Branding Gives Your Company the Benefit of the Doubt

July 27th, 2015

People tend to assume the worst, especially about companies. So, when companies screw up, and they inevitably will, consumers (and partially as a result, the press) are ready to pounce on you and your vile type of corporate evil. Every company has this moment, and some companies are more prepared for it than others. Yes, being prepared does mean having a crisis PR strategy and all that tactical jazz, but what’s more important is to have a brand people know. I’ll explain a bit why.

The brand of a company tells the consumer what it stands for, what it promises, and what it can deliver. Most companies invest handsomely in their brand and for good reason. Brand building can increase loyalty and command higher prices. But a crucial piece of brand building is that since consumers know what you stand for, and many of them have already identified with that, they give you more leeway in how you do business and when you make mistakes. Another word for this is trust. In really great brand building examples, a consumer will say, “That can’t possibly be right. I want to hear what they have to say about it.” In absence of this work, a brand is just identified as the product experience, which means when the product has issues, the brand has issues. Companies should try to elevate their brands to mean something beyond the product experience, and bad things happen when they don’t.

Brand building also crystallizes what you stand for inside a company, making your company less likely to make a strategic mistake against what you stand for. In absence of a strong brand, different departments optimize for different things, typically creating both a Frankenstein experience for the consumer, but also distrust among departments. When a core engineering team sees a new signup flow that seems particularly aggressive, they might be inclined to curse the growth team instead of saying, “I know what that team is about. Let me go talk talk to them to see why things seem amiss here.”

You can absolutely be successful without building a strong brand outside of the core product experience, but it is harder, and you’ll have more bumps along the road. I’ll give one example that comes to mind. The first is Netflix. Netflix is undoubtedly one of the most well known brands in the U.S. It is also a brand that has grown entirely through its product experience and direct response advertising. All of its marketing is tied to signing up for Netflix. Its TV ads, display ads, pop unders, etc. eschew brand building to attract direct signups. This worked very well to grow Netflix into a powerhouse, but when they inevitably made some major and minor mistakes, consumers, the press, and the public markets went after them. In 2011, Netflix announced a price increase and then after that a split of their DVD and streaming business, including a new name. Netflix is an amazingly valuable service at an incredibly affordable prices, especially compared to cable. But, because they lacked a strong brand, consumers associated a lot of their brand with the price. Furthermore, separating the two businesses was clearly a case of not having a strong understanding of their brand internally. The result: 800,000 subscribers lost in one quarter and a 77% drop in stock price.

Now, Netflix recovered from this, but it took years and a pretty radical change in strategy toward original content. While this provides Netflix more of a brand than “cheap access to tons of movies and TV shows” and pushes that branding more so to “quality content that I sometimes can’t get anywhere else”, it still associates the brand entirely with the product experience. If they go a few seasons without a hit show, or need to raise prices again, they may be in the same situation in the future.

Currently listening to Panda Bear Vs. The Grim Reaper by Panda Bear.

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