Sunday, November 25, 2007

Laws of Branding - application to service firms


“If [a law] is of such a nature that it requires you to be the agent of injustice to another, then I say, break the law."
- Henry David Thoreau

Many branding maxims tossed about in the marketing world, maxims accepted as unquestionable gospel and law, simply are not valid. At least they are not valid for everyone and every business.

When I read a piece of business advice that confidently declares, “Always do this,” or “This is true 100% of the time,” or even “You should…,” the warning lights go off. The Grand Poobahs of branding are particularly prone to heading down this all-or-nothing path. So, I thought I would throw in my two cents and add to the list of branding absolutes:

Always seek to understand the underlying dynamics of your own industry and company before making decisions on how to brand your business.

Never forget that, in the right situations, laws are meant for breaking.
Consider the following commonly held branding beliefs that may be meant for breaking, especially if you work in a service or technology industry.

Maxim #1: Differentiation

“To build a strong brand, service companies must implement their brand with hard-hitting positioning strategies that differ significantly from competitors. In fact, most powerful differentiation strategies are directly opposite from those of primary competitors.”
- Terrill and Middlebrooks, Market Leadership Strategies for Services Companies

Terrill and Middlebrooks believe so strongly in this extreme differentiation theory that they refer to it as oppositioning. Think about the following types of companies:

CPA firms
Law firms
Financial advisory firms
IT consultants
Strategy consultants
Of the companies in these fields, what are their positioning strategies? Additionally, which are directly opposite of the other? Do you really even care?

I pride myself on knowing a thing or two about service industries. I live in Boston. To test my own assumption, I reviewed the Boston Business Journal Book of Lists top 25 accounting firms in the city.

I cannot tell you the positioning strategies of any one of them. Sure, some are known to have strong practices in certain industries, for example, education, non-profit, and biotech. However, I would hardly call having a competent industry presence a ‘hard-hitting positioning strategy that differs significantly from a competitor's.'

And yet, as undifferentiated as they may be (though I am sure some of them would argue otherwise), they seem to be quite successful.

Maxim #2: Category

“The most effective, most productive, most useful aspect of branding is creating a new category. In other words, narrowing the focus to nothing and starting something totally new. That's the way to become the first brand in a new category and ultimately the leading brand in a rapidly growing new segment of the market.”
- Ries and Ries, “Law of the Category,” 22 Immutable Laws of Branding

Imagine this conversation:

IRS: Ms. Jones. This is the IRS calling. I have a question about the tax return you filed.

Ms. Jones: Yes?

IRS: Well, we don't understand them. The forms you sent in are unfamiliar to us. We also do not understand what you submitted.

Ms. Jones: Oh, I'm not surprised. You see, I used a new category of CPA firm this year.

Do you really want a new category of:

CPA to do your business taxes
Lawyer when you need to win a case
IT consultant when it just needs to be done right
Plumber when all you want is a promptly returned phone call
Or do you just want a reliable, consistent, high-quality job done?

Maxim #3: First Mover Advantage

“There's one critical thing to know about position: Whoever grabs a position first pretty much owns it forever. Position is in the minds of the collective market. Reality hardly counts.”
- T. Scott Gross, Microbranding

Branding guru after branding guru echoes this ‘first mover advantage' maxim.

I ask you, who grabbed the position first, and now owns high-quality investment advice in Boston?

John Hancock • Citigroup • Brown Brothers Harriman • Fidelity Investments • Charles Schwab • TD Waterhouse • TD Banknorth • Citizens Bank • RBC Dain Rauscher • Wainwright Bank • Eastern Bank • Sovereign Bank • Prudential Financial • Legg Mason • Merrill Lynch • Morgan Stanley • Paine Webber • Bank of America • Boston Private • Fiduciary Trust International • Edward Jones • A.G. Edwards • Bear Stearns • Dozens of smaller banks • Hundreds of CFPs, CPAs, and insurance firms • Hundreds of others

(Once again I show my New England roots—go Sox.)

Does it matter who was there first?

Maxim #4: Word Ownership

“If you want to build a brand, you must focus your branding efforts on owning a word in the prospect's mind. A word that nobody else owns.”
- Ries and Ries, “Law of the Word,” 22 Immutable Laws of Branding

In industries where there are only a limited amount of players because of the nature of the industry (e.g. there are only so many car manufacturers) it is possible to own a word. Who owns safety? Volvo, of course.

In service industries it's different. There are typically an over-abundance of providers of all sizes, and few generic words one can own:

Achievement • Balance • Control • Creativity • Fame • Independence • Influence • Integrity • Loyalty • Performance • Pleasure • Power • Prestige • Respect • Recognition • Service • Solution • Tradition • Wealth • Wisdom

Sometimes service firms use specific words that focus on need areas or hot buttons. Among CPA firms these words might be:

Audit • Advisor • Cash Management • Compliance • Estate Planning • Forensic Accounting • Internal Controls • International Tax • Sarbanes • Small Business • Valuation

In your area, who owns any of these terms? Can't think of any firms? Or maybe you just think of a number of CPA firms that play in these fields. Even if you could own a word in a service industry, I suggest that it should be a side-benefit of winning and satisfying clients, not a goal in and of itself.

Maxim #5: Being Number 1 in Revenue or Market Share

“At all costs you should avoid being second in your category.”
- Ries and Ries, 22 Immutable Laws of Branding

“Your company doesn't belong in any market where it cannot be the best.”
- Phillip Kotler, Marketing Management

What CEO heads into his board meeting and says, “Next year our big audacious goal is to become number 16 in our market!” You simply would not hear it. Being ‘number one' is a natural strategic target to set and it certainly sounds good. However, in service and technology businesses, being number one is usually neither a feasible nor a desirable goal to set. Revenue and market share are not necessarily the answer to greater success and higher profits.

Service and technology industries, from accounting to software to consulting, should focus on customer loyalty if they want greater revenue and profit growth. Publication after publication (however not branding publications!) by well respected authors and academics, such as James Heskett in Putting the Service-Profit Chain to Work (Harvard Business Review), and Fred Reicheld in books like Loyalty Rules! echo this mantra. However, the messages of these books are not making enough of an impact on the hearts and minds of the advertising and marketing community.

The idea here is not to make the argument for customer and employee loyalty over market share or revenue leadership. I merely want to point out that not everyone agrees with the branding gurus on the 'being number one' law – one of the most taken-for-granted laws of branding that business people blindly follow.

Differentiate…own a number one…be first…create a category…the list goes on. These guiding principles are easy to remember (good job in branding, branding gurus) and easy to latch on to.

Take care, however, that you act only on the guiding principles that will do the most justice to your business and the people that comprise it. In the end, it is up to you to know which laws apply to you, and which laws are meant for breaking.

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