers with rich, authoritative information. The brand’s backstory, which provides customer perceived legitimacy, authority, expertise, authenticity, trust, responsibility, quality, and value.

For those people who are not familiar with the brand or are uncertain about the brand, a compelling backstory can increase confidence in the brand. Small or new brands, or brands with limited resources can use a backstory to “increase consumers’ perceptions of credibility and quality, as well as to possibly set a higher price.”

Levi’s® uses its heritage in a variety of ways. The website describes its 1853 beginnings. The brand transitions its heritage as an “invention for the American worker” becoming a “uniform of (American) progress” to the “purest wearable form of authentic self-expression”. Along with its new, fashion-forward designs, Levi’s® offers clothing designated “vintage” – “… sourced from our own archives and inspired by the pioneering West Coast wave riders of the 1940s”.

Chili’s is not as old as Levi’s® but it uses its backstory to shape the brand experience. Chili’s reminds us that in started in 1975 as a “funky” place for “… people who craved connection with family and friends, we were the only ones to offer a genuine Southwest spirit filled with positive energy.”

A backstory does not have to be steeped in decades of history. An interesting narrative of how the brand came to be is just as informative when communicated clearly, consistently, and credibly. Chobani is a relatively new brand, but its story is engaging. Founded in 2005, Hamdi Ulukaya purchased a factory that Kraft was closing.  His first hires were Kraft employees. By 2007, the brand was selling its American-made strained yogurt.

A brand backstory reinforces the permission to believe through content, clarity, consistency, and credibility. In the brand decision-making process, customers ask themselves, “Why should I believe you will deliver to me your promised experience?” The brand’s backstory can help answer this question by offering a fuller understanding of the brand.

In a highly competitive, disruptive, changing environment, an intriguing, informative backstory is comforting, and reduces perceived risk. Research supports the idea that customers are willing to pay a premium for brands communicating a meaningful backstory or heritage. A credible backstory builds brand trust. As trust increases, price sensitivity decreases.

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Photo Credit: Cullen328 photo by Jim Heaphy

BRAND DECISION-MAKING IN AN INFORMATION-RICH WORLD

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Today, we have so many ways to learn about brands: there are multiple platforms and information comes in multiple formats such as video, audio, VR, AR, as well as text search. When information is delivered in multiple formats, the information is considered “rich”.

New research (Maity, Dass, and Kumar) reveals that the “richness” of the available information affects our brand memories, and our consideration sets. The richer the information, the less we rely on our past experiential brand memory, and the more brands we are willing to consider prior to purchase. If the information is limited, we must put effort into searching for information. We are only willing to do this for a limited number of brands. When we have to rely on our own searches, we default to our past memory of experiences and learning.

Choosing a brand simplifies choice. In a complex, over-whelming, over-choice environment, brands are one-think decisions.  But in a rich media environment, the one-think role of brands is in jeopardy. A good part of a brand’s value is based on familiarity and previous experience. Experience is built over time. Without relying on experience memory, a favored brand may lose some of its advantage to these new devices to make brand choices.

One-think decision-making

This research reflects one of the great paradoxes of brand shopping today: the desire for multiple choices and the desire for ease of choice. People desire choice, yet having too much choice increases uncertainty, decreases speed of decision-making, and requires more physical and mental effort. Consumers want more choices, but they want choosing to be easier. One-think shopping alleviates the uncertainty of too much choice while helping a consumer choose wisely.

With one-think shopping, the consumer can quickly make decisions based on the trustworthiness of the brand. It is a streamlined roadway through the cluttered confusion of choices. This trustworthiness is part of the brand’s value.  The brand loyal customer trusts the expected total branded experience will be delivered as expected. Brand loyal purchase decisions are easier to make.

When rich media are available, processing information using modern smart devices to make choices for us makes decision-making easy. When information processing is easy, customers are less likely to rely on their memory of previous brand experiences.

In this future marketing world, brands have no choice but to focus on building real, customer-perceived value along with building and reinforcing trust. By building Trustworthy Brand Value, brands will maintain a marketing advantage even in information rich, smart device enabled environment. Instead of “Alexa, what soup should I choose today?” The interaction will be, “Alexa, buy Brand X soup today.”

BRAND EXTENSIONS STRENGTHEN BRANDS

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The more ways a customer experience the delivery of a brand promise, the stronger the brand connection. Well-managed extended brands build brand loyalty. For example, having great experiences with Samsung mobile phones as a young adult can influence your choice of a Samsung washer and dryer later in your life.

Apple is enjoying the fruits of an attractive extended brand. Barron’s recently reported on PiperJaffray research indicating that among 6,000 US teenagers, in Spring 2018, 82% said they own an Apple iPhone, while 84% said they intend to buy a new iPhone the next time they buy a mobile phone. Compare these numbers to Spring 2014, when about 60% of 6,000 US teens said they own an iPhone, and about 66% said they intend to buy an iPhone.

Additionally, PiperJaffray asked about Apple Watches. Of the 6,000 teens in the study, 20% said they already own an Apple Watch, while 20% said they intended to buy an Apple Watch. Considering that the smart watch category is still taking hold, these are respectable numbers.

A favorable experience with an iPhone and/or an Apple Watch and/or an iPad increases the probability the same customer will by an Apple laptop. Apple is building an over-arching power brand by connecting with younger cohorts. As Barron’s states, “Getting more people into the Apple network early can be extremely valuable, especially if they sign up for services that make them unlikely to switch to other phones. And, finding that interest in the Apple Watch is also growing would only help.”

Amazon is another brand that is building a strong branded multi-product and service portfolio. According to The Toronto Star, Amazon has strong relationships with Millennials and older customers because these demographics have access to financial services. Many Gen Z individuals are still using the bank-of-mom-and-dad.

“Teenagers, otherwise known as generation Z, with their lack of debit and credit cards, their absence of bank accounts and their overwhelming preference for actually putting on clothes and going to physical stores to buy things they could purchase online, pose a big challenge to Amazon.  Amazon’s answer: The internet behemoth is in early discussions with banks including JPMorgan Chase Co. and Capital One Financial Corp. to create a product similar to chequing accounts. Amazon aims to tailor the accounts to appeal especially to youngsters and those who own no plastic in their wallets.”

Airbnb is creating a portfolio of branded products and services for young people including rental apartments. The brand has created Airbnb Experiences with Generation Z and Millennials.  CEO Brian Chesky sees Experiences as the future, as Millennials and Gen Z customers live in smaller urban spaces where amassing things becomes superfluous. It is the experience that matters. Currently, Airbnb offers 5,000 Experiences, and Mr. Chesky says there are 55,000 on the waiting list.

Extended brands that offer multiple product and service experiences strengthen the customer’s commitment and conviction in the brand promise.

 

THE LURE OF LOCALIZATION

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Customization and personalization are increasingly important marketing opportunities. Customization means flexibility of product and service design. Personalization means respecting and reflecting personal differences, attitudes and values. Personalization conveys respect for customers as individuals.

There is another powerful force… the lure of localization. Localization is more than the farmers’ market or the neighborhood craft brewery.  Local is a distinctive feeling of community. Local creates a sense of belonging.

Locally sourced, locally crafted, locally owned, regionally authentic, one-of-a-kind, bring a sense of cultural, ethnic, economic, and social connection. Artisanal, regional cheeses, local distilleries and breweries, grass-fed cows on local farms, cage-free chickens, arts and crafts, non-GMO, fresh, organic, locally made employing local people, and other local elements and activities that bring “real” into our lives continue to grow and are increasingly attractive and affordable. Homemade items from Etsy; retro items from eBay; and modern vintage from Restoration Hardware – all of these give us a sense of truth.

Local is more than location. It is also about local values. It is the comfort of belonging to a familiar community. Localism provides authenticity, genuineness, and a true sense of reality as in “This is what it is really all about.” It is a feeling of being a part of people just like me.

Feeling like a local gives us a sense of belonging to a social group with distinctive interests and priorities. In our current world, we have this need to belong while we consciously attempt to maintain our individuality. Feeling like a local means that we can stand out while we blend in.

For Millennials especially, it is important to feel like a local. Millennials value living and working in the same neighborhood.  They like “walking neighborhoods where you step outside your home, and have opportunities to have exchanges with others. In walking neighborhoods, people pass others on the street, and can connect. In a digital, AI, VR, and AR world, we need neighbors and belonging more than ever before.

Short-term residential rental housing is leveraging this need. For many people, staying away from home creates a sense of loss. We lose our anchors. Instead of staying at a standardized global hotel brand, people are searching for hotels with a local, neighborhood feeling.  As Airbnb says, short-term rentals let us choose a neighborhood where we can “live like a local.” Feeling and acting like a resident is important. Barry Sternlicht (former CEO of Starwood Hotels & Resorts, and creator of W Hotel and Westin’s Heavenly Bed) is investing in short-term residential rentals. His investment in a start-up goes to support the addition of new upscale, branded residences for short stays to compete with brands like Lyric, which is listed on Airbnb. Airbnb has its own brand as well, “Friendly Buildings Program” that features rental units provided by “friendly” landlords. The short-term residential rental market appeals to corporate travelers who prefer integrated neighborhood lodging experiences.

WeWork is another example of creating feelings of belonging. WeWork generates feelings of community. Not only does the brand provide communal office space, but, also, through its WeLive brand, it offers apartments. And, to provide for physical and mental wellness, We Work just opened Rise, its gym and spa featuring treadmills, boxing bags, saunas, and massage studios. (The New York Times indicates that the Rise memberships are from $100 to $360 a month.)

Brands have an amazing opportunity to leverage the need for feeling like a local – enhancing the sense of belonging – for all individual customers. Here are three things brands can do right now:

  1. Figure out what makes your brand “authentic” to its audience and then consistently and creatively deliver that authenticity in its experience. Increasingly, deliver the local “real thing” over a who-knows-who-how-where it-was-made. We want something genuine, honest, we can trust. People trust local over distant. People trust locally grown over imported from Mexico.

 

  1. Design ways that customers can become involved in the brand community. People want to feel like a local – this need to belong is a need to be a part of something bigger than themselves. Create personalized participation for customers. Don’t automate everything. People see certain services as being more authentic when delivered by a human. All-digital-all-the-time can be dehumanizing and deadly. Feeling like a local entails being within a neighborhood of real people.

 

  1. Create conversations. Employ the art of conversation. Conversation is collaborative: it is an engaging, connecting, channel-agnostic interactive, and integrative force. Whether vocal or digital, it can be used to generate a feeling of local. Conversation builds trust.

 

Feeling like a local helps us understand our places: our communities, our neighborhoods, our homes, or our countries. Feeling local binds us together as belonging to some place or communal physical, psychological, geographical or virtual space. Local provides kinship with a particular place, wherever that is, and in whatever physical/virtual state that is.  Technology is transforming the world by lowering the physical barriers of place. By respecting local values and tastes and ideas, by rooting in the local space, brands deepen trust.

 

THE ART OF ATTITUDE

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In our increasingly visual, digital, world of video posts and selfie poses, Pinterest, and Snapchat, a powerful non-verbal attitude is a must for a brand. Brand attitude is not claimed. It must be designed into the brand experience.

McKinsey & Co. posted an article on their website, “Ten Design Practices to Deliver Business Value.” McKinsey & Co. points out that design is a top-level priority for the CEO, design being a necessity for long-term performance.

Design has many definitions. Design has always been placed into the “emotional” business bucket, the art side of the business. And, design has, in most cases, been a concept attached to a brand later rather than built into the brand from the beginning. Brand management must be integrated with brand design management. The word “design” means, to “create, invent, devise, execute, or construct.” Brand design focuses on creating, inventing, devising, executing, and constructing a distinctive attitude into the experience.

Effective brand management is about the design of a relevant, differentiated brand experience. A brand is a trustworthy promise of relevant, differentiated experience. It is more than a promise of features and functions. It is about creating a distinctive brand attitude that is designed into the experience. Brands are promises of brand-designed experiences. Trustworthy brand-designed experiences are the real enduring differentiators.  

Brand design integrates the voice and the emotion of the customer into renovation and innovation. Brand design brings creativity into the development and implementation of the total brand experience.

Brand design harnesses a brand’s elements into something tangible, memorable, and visceral creating a special brand attitude. The brand attitude is the non-verbal perceptual impression that makes the brand feel special. The brand’s attitude expresses the brand’s character in nonverbal ways that can be seen, sensed, understood, heard, and felt. A brand’s attitude is the unified expression of aesthetic cues. These non-verbal elements guide how a brand will be identified in the marketplace. Brand attitude answers the question: “How do we want people to recognize, sense, know or feel this particular brand experience?”

Creating and owning a brand attitude is a vital tool for building a strong brand. It is key for projecting a brand’s promise across all communication media. Brand attitude is an interpretive guide for the consistent expression of the brand’s promise. Brand attitude is not easy to create, but well worth creating. Crafting a non-verbal brand attitude for consistent use across all of a brand’s touch-points is an art. Brand attitude is that all-important art that must be a part of any brand policy.

 

A LOVE AFFAIR WITH MARKETING NUMEROLOGY

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A walk through the market research trade press is a frightening experience. The articles are paeans to technology and proprietary methodologies. If we can quantify something, it must be actionable. It is a love affair with marketing numerology.

Market research has split into two groups: the academics who publish statistical articles in technical journals. (To read these, you need a degree in statistics and familiarity with an obscure academic language.) And the marketing numerologists, who believe in some kind of magical relationship between their mystical techniques and some measure of marketing effectiveness. In both cases, producing numbers is the goal. We learned as children that correlation does not mean causality. However, the numerologists love correlations.

Data hyping by the numerologists underlies the poor research reporting we regularly see. In one recent article, on the relationship between video ads on social media and purchase, the researchers concluded that all brands should use video ads. Why? 54% of the sample who watched a video ad also went to the brand’s website. The researchers exclaimed, “Yes, that’s over half.” True, but only by 4 percentage points. And, it means that almost half, 46% did not. In other words, the odds that a viewer of the video ad also bought the product are the same as the flip of coin. It does not follow that viewing a video ad increased the probability of a purchase. It could also be the other way around. Or, one could have nothing to do with the other. Just because you can produce a number does not make it a relevant insight. The researchers were ecstatic that 28% of respondents watched the video ad and then claimed to buy the product.

Just because it is based on numbers does not make misleading, misinterpreted observations actionable. If we produce a number, it must be true. Or, if we produce a number it must be news. Much market research is merely observation of the obvious. In an article on finding the best ways to reach Millennials, the first recommendation based on data, was “Don’t Overgeneralize.” Really? Supported by data, they observe that all Millennials are not the same age. People born in the mid-1980s are at least 10 to 12 years older than those born in the mid-1990s. Wow! What an insight!

The battle for numbers is supported by the battle for proprietary models and methods.  One firm claims that it provides unmatched sensory testing including eye tracking. Another states that it generates ideas from the “squeezing” of behavioral science and cultural anthropology. There is fascination today with something called neuromarketing. Neuromarketing is the application of neuroscience to marketing research to study our sensorimotor, cognitive, and affective responses to marketing communications. Neuromarketing uses technologies such MRIs EEGs, and Steady state topography (SST) to measure brain activity changes in physiological state (biometrics – heart rate, respiratory rate, and galvanic skin response), and something called facial coding (did your face show emotion when you  saw the pizza). Market researchers are fascinated with the latest new technology, the latest new equations, and the latest new, bright, shiny methodology.

Not everything that is important is quantifiable and not everything that is quantifiable is important. Some numerologists at Facebook have created “trustworthiness” measure that will rank news feeds. There has already been withering criticism of this measure. Furthermore, Facebook says they are also developing a metric to help advertisers assess brand success on Facebook. When an analyst questioned Mr. Zuckerberg about the metric, he responded:

“The thing that we’re going to be measuring is basically the number of interactions that people have on the platform and off because of what they’re seeing that they report to us as meaningful.”

As Bloomberg commented, “Good luck putting that into a spreadsheet.” And, “It is remarkable that a company as data-driven as Facebook would gauge success based on qualitative user surveys.” Given the desire for a magical number, Facebook must have hired a group of marketing numerologists.

The love of numbers as evidence of truth, has led to an over-reliance on numbers however they are derived. Marketing numerology is contributing to an over-reliance on numbers over judgment in making creative decisions. People interpret, question, evaluate, simplify, clarify, examine, illuminate, imagine, create. Decisions should be informed by evidence. But, the evidence does not make the decision. People do.

PASSION OR POISON: THE HORROR OF HUBRIS

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Brand founders are special. They have great ideas. And, they have passion. They act on their ideas. Brand founders have the code of the brand in their core. It is always worthwhile to spend time listening to their stories, learning from where the brand’s values come, and understanding the brand’s guiding principles. Unfortunately, sometimes a brand founder’s passion becomes arrogance; poison for the health of the brand. Uber is a recent example of passion turning into the poison of arrogance. And, sadly, another recent example is Chipotle.

Recent UBS research indicates that the customer perceptions about Chipotle have fallen enough to merit downgrading Chipotle’s rating from neutral to sell. The research indicates that concerns about food safety are only the tip of the iceberg. Customers indicate that they frequent the brand less not only because of food safety but also because customers perceive the brand as not as clean as it used to be; the food is not as good as it used to be; the service is slower than it used to be; its food is not healthy; and friends do not want to go there with me.  Whether these statements are actually true, perceptions are everything: the hovering food safety issues have tainted customers’ overall brand perceptions. UBS examined Chipotle’s online ratings across various websites: the brand’s online ratings – reflecting customer reviews – have deteriorated substantially.

Chipotle was built on the brand founder’s commitment to sourcing and preparing food according to classical culinary techniques applied to fast food. His passion for Chipotle’s founding principles worked when the brand was small. However, Chipotle has grown to over 2000 restaurants. It now needs to operate differently. Yet, Chipotle did not adapt. Classical cooking does not work for a 2000 restaurant chain. Food safety was a looming risk. The founder’s passion actually prevented the brand from handling an incredibly serious food safety situation where customers in multiple states were becoming ill. The brand founder’s unwavering belief in the food’s provenance and the logistical and culinary processes became stumbling blocks.  The food could not be the problem: the food is organically, naturally, humanely grown, nurtured, handled, and the food is additive-free.

Chipotle’s commitment to classical culinary techniques meant crewmembers had to learn how to properly use knives, and all preparation would be handled in the restaurant, just as in high-end, sit-down, restaurants. Chipotle does not use frozen food. Rice and guacamole are made fresh every day in the restaurant.

The public communications reflected the founder’s hubris. Over the course of the multiple food safety incidents, the brand released numerous press statements that boggled the mind. There was a statement indicating that along with Food with Integrity, Chipotle was now committed to food safety. Did they mean that previously the idea of integrity did not include food safety? Chipotle hired a food safety expert, but there have been no indications that this expert’s recommendations have been followed. In fact, after using a commissary to safely prepare the food the brand’s founder thought the food tasted differently and so the commissary preparation was stopped.  

Chipotle seemed to view the food contamination issue as a small, limited standalone issue. They did not imagine that overall brand imagery perceptions across the brand would be damaged. Contaminated food appears to affect the image of restaurant cleanliness, food taste, and customer service.

Chipotle felt the media treated them unfairly. The incidents were only a very small fraction of the total number of customers served very day. But, the credibility of Chipotle’s promise of “food with integrity” was attacked at its core by these incidents. Playing the situation down will not make it go away.

Advertising can do many things, but it cannot make a restaurant’s food safer. Chipotle tried strange, unconventional adverting. Product safety issues cannot be changed by running a philosophically existential advertising campaign that is probably making Jean Paul Sartre turn over in his grave.

New products did not help change the perceptions of Chipotle either. Chipotle’s queso has been ferociously panned. Commitment to the founding principles of classical culinary techniques does not work for preparing queso as people know it. Chipotle tries a new dessert item. This was destined to fail. People come to a restaurant for its core menu. They are not likely to choose chipotle for a dessert if they do not like the burritos. The dessert entry has been yanked from the stores. And,

Chipotle is not a franchise. Chipotle owns all the restaurants. There was no interest in having outsiders meddling in the brand. As Chipotle grew to over 2000 restaurants, the management of the brand became much more complex. Furthermore, the creation of two other restaurant brands using the Chipotle-style assembly line distracted executives.

Chipotle has experienced tremendous success. The brand changed the fast food landscape. Chipotle leapt to success by leveraging an idea that food can be great and fast. The problem fast food is not that the service was fast; it was the food. Offering quality, sustainably sourced food, made in the restaurant according to classical culinary techniques was something new for the fast food customer. Chipotle’s success created a new business model the industry dubbed fast casual.  

Success needs to be leveraged, not lived off. As brands grow, as the world changes, as customers change, properly managing brands demands changing the way the brand experience is delivered. The essence of the brand’s promise can be kept intact while adapting to changing circumstances.

Chipotle is now looking for a new CEO. As with Uber, Chipotle needs a new leader to put the brand back together. The belief that stubbornly sticking to original techniques supported by unusual advertising would bring back customers and allay their fears was arrogant.

Chipotle is on a downward spiral. Executive hubris will not change this trajectory. Yet, the death of the Chipotle brand is not inevitable. Brands can live forever if they are properly managed.