An article by advertising executive Barry Silverstein highlights a trend that offers important lessons for marketers in many areas, not just the category that he analyzes, which is gasoline. Silverstein outlines the evolution of retail gasoline brands in the United States over the past several decades, describing the current situation as one in which consumers make their buying decisions based on price or convenience. Needless to say, those are the hallmarks of commodities, not brands.
There was a time not so terribly long ago when gas stations were known as "service stations," and, for example, Texaco's customers were asked to "trust your car to the man who wears the star." Today, consumers pump their own gas, check their own oil, and wipe their own windows. Companies encourage customer loyalty through cash discount rebates and attempt to differentiate their brand by speed-of-payment claims, fuzzily defined additives, and advertising that speaks vaguely of their commitment to "think differently about energy."
The impact -- or more precisely, lack of impact -- of these retail gasoline brand marketing investments can be readily seen in consumer perceptions. A 2007 Gallup Panel survey explored the feelings of consumer prospects (those who buy gasoline but who are not buying a particular brand). Although more than 7,700 prospects were familiar with a variety of leading gasoline brands, very few (4% to 9%) were at all convinced that any individual brand was truly distinct from the others. And an equally unimpressive number (ranging from 4% to 17%) could envision any brand as setting the standard whereby other brands should be judged.
Regardless of their efforts to create brand differentiation, gasoline has become a commodity in the eyes of consumers. No brand is recognized by prospects as being meaningfully different from any other. The brands differ only in their names and in their logos.
How are the mighty fallen?
It wasn't always this way in the world of gasoline retailing. But in a marketing world where products are virtually identical and station layouts are essentially indistinguishable, it appears that the major gasoline marketers have chosen to eliminate one meaningful brand experience differentiator -- the people who were called on to serve the customer "from Maine to Mexico," as Texaco once claimed.
The reason for this is simple, although it's also short-sighted if the company's true goal is to create relationships and not merely process transactions. At gas stations, the employee-customer interaction has been effectively minimized. That's because organizations find these interactions complicated and cumbersome to control -- or because they deem employees an expensive luxury. Making customers responsible for serving themselves certainly saves money for the station operators. But these savings come at a cost, as revealed in the dearth of customer connections evident in the Gallup Panel responses.
Turning brands into commodities
Perhaps this is just a problem for gasoline marketers. After all, their challenges and initiatives could be atypical due to the fluctuating prices in the world markets in which they struggle to operate. However, the actions that gasoline retailers undertake are in fact quite similar to those being pursued by marketers in any number of industries, and the ultimate result is the same. Brand differentiation is diminishing, and the category is becoming commoditized. Examples abound:
- Banks have been driving customers away from their branches -- and from interactions with their tellers -- to reap the lower cost per transaction of service through telephones, ATMs, or Web sites.
- Airlines have reduced employee headcount by outsourcing their customer interactions through subcontracted call centers and have minimized human contact by establishing computerized flight management systems and airport kiosks.
- Hotels guide their guests to Web sites and self-service check-in and check-out stations, eliminating any need to interact with hotel personnel.
- Grocers provide checkout lines where shoppers bag their own groceries and pay for them without ever having to come face-to-face with an actual employee.
While banks, airlines, hotels, and grocery chains talk about their commitment to providing excellent customer service and building customer loyalty, they are all taking steps to replace employee-customer interactions with systems that are more cost efficient. The ultimate objective is to improve bottom-line performance. But does the enhanced efficiency and reduced headcount affect customer relationships? And if it does, does management notice -- or care?
Perhaps the trend toward self-help and self-service is happening simply because customers like it this way. Perhaps it's because today's hurried customers want to reduce time-consuming personal contact.
Don't be so sure. Today's consumers may seek speedier transactions, but they also want better service. We've found in case after case in our research that customers want to feel good about the companies they do business with. They want to feel recognized and appreciated for their patronage. They want businesses to address their emotional needs, not simply their rational needs.
Businesses that meet their customers' emotional needs aim to do much more than merely satisfy their customers; they seek to engage them. And engaged customers reward these businesses handsomely. They stay longer and return more often, they give the company more of their business, they resist competitive overtures, and they happily trumpet their stories to others. (See "Maximizing Return," "The Engagement Imperative," and "Customer Satisfaction: A Flawed Measure" in the "See Also" area of this page.)
When it comes to engaging the customer, an organization's employees are essentially irreplaceable. In studies that include fast food and banks as well as auto dealers and hotels, Gallup has found that employees are often the single most important factor in building customer engagement, often dwarfing the impact of traditional standbys such as product, promotion, place, and price. (See "People Who Need People" in the "See Also" area on this page).
We are the brand
For companies that range from The Ritz-Carlton to JetBlue, employees function as a key brand differentiator -- a cornerstone that gives real meaning to a company's foundational brand promise. (See "How The Ritz-Carlton Is Reinventing Itself" in the "See Also" area on this page.) For these businesses and others like them, employees define and support a distinctive and engaging brand experience. Eliminate the baristas, and the Starbucks customer experience would be palpably less engaging -- and far more like a commodity.
Employees are, of course, not the only means a bank or an airline can use to enhance its customer relationships. Every point of customer contact, whether it's a Web site or a phone call, can contribute to -- or detract from -- the connection between customer and company. But it's also quite clear that employees are not just mechanisms for recording and processing customer transactions, and they represent much more than another cost to be minimized.
As advertising guru Lee Clow said, today's marketers are operating in "a new age of transparency, and . . . everything that a brand does is a message." It takes more than advertising to build a brand and keep it from deteriorating into commodity status -- and an automated phone line or a self-service kiosk sure won't help.
If marketers truly care about the health of their brands, they cannot afford to waste any opportunities for strengthening the connection between customer and company. Executives must look upon each point of customer contact -- especially interactions with employees -- as a way to build meaningful differentiation versus competition, rather than a cost to be minimized. If marketers seek to avoid the slippery slope to commoditization, they can't afford to place a greater value on short-term cost savings than they do on building long-term relationships.