Over the past few years, enormous attention and barrels of ink have been devoted to the apparent business fortunes -- and, more recently, to the up and down stock price gyrations -- of Internet companies and Web site marketers. Only lately, however, have these discussions begun to shift from a focus on short-term stock price performance to a consideration of the important business fundamentals that are the keys to any company's enduring marketplace success.
Although it is tempting to conclude that the world has inalterably changed as a result of the Internet -- and in some ways it certainly has -- it is equally important to revisit some marketing "truths": lessons in brand-building that have been learned over the years.
The key to sustainable growth has been -- and continues to be, in the age of the Internet just as it was in the age of the medieval guilds -- repeat business. Trial is essential, but no business can endure without the repeated (and, where possible, expanded) purchases of continuing, committed customers.
The value of a loyal customer has been well established. Loyal customers are resilient. Not only do they resist the overtures, claims and promotions of competitive marketers, they are far more likely to forgive a company for occasional transgressions or performance lapses. In addition, as Gallup has found repeatedly in studies of customers for products and services as widely ranging as healthcare, hotels and hamburgers, loyal customers spend more, they visit more frequently, and they are far more receptive to additional product and service offerings from the company.
Do e-marketers recognize the value of loyalty? Increasingly, they do. Although many seem to have labored under the mistaken impression that the sole key to business success was a readily recognized brand name, most now realize that this is just step #1 in building a true brand relationship. Advertising during the Super Bowl may be great for the ego, but it has a limited impact on customer loyalty.
Brand awareness is, of course, a prerequisite to brand success. However, it should never be confused with brand success. Consumers recognize the names of many companies with whom they do not choose to do business. Thus, the initial onslaught of dot.com advertising, which at one point was estimated by Advertising Age to be reaching a mind-boggling $7.4 billion per year, has tapered off.
Why? Because awareness of the brand name isn't nearly enough.
So, what are the requirements for a great brand?
Drawing on decades of research stretching back to Dr. George Gallup's pioneering efforts to determine the "marquee values" of Hollywood stars (i.e., the financial value of a star "brand"), The Gallup Organization has learned a great deal about what makes a great brand name -- and what turns a first-time user into a committed customer.
Do the old rules still apply in the age of the Internet?
First, we need to take a close look at what the Internet actually represents. The Internet is, at its very basic level, simply another "touchpoint" that can connect the company with its customers and prospects. It is a very fast and direct touchpoint, one with two-way capabilities -- but at its heart it remains another touchpoint.
What makes the Internet unique as a marketing tool is that it is fits into two of the famed four P's of classic marketing parlance. It is both "Promotion" and "Place" -- a medium for both message delivery (i.e., a communications medium) and for product/service delivery (i.e., a distribution vehicle). It can thus fulfill some of the functions of both a TV ad and a store location.
But no one marketer owns the Internet, just as no single marketer owns all the convenient store or hotel locations, or is the only brand on the grocer's shelf. The marketplace remains a competitive one, with multiple companies vying for business, offering similar products at similar prices, and, thanks to the Internet, through similar distribution channels. You may be the first marketer on the Internet, but you will not be the last, or the only one.
The key to an enduring customer relationship is, however, not the mere existence of another touchpoint. Rather, as we've found repeatedly in every category we've studied, the key to brand success is meaningful brand differentiation.
Meaningful brand differentiation depends not on the existence of a particular touchpoint, which is equally available to other marketers. Rather, it depends on how that touchpoint is used -- on how the company employs this touchpoint in order to build, reinforce and sustain the bond between company and customer.
How do great brands build relationships?
The characteristics of a great brand, gleaned from more than fifty years of Gallup brand research, reveal some answers to this key question, and underscore the challenges that remain to be faced by Web site marketers and e-business companies. Great brand relationships grow from great brands. What do these great brands have in common?
- Great brands readily come to mind. Context, of course, is important. Coca-Cola readily comes to mind when consumers think about carbonated soft drinks, but not when they're thinking about telecommunications.
This is an area where Web-marketers have had problems. Context has often been left undefined in the rush to establish name recognition. For example, do all the consumers who are aware of the "Monster.com" site know what business it is in?
- Great brands are familiar, and their promise is known. If a brand is a promise that a company makes to its prospects and customers, it stands to reason that they must know what that promise is.
This sounds deceptively simple, and yet there are companies that cannot articulate what their brand promise is, and nevertheless expect that their customers somehow can. There are companies whose promise is vague ("we want to be your partner"). And there are, as will be discussed later, companies whose promises aren't kept.
- Great brands are meaningfully differentiated from their competition. A brand is not merely a promise; it is a promise that no one else is making, or can make. It is a promise of a meaningful consumer benefit that one brand, in the consumer's mind, can "own."
"Available through the Internet" is not a differentiated promise, whether the product is books, brokerage accounts or job listings. At one point, it may have been. At present, however, it is a parity promise, capable of being made by a number (sometimes a very large number) of competitors.
- Great brands are well thought of, trusted, and held in high regard. Customers feel a sense of "attachment" to a great brand. A great brand offers customers reassurance that the brand promise will always be kept. Customers believe they will always get a fair shake in their dealings with a great brand, and they are proud to be known as its customer.
- Great brands keep their promises. Trust and attachment are earned, not through communications and Super Bowl ads, but through actual performance.
Thus, actual customer experience must "fit" with the brand promise. If the promise is one of change ("come see the new X") or of superior performance ("you'll feel the difference"), the customer experience must match it.
This is a critical challenge for those whose apparent promise is instant contact or instant delivery. The marketing world in this new millennium, given the plethora of competition, is in many ways a world of "one-trial learning." Failures are remembered and, as numerous Gallup surveys have noted, they are commented upon (sometimes loudly) to friends. All brand relationships start with a single encounter (trial), but it is repeat business that is the essential ingredient. And that means promises must be kept.
- Great brands have positive momentum. Consumers feel that the brand is heading in a positive direction, or at the very least is not headed downward, either in quality or acceptance by others.
Web site marketers and e-business companies have created substantial feelings of "popularity" momentum -- that more and more people are using these services. Popularity is only one aspect of brand momentum, however. There is also "quality" momentum -- the belief that the promised performance keeps getting better (or at least is not deteriorating). Reversing negative momentum is an enormous challenge. Ask the folks at Yugo. Or Schlitz.
- Great brands are worth working for, worth waiting for and worth paying for. Great brands provide perceived value; they are thought to be worth the effort expended to obtain the brand. This may mean that customers will pay more for a great brand, or it may simply be that they will go out of their way and encounter inconvenience in order to avail themselves of the products or services the brand provides. A great hotel is worth a special trip. A great airline is worth adjusting your routing and/or scheduling for. And a great Web site is worth seeking out.
- Great brands build loyalty and commitment among customers. There is a payoff associated with a great brand -- a reason why companies seek to build them and make efforts to nurture them. This payoff relates to continued business, to repeat selection. This is the area that makes or breaks any brand. The true greatness of a brand, therefore, can only be assessed over time. One purchase does not make a franchise.
What are the lessons for Internet marketers?
The key to success lies in establishing an ongoing relationship between company and customer. The key to an ongoing relationship is a meaningfully differentiated promise, one that is recognizably associated with a single brand and one that is consistently kept.
That meaningfully differentiated promise has been the key to success for Kellogg's, for Kodak and for McDonald's. It will also be the key for Amazon.com, Yahoo! and E*Trade. Some things -- even in a world of manifestly rapid change -- remain immutable.
The brand-building challenge in the new millennium is, after all, much the same as in the old one. Awareness may be built at Internet speed, but brand relationships are not.