Brand Loyalty

6-point checklist for brands in managing a crisis.

As Winston Churchill famously quoted "Never let a good crisis go to waste". As a leader during crisis, he became more strategic, communicated both effectively and inspirationally. Brands can take some learnings from this during the COVID-19 crisis in asking how they maintain trust? How do I communicate and enhance consumer confidence?

In an era of corporate transparency and economic crisis, the actions of businesses, industry and brands are under greater scrutiny and judgement. It is vital that brands don’t knee-jerk react, but maintain their integrity, understand what their customers require, stay true to their brand values, and continue to communicate in the most appropriate and manageable way.

It is easy to get distracted, panic and make drastic, non-strategic decisions in times of crisis. But in the past (admittedly this crisis is unlike any other), those who hone their brand, that focus on communicating the right message at the right time will be well placed to see this through.

Here is a 6-point checklist for brands on a mission to find the light at the end of the COVID-19 tunnel.

1. Review your balance sheet - but not at the expense of your skills base

Now is the time to conduct a review and focus on what you don’t need. Financially reviewing your business and cutting unnecessary costs straight away, will allow you to focus on what is important and continue to move forward in a positive way.

When reviewing your operational and capital expenses, there will be a lot of challenging decisions, especially when it comes to human resources. Remember the value in employees, what they were doing for your business before the crisis, and how vital their experience and skills as we move through its duration.

Where skills are lost, a key question is how quickly would you be able to gain those lost skills back once the crisis is over? What is the cost-to-benefit ratio of future recruitment against current resourcing? Are there other ways to reduce overheads so as to ensure you maintain culture and morale?

As all organisations are looking to streamline their operations, it’s critical to figure out what you need and what is prudent to ditch. Look after employees, customers, and suppliers, as they are the three most important groups for your business when we lift out of this tough period.

2. Review your business strategy

Crises drive the need to reframe business strategy. How you are going to get through the next 3 months, the next 6 months, the next 12 months? Business has changed so dramatically since COVID-19 has engulfed the world. Of your revenue streams, which are still performing? Which ones can no longer be supported in our new reality? How ready are you for a more digital environment? Are there any easy to access opportunities within your current market that you could easily pivot to?

To survive, many brands have pivoted dramatically into completely new markets, where areas of demand have been identified as potential opportunity. Some great examples we have seen here are gin distilleries pivoting to hand sanitisers, or manufacturing companies producing equipment for healthcare professionals.

They have asked themselves the important question “What can we do with what we have?” The answer may not be what they were expecting, or what they dreamed their future would look like. But these pivots, transferring resources and skills into unfamiliar areas, may well be what keeps them alive for future business opportunities.

The key takeaway is innovate: think about every angle possible, and utilise your resources wisely.

3. Balance the short-term revenue generation strategies vs long term viability

A potentially damaging strategy that an organisation could take is to sit tight and wait for this crisis to blow over. There is no worse strategy than doing nothing. Fear can often lead to knee-jerk decisions such as selling off assets or cutting costs to the point where they cannot operate. An example of short-term reactive decision making, airlines and travel companies may have thought that holding on to their customers money would have allowed them to get through this period. It was soon obvious that for this sector, the crisis ran deeper than holding on to cancellation fees. This sector is not going to return to its former normality for some time, if at all.

Looking longer term, generating entirely new revenue streams is critical for the climb out of this downturn. There is a massive opportunity for brands to reinvent themselves in exciting and new ways to meet the demands of the world moving forward. Profits and dividends will come later if you make the right moves now.

4. Ensure you keep the communication clear, concise and consistent.

Now is not the time to underestimate the power of communication. Customers are online, they are watching the news, listening to latest updates and in their spare time, they are seeking their entertainment online or communicating with friends online. Now, more than ever, concisely and consistently reaching your audience (potential new and existing customers) is vital.

As a brand, you need to consider your communication strategy both internally and externally. Your messaging must evolve, be reflective of the daily situation and considerate to your customers’ needs, without being opportunistic or playing on fear.

If your website or social media communications have not evolved since the crisis began, your brand may be perceived as being out of touch, or insensitive. Regardless of what your product/service provision, you need to empathise with your customers. Place yourself in their shoes to determine what solutions you can offer to their problems. Your message must continually evolve as we move through the crisis, with a sense of togetherness that will keep you connected to your customers.

Internally, communication is just as important. Don’t ever feel like you are over-communicating with your team. With communication comes confidence and reassurance. Silence can breed anxiety.

5. Don’t stop marketing

Once you have your business strategy and messaging refined, the next step is execution. If you don’t start marketing, no one will be aware of your new positioning or messaging. If you haven’t already developed your marketing campaigns and lead-nurture sales funnels, now is the time.

Create content that resonates, educates and motivates your audience. Pick the most effective channels in which to focus your communications and ensure your marketing is highly targeted. Use your owned media as much as possible as these customers already know and like you. Customers who are already in your sales funnels, or engaged in your brand in any channel are an important asset. Now, and now more opportune than ever, is the chance to reach new audiences.

6. Review, Review, Review

Look at your current KPIs and ask: are these all still relevant? If met, will they help you survive this crisis? You need to be realistic in your goal setting. Now may not be a time to look at profit as a singular metric of survival: ensuring efficiency and effectiveness may be more beneficial, or activity vs output may be a more relevant metric.

It is also important to take the temperature of your audience, get a good read on whether your messaging is resonating, and how your brand is performing compared to your competitors.

Surviving the Covid-19 crisis in the short term may not be enough. Like past crises, it too will pass. However it will create a new normal, and it is in this context your organisation needs to learn how to thrive again.

It’s a sad week for many Aussies as the news breaks about the end of an era, the end of 72 golden years of Holden as an iconic Australian brand.

But the writing was on the wall and the time has come for many automotive brands to take stock of the current market, keep up with technology and consumer demands and embrace the new future of the automotive industry.

BrandMatters’ Managing Director, Paul Nelson reflects on the brand:

“I’m a multi generational Holden fan and my sentiments are a mix of nostalgia and frustration. Sad to see the demise of a brand that was part of my social fabric growing up. Frustrated to think of what might have been, with a different mindset.

So what happened? To me it ultimately came down to leadership looking backwards on what made the brand great in its heyday and losing connection with the next generation of consumers and what they were looking for in an ideal car.”

So what were the factors that contributed to the demise of the Holden brand?

1. The brand suffered from its US owners (General Motors) who didn’t have visibility or a committed understanding of the Australian market. 

2. Holden sales have been in systemic decline, especially since the decision to stop manufacturing here was announced in 2017. As a global player, GM would have been looking at this market and making decisions on the best way to exit.

3. The dependence on Commodore as the replacement for the Kingswood, when the market demanded a much broader range of styles and sizes of vehicle. 

4. Since local production stopped, GM were committed to sell what they had, rather than what we wanted. After all, the Australian market would have represented a very small, and potentially insignificant share of its overall focus. GM further claim their focus was on left-hand-drive markets – Australia today is right-hand drive which, at only 25% of all cars manufactured, meant higher re-tooling costs. 

5. As the range was narrow and the relevance too low, so was the investment in brand building and advertising. A drop in loyalty and pride in owning a Holden soon followed, as Holden had decreasing relevance with a younger audience, who aspire to new emerging, efficient, environmentally friendly brands that increasingly are the norm. 

In a statement made by GM’s President, a nod was made in recognition of the love of this brand in the Australian market “At the highest levels of our company we have the deepest respect for Holden's heritage and contribution to our company and to the countries of Australia and New Zealand," he said. So what was it? What led to the failure? Was it the traditional marketing forces?

It could well be argued that it lacked market commitment, product range, competitive offers and customer understanding. Its brand weakened dramatically as a result. All these factors meant it didn’t take long to lose relevance for today’s customers.

So it was all these local factors that began to spell the end for Holden. But the bigger and more fundamental factors were global.

Global competition ultimately caused the demise of this local brand. In an industry with such high manufacturing costs, a focus on innovation and the need for economies of scale, it seems near impossible for an automotive brand to be localised like the Holden brand was.

Mention any organisation that has excelled in branding such as Nike, Apple or Lego and you’ll find they have much in common. Consumers understand clearly what these brands stand for, how they are different to their competitors and bring expectations on purchasing value when dealing with the brand. For each of these organisations, brand is the champion that sets them apart and drives their business growth. More importantly, brand investment sits front and centre when it comes to budgeting and business strategy. Shareholders and the C-Suite value investment in the brand. The role of the CMO and their marketing team is clearly valued as contributing to the bottom line.

Communicating the impact of brand investment on revenue and revenue growth can be a tricky task - especially if the Board or investors/shareholders are used to viewing the business through a profit/loss lens. CMOs need to work together with the C-Suite to communicate the value of the brand and how it helps build and improve the overall performance of the organisation.

A recent McKinsey study highlighted that 83% of global CEOs agree that marketing can be a major driver of growth. There are still many who believe marketing falls under discretionary expenditure and would not attribute it to growth. The report concludes that the opinion of the CEO and Board is heavily influenced by the reputation and rapport of the CMO with the C-Suite and their ability to build deep, productive relationships and win over the sceptics in the C-suite.

McKinsey divides CMOs into three categories – Unifiers, Friends and Loners. The unifiers are 1.4 times more likely to be viewed as having a clear role in driving growth, be mutually accountable in delivering on this growth and be given the right resources and tools needed to achieve this.

It is vital that CMOs ‘seize the day’ in proving the value of marketing in driving growth for the organisation. They must unify the team and leverage the CEO’s support in order to drive growth. The challenge placed on CMOs, is to ensure they can effectively showcase the value brand and marketing has on business growth.

 

CMOs can take ownership of driving positive growth via 4 key deliverables.

  • DIRECTION OF THE ORGANISATION

  • DIFFERENTIATION IN THE MARKET

  • DEMAND GENERATION

  • DEVOTED ADVOCATES

 

1. Direction - a clear vision and set of values that align with your brand positioning

CMOs can lead the way in creating a clear vision for the entire company. A vision that is easily adopted at all levels of the organisation and that aligns with values and brand positioning.

A clearly defined vision and brand positioning can not only help unify the organisation but also help in making informed decisions, understanding where the company is heading and setting a clear path on how to get there together. An effective brand positioning will not only provide a guiding light for the team - it will should also clearly differentiate a business from its competitors.

How does this directly impact the bottom line? There are some clear-cut examples. The recent Nike campaign which, as reported by CNBC, created a surge firstly in shares, likes, followers and fans across social media - followed by a surge in sales and stock prices. The campaign initially prompted a boycott from some consumers, but the values behind the brand and the campaign proved more positive than polarising with their customers and the general public. An increase in sales followed in the immediate days after the campaign release.

 
2. Differentiation – setting you apart from your competitors

In this commoditised world, brand is often the only factor that differentiates an organisation from its competitors. A well-articulated brand story and brand identity can set a brand apart and build an affinity with your customers. It takes time, investment and patience to build a strong brand. A commitment from the C-Suite and shareholders to this process is vital.

When an organisation commits to building their brand in a consistent and authentic way, brand awareness will grow, consumers will develop an understanding of the brand, which in turn builds trust and loyalty. Subsequently, awareness and trust positively impact overall profitability. A CEO or business owner who understands this will accept the fact that investment in brand, especially in the early days, will lead to long term profitability and a reduction in the marketing spend, once the brand is well established.

Unfortunately, only a small number of board members or CEO’s (McKinsey noted only 3%) have a marketing background. This does not, however, stop them from having an opinion on marketing. CMOs need to bring real data and evidence to the table – start talking the language of CEOs and CFOs to ensure their message is taken seriously above simply ‘opinions and gut feelings’.

Bring data to the table. Evidencing results such as the volume of traffic, engagement rates, search engine rankings and organic search queries for your brand name can be proof that investment into your brand strategy is resulting in growth in sales. Proof of your brand being selected over your competitors and other examples of quantitative data can prove the importance and performance of your brand.

Other research, such as survey results on your customer sentiment, or using social listening tools to track how a brand is being perceived by potential customers, or alternatively engaging in brand tracking research on a consistent basis, are all ways that you can incorporate results into your quarterly or annual reports. In this way, investors start to get used to seeing these results and beginning to understand them.

 

3. Demand Generation – driving direct business via campaign activity

Demand generation is probably the most resourced area of the marketing team – an effective marketing campaign should result in instant gratification in the form of sales, leads and brand awareness – all of which can be measured.

Providing the C-suite with a clear understanding of the specific objectives of each marketing tactic and where it sits within the buyer journey is also extremely important. Not every dollar spent is about sales – consumers need to know you first before they will be willing to purchase from you – so an element of your marketing investment needs to focus on brand awareness.

According to Gartner, 80% of the buying process will occur without any human interaction. The challenge for brands is to position themselves with brand strength and understand the role of marketing in the lead nurture process. The marketing activation strategy needs to ensure the right message is targeted to the right consumer at the right stage of their buyer journey.

 
4. Devoted advocates – brand loyalty is alive and well worthwhile

The Pareto Principle, or “80/20 rule” as it is frequently called today, is often used to point out that 80% of a company's revenue is generated by 20% of its customers.

Put simply, if customers are happy, you will find them coming back to you as well as sharing their experience with others. Consistently high retention has a twofold effect on the bottom line via increased sales and reduced cost per sale.

Relationship marketing, customer retention, loyalty programs – these strategies all sit squarely with the CMO. Consistently high retention can create a strong competitive advantage.

Brand loyalty, and its effect on the bottom line, is one aspect of brand where business owners and investors can also track and measure performance. It is evident that shareholders, investors and business owners are well aware of the positive impact of brand loyalty, hence loyalty programs and other reward strategies that have been put into place to retain existing customers. It is hard to ignore the scale of the cost differences in acquiring versus retaining customers.  It costs 6 times more to gain a new customer versus keeping an existing one. The value in retaining existing satisfied, loyal customers is hard for anyone to ignore.

Brand loyalty and retention of customers can not only increase profit, but it can also decrease costs through referral and advocacy. Building great relationships with your customers means that when prompted (and sometimes unprompted) they will refer you to others without hesitation.  

CFOs and CEOs are increasingly accustomed to reading and interpreting the Net Promoter Score (NPS) therefore it has become an extremely efficient tool for CMOs. Sharing this information within your quarterly or annual reporting will also be extremely beneficial in helping financial investors understand the importance of customer satisfaction and brand loyalty to the overall picture.

 
Getting everyone on the same page

At BrandMatters, we have seen the evidence of the positive growth results of our clients who have made significant investments in their brand. Research and data underpin all our recommendations and provides the much needed demonstrable proof.

For CMOs to become unifiers – they need to ensure they effectively collaborate and earn the respect of the C-suite and key stakeholders. We can also help facilitate this, through depth interviews and stakeholder workshops and track subsequent campaign effectiveness through brand tracking research.

All of these strategic brand measures should be considered when analysing an organisation’s results. As outlined, brand can positively impact sales, help you increase profit margins and reduce costs in the long term through loyalty and advocacy.

  

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