Are you measuring the right things right?

  • By Nader Tavassoli
  • 10 Sep, 2015

You might consider a more sophisticated approach to measuring brand-related performance

How closely do CMOs and CFOs work together in today’s global, digital and ever-changing environment? According to recent research, more closely than you think. In a global EY survey, nearly two-thirds (63%) of CFOs polled said their involvement with marketing had increased in the past three years. This is true in particular when it comes to returns on brand investment, or brand equity. I would argue, however, that their involvement is entirely impoverished. To quantify brand equity – and what drives it – the right metrics have to be in place, and before that, the entire organisation has to align. This requires:

  1. Measuring things right – today, brand differentiation is increasingly about the delivered brand experience rather than just the brand promise communicated through advertising and sales

  2. Measuring the right things – entirely overlooked is brand engagement amongst employees – those who actually deliver on the brand promise. Not only do your people provide a leading indicator of external brand health, but they are a significant source of returns to brand via lower pay and productivity gains

  3. Aligning the 3Bs of business, brand and behaviour – improving on these metrics by changing peoples’ behaviours requires marketing to work in unison with human resources (HR) and operations; new territory for many organisations!

Measuring things right: Metrics across moments-that-matter

One of the greatest short-comings of marketing programmes today is their obsession with the purchasing funnel, one that is often mistaken for “the customer journey.” Here key metrics track brand awareness, consideration, purchasing and loyalty. This is what firms want from their customers; but it is not the actual journey their customers traverse. What the customer journey is, in reality, is a meandering across many brand touch-points that cut across often siloed business functions; where key interactions represent moments-that-matter. It is these moments-that-matter that provide an opportunity to provide signature brand experiences. And it the collection of these many experiences that builds the brand image over time by leaving lasting impressions.

Consider answering “how was your business trip”. This experience is itself made up of many smaller, more tangible ones. It might include purchasing the ticket, getting to the airport, checking in, in-flight experiences, disembarking and getting to where you want to get to. It is the impressions these experiences make that combine to create the brand image. And they don’t simply add up. A single bad experience can negate many positive ones.

For example, being charged an exorbitant fee for Wifi access – something several so called “leading hotels” still do despite Starbucks having abandoned this practice in 2008 – can outweigh even the most attentive concierge service. It is therefore not enough to track the average quality of customer interactions at each separate touch-point. Firms need to holistically measure satisfaction across the whole journey, in order to get a clearer picture of the brand’s health. And it is not just whether an experience is good or bad in a generic sense, but whether it differentiates the brand in a more meaningful way.

Customer journeys contain a plethora of seemingly mundane experiences that firms can turn into meaningful on-brand gestures – an entirely different way of thinking about brand communications. Take Singapore airlines, where you will find your seatbelt in a particular way when you return from the bathroom. This demonstrates service in a memorable way. And have you ever noticed how employees at FedEx seem to rush about? Could this be to highlight the brand promise of speed? Or consider Amazon whose brand is built on customer trust, especially when it comes to obtaining good value. When you purchase and item that is discounted before delivery, you might just get an email explaining that you are receiving a refund. Some of these refunds are tiny, say 24 pence, but they nevertheless have a powerful effect, far larger than the loss of revenue Amazon incurs or what an ad could buy.

Aligning the 3Bs

Customers buy actual experiences and not brand promises, at least not indefinitely. And these experiences are directly or indirectly provided by people. People can positively differentiate a brand and deepen the customer relationship, miss the opportunity to do so, or undermine it. And this source of experience-based differentiation is increasingly important in a world of functional product-service parity.

Differentiating brands in this way requires bridging the brand design-delivery gap by embedding the brand into daily employee behaviours. And, for this, HR and not marketing is in the driver’s seat with a tool set of processes spanning the employee journey from hiring, landing, developing, rewarding, and exiting. Think of your own HR processes. Are these on brand or do you recognise a design-delivery gap with a Cartesian-like separation of mind and body, between brand thinking and brand doing?  

Indeed, brand thinking is in desperate need of catching up with this reality across sectors. This is also true in business education. The history of and writing on branding has come mainly from consumer product markets, with scant attention given to B2B or service industries, where face-to-face interactions are more obvious brand touch-points. This has led to an exaggerated focus on the 4Ps – product, price, place and promotion – at the expense of the ‘P’ that stands for people. The new 4Ps of branding – people, people, people, and people – require coordinating an internal brand engagement process across company silos, one that recognizes that an external brand positioning ultimately lives and dies by the actions of people, actions that are shaped by and reflected in organizational culture.

Measuring the right things

In order to track the delivery of the brand experience, organisations need to measure brand engagement with the people who design and deliver each moment-that-matters. Not just employee engagement in the generic sense, but with the brand values, particular. Do your people understand the brand promise? Do they believe in it? Are they motivated by it? Do they know how to provide signature brand behaviours? And do they feel supported and empowered to do so? For example, do your people feel that the right on-brand behaviours – rather than the wrong off-brand behaviours – are recognised and rewarded? It is these types of internal brand engagement measures that provide insight into where brand-improvement efforts need to be allocated. Internal brand engagement is also a leading indicator of external customer-based brand engagement. Unfortunately, most organisations track employee engagement only once a year, if at all, and they do so in an entirely generic way without any consideration to the brand.

Now coming back to our CFO – who might find this focus on soft brand engagement metrics a tad bit fluffy – consider the hard returns that brand engagement can buy. Traditionally, brand returns have only considered customer-based brand equity, typically in terms of the top line. Will more people buy more for more? This is only half the story, however. It is the bottom-line that counts, and a major chunk of this tends to be related to HR costs. Brands with a high standing externally not only give companies a leg up in the perennial war for talent, they can also attract the right kind of people that provide a better fit – especially when HR hires on brand. These people more naturally provide an authentic brand experience, and they tend to be more motivated based on their brand engagement. This increases productivity and thereby lowers costs. 

But the real kicker is the fact that when the 3Bs are aligned the resulting brand strength not only translates into revenue gains with customers, but also in significant cost gains with employees. My research shows that strong brands attract better people for less. And I have researched this with my colleagues from front-line and even hourly workers all the way to executives and even CEOs. Depending on your cost structure, the resulting employee-based brand equity can be as or even more significant than customer-based brand equity.

So let’s return to those ROI discussions between the marketer and CFO. If we are not considering a significant source of return, are we actually making the appropriate level of investment? And without considering the brand experience are we deploying the brand investments in the right way? My contention is not, in both cases, and measuring the right things in the right way will help rectify the situation and provide a solid basis for aligning the 3Bs of business, brand and behaviour.

This musing first appeared in the London Business School Review .

By Nader Tavassoli 26 May, 2017

Most managers, when they think of their company’s branding, view it as the image of the company as it faces the marketplace and the general public. Very few think of the importance of branding inside the organization. If brands are to be an integral part of a company’s strategy, they need to have traction internally. The reality, however, is that a majority of people do not know or understand their company’s strategy, of which branding needs to be a critical component. It should thus be no surprise that far too many companies fail to deliver their brand promise to customers.

Fortunately, there are initiatives that can be taken to overcome this issue. These initiatives leverage core skills already in the marketer’s toolbox. Critically, however, marketers need to involve those in human resources (HR) while also seeking the finance director’s blessings. In many companies, this is uncharted, if not hostile, territory for those in marketing.

Stepping out of the silo

A study by The Brand Inside indicated that, for 60 per cent of sampled organizations, it was unclear who is responsible for building the internal brand in order to support the external promise. HR must take the lead in this process, and it should be a process that involves taking people along the 6-A’s journey: from attention to awareness, acceptance, advocacy, action and adherence. Each stage has different drivers and requires different interventions.


Unfortunately, instead of championing the brand for those inside the company, HR often treats their company’s products and services as if they were commodities, leaving employees with only a broad, fuzzy image of what the company is, at heart, all about. Recruitment ads, thus, are more bland than on-brand. They are largely generic with different logos adorning the same tired copy next to near-identical images of dynamic and diverse young adults.

Job descriptions, key performance indicators, development programmes, incentives and rewards tend to look similar across many of the competitors in any industry. In addition, many people have similar educational and social backgrounds and (often) have already worked for one or more competitors. Currently, there’s a buzz among HR chiefs about “employer branding”; sadly, this trend misses the point. It is typically associated with generically creating a great place to work, but it is not about creating a differentiated organization in a strategic sense. This begs the question: if not through its own employees, at what point can an organization create a differentiated brand?

HR as brand champion

The clearer the brand can be communicated, the easier it is to gain alignment within the business and clarity within the marketplace. Internal branding starts at the top of the HR agenda; the posted company values need to be revised to be less generic, editing out the hackneyed phrases trust , innovation , quality or partnership . HR should strive to promote mission-vision-values documents that express the brand with both precision and enthusiasm, thereby beginning to execute a differentiated strategy from the inside of the company out. 

Engaging people in this process cannot start too early. HR should recruit people with the right attitude, who are naturally inclined to live the brand. Having differentiated recruiting ads can begin to attract on-brand applicants through self-selection. But HR’s job doesn’t stop there. The selection process should assess the candidate in terms of whether the prospective employee fits the company’s brand. Many organizations use the same hiring criteria as competitors, and hiring might even be outsourced. Once on the ground, making the induction process a showcase for the brand immediately engages people in the strategy.

Then, going forward, it is essential to communicate the brand across all the points where the company communicates with the workforce: training, development, performance reviews and incentive schemes. Successful companies are learning that reviewing and rewarding people for on-brand behaviours, rather than only meeting numerical goals, sets them apart from the competition.

Don’t forget current employees

All of this effort should not be reserved only for new recruits. What can be done to promote branding to current employees? A one-size-fits-all approach will not work when trying to win over a large and diversified workforce. Segmenting people based on their various mindsets is the starting point for taking the organization to the next level of branding enthusiasm. Are employees in each part of your company brand advocates, agnostics or antagonists? Identifying and stimulating brand champions – opinion leaders within their functions – is a powerful tool for winning over others less involved with (or cynical about) the brand. 

Building brands from the inside out is a grassroots exercise that needs to penetrate every functional silo, from information technology to research and development, from accounting to sales and service. It is also one that requires top-level sponsorship and long-term attention. It must be sustained and adapted to changing market conditions. It must be constantly monitored through employee polls and against the programme’s key progress indicators to make sure that the planned efforts are on track. Otherwise, be assured that internal branding traction will be lost.

How can HR justify the added cost of such an aggressive internal branding programme? To be sure, these efforts have to lead to measurable results and tangible savings. One way to position the “ROI” of this work is to create a set of measures that ties cost savings to key HR metrics. For example, well-crafted, on-brand ads can save recruiting costs through attracting the right kind of new employee, reducing offer rejections and saving costs on handling the “wrong” applicants, those who may be a bad fit for your company but who tie up many people in the interview and selection process. On-brand selection processes further result in a higher yield rate in job offers accepted. Moreover, it should be no surprise that people like to work at organizations where there is an attitudinal and cultural fit. This translates into higher retention – reducing costly turnover – and even lower absenteeism. There are already accepted ways of monetizing these returns and, when added up, they will more than cover the budget required for the programme. This is less about doing new things, than doing things different. This will be music to the finance director’s ears.

Communicating and living the brand through HR also results in higher pride, a greater sense of common purpose and higher motivation levels. Motivated people who fully support the brand and understand their individual role in delivering the right customer experience are also likely to be more productive. Needless to say, recruiting and developing people 'on brand' will also affect the customer experience - one that typically spans "moments-that-matter" delivered by functional silos. People across the organisation will know how to behave in order to deliver the advertised brand promise, thereby enriching the top line. Ultimately, brands that are created from the inside out are the foundation for a difficult-to-imitate competitive advantage. 

By Nader Tavassoli 20 Mar, 2017

Maybe the Brexiteers didn’t expect to win the referendum in June 2016. To quote from the confusingly-titled iconic Brit film, The Italian Job, maybe they “only meant to blow the bloody doors off”. Possibly they didn’t intend to shatter the whole edifice: they fled the scene so fast it’s hard to know. No matter. In uncertainty, as everybody knows, there is opportunity. And for Brand Britain to grasp this opportunity, it cannot afford the British habits of self-deprecation and ambivalence. Brands need to know what they’re about. And behave accordingly.

I don’t know how Britain will emerge from Brexit – who does – but I do know that it could help to look at it from a brand-building perspective. I have a 3Bs framework for this: aligning business, brand and behaviour. Maybe if Britain learns from corporate experience, it can avoid becoming a nation of Bregretters.

Seize the moment

With the world watching, attempts to shape Britain’s brand will have a disproportionate impact, amplified internationally by the press and social media. That opportunity won’t last for ever. The British government can help people reconnect with their identity, reframe the values that define the culture, and position Britain's role in Europe and the wider world for a new era. Political leaders should not get caught up in short-term posturing on the terms of Brexit – or its £60 billion price tag. This behaviour will reflect on Brand Britain. Rather than think of it as a cost, it should be seen as an investment. The European Union (EU) is not the only one listening and Brand Britain is a far greater prize at stake. Ultimately, brands are about identity and emotions. And, without empathy, Brexit may well have the same chilling effect of the separation of the British Isles from continental Europe following the last glacial period.

So let’s look at corporate brands for inspiration on how it could and should be done.

A branded house or a house of brands?

What is the national brand in question anyway? Brexit is an abbreviation for “British exit” where “British” refers to the people of the United Kingdom, which includes Great Britain – comprising England, Scotland and Wales – and Northern Ireland. As such, the UK is not a branded house like London Business School (LBS). Rather, it is a house of brands such as Unilever that owns power brands such as Dove, Axe (or Lynx), Lipton and Knorr, to name just a few. Unilever is also the world’s leading ice-cream maker, with brands such as Magnum, Carte D’Or, and Solero that are part of the Heartbrand, and Ben & Jerry’s that is not. Unilever’s Global Chief Marketing Officer, Keith Weed’s views on the repositioning of their brand can be usefully applied and can be heard in an interview I carried out with him  here .

The brand architecture is complex, but purposeful. Brands such as Carte D’Or and Solero have a different functional positioning – sharing and refreshment, respectively – but are united under the Heartbrand’s umbrella positioning of “euphoric fun”. This aims to turn Carte D’Or’s sharing into a much more active “bonding” and Solero’s refreshment into an emotional “uplift”. Furthermore, Unilever’s corporate brand has the purpose of “adding vitality to life”, which for example, drives product development into lower-sugar ice creams.

Britishness too is a layered identity. Think of the UK as Unilever, Great Britain as the Heartbrand – with England as Magnum, Scotland as Carte D’Or, and Wales as Solero – and Northern Ireland as Ben & Jerry’s. And, of course, each comes in different flavours, just like London, the Lake District and Cumbria are all English yet different. Britishness is layered on much older identities of being English, Irish, Scottish and Welsh, which continue to resist a homogenised British identity. People differ in the degree to which they consider themselves as English versus British, for example, with some rejecting either aspect entirely. And it gets even more complicated when considering the EU: Remainers might add a dollop of Europeanness to their identity, which surely is a concept entirely foreign to the identity of most Brexiteers.

Business: British brand DNA

These complex concepts must be defined when it comes to establishing the ‘B’ for “business” in my 3B branding framework, whether for a company or a nation. William Hesketh Lever, founder of Lever Brothers, defined the purpose for Sunlight Soap in Victorian England in the 1890s: “to make cleanliness commonplace; to lessen work for women; to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products”. These ideas still guide Unilever’s business, brands and behaviours today.

But what is the identity-defining purpose of a nation? A nation is a body of people of a particular territory, united by common heritage, history, culture, or language. And to (re)define the British brand, one must deep dive into its DNA, values, culture, key moments in history and the iconic people that continued to shape it.

The British national identity finds its roots at least as far back as Magna Carta in1215, still an important symbol of liberty today. Britishness has political and moral foundations, such as tolerance, meritocracy and freedom of expression. It is an identity formally established with creation of the unified Kingdom of Great Britain in 1707, when England and Scotland agreed “a hostile merger”. What was the purpose of this union? What led to its expansion to include Wales and Ireland later on? Or the demerger of the Republic of Ireland in 1922?

Purpose and identity are closely linked, and the notion of Britishness was strengthened during the Napoleonic wars, when it was one defined primarily by virtue of not being French or Catholic. A more pragmatic purpose was the growth and wealth creation of the British Empire, one that cemented the union. Money is also part of the Brexit equation, but the Remainers missed a vital ingredient by ignoring the role that identity played during the vote. And the government is in danger of playing a short game by focusing on the uncertain economics of Brexit without understanding the vital long-term implications of a strong British identity. The Brexiteers certainly knew how to play up historic identity battles with the Continent and the otherness of immigrants to fuel patriotism. Identity is a powerful card being played around the world, and the UK government ignore it at their own peril – not just with respect to the UK’s role in the world, but the union itself.

To redefine Brand Britain, it is worth looking at what accompanied the Empire’s planting of the Union Jack across the globe: tea, tubs, sanitation, obscure sports and churches, as well as a love-hate relationship to Britishness. In making its mark in the world, the UK has needed a range of soft skills: persuasiveness, diplomacy, creativity, ingenuity. These are skills that Brexit Britain should consider rediscovering and using to their maximum potential.

Mass immigration to the UK from the Commonwealth after the British Nationality Act 1948, and from all over the world since, has created an eclectic and vibrant expression and experience of cultural life exemplified in London. More than 250 languages are spoken in the capital, which has the largest non-white population of any European city. The UK’s membership in the European Economic Community in 1973 and European Union since 1993 has left indelible traces of Europeanness on the British identity.

Akin to how corporate brand identities are established, it’s instructive to look at who the British celebrate as the best examples of themselves. In November 2002, a BBC poll of more than a million people identified their greatest Britons of all time. Winston Churchill topped the chart, with engineer Isambard Kingdom Brunel in second place and Princess Diana in third. The list included artists, writers, royalty, scientists, explorers, military giants and, of course, a Beatle.

As the list illustrates, Britain has long been a hotbed of innovation, with major contributions to global culture, literature and the arts. Brits contributed to world-changing inventions in global communications (electronic telegraph, telephone, worldwide web), the media (photography, television), industry (cement, stainless steel, spinning frame, steam engine, electric motor), and even the humble toothbrush. Its education system at all levels is envied and has been copied around the world. One should also explore what people think when they see a product is “Made in Britain” and how perceptions differ from the same product labelled as “Made in Germany” or as “Made in China”.

But a brand is not simply a laundry list of all possible ingredients that make up its DNA. As the British film producer and director Alfred Hitchcock has observed: “If you confuse the audience, they cannot emote.” And, in the end, this is an emotional and not just intellectual exercise. The genes of the DNA ingredients need to be boiled down and fit together as a coherent whole.

Brand: who is it for?

But to create a compelling brand, the DNA is not enough. One has to consider the voice of the target audiences, whose attitudes and behaviours the brand should ultimately affect. It is an exercise at small scale with the Red Arrows as part of our  MBA programme’s  London Business Experience immersion. The Red Arrows know who they are, but in order to be a force for stimulating UK economic growth – their new remit of their air shows when travelling the world – they need to understand the goals of their different audience members, and then marry these insights up with what their DNA has to offer. To do so, you have to look for a universal insight that unites, rather than differentiates these audiences. Unilever has many audiences ranging from their own employees to regulators, communities, investors, customers and consumers. But they all can relate to their corporate purpose.

The second ‘B’ for brand therefore marries the DNA with target stakeholder insights: from businesses, immigrants, tourists, students, governments, not to mention its own citizens. For whom, in the long-term, should the brand be crafted? What are their goals? In what ways can Britain and Britishness authentically relate to these? While the brand message can be articulated in different ways to different stakeholders, the brand idea must have a consistent and coherent voice. External stakeholders too have different goals: Brexit affects them in different ways. The remaining 27 EU members will certainly feel different about Brexit than non-EU countries, who see new opportunities in a more independent UK.

Starting internally may well be the way to go: finding common ground for a nation divided. London stands apart from most of England, and Northern Ireland and Scotland voted to remain. It is therefore important to not get seduced by the notion of trying to forge a new Britishness around the identity of the Brexiteers. Exit polls and regional voting patterns suggest that they were, on average, older and less educated than the Remainers. Also, as the polling organisation YouGov showed, the brands preferred by voters differed substantially, even when correcting for demographic factors. Those who voted to leave were most loyal to traditional and warm brands like HP Sauce, Sky News, PG Tips and Richmond Sausages; whereas those voting Remain favoured more progressive and innovative brands like the BBC, Spotify, Virgin Trains and Twitter. This is no value judgement but a call to look at what unites rather than what divides them.

Behaviour: what are the moments that matter?

Whatever brand idea is created at the overlap of the DNA and audience insight, this is only the design of the brand strategy – one that needs a plan to be successfully executed. This is where the third ‘B’ for behaviour comes in, and it presents probably the biggest challenge – for business or nation alike. This is not about the big campaign. This is about the thousands of behaviours that add up. Take Southwest airlines. They are not just cheap, but their brand promise to weary travellers is that it will be a cheerful experience. And their people exhibit true missionary zeal, with constant smiles and creative in-flight announcements. This is not the 4 Ps of marketing – product, price, place and promotion – but the Southwest’s 3 Ps of “people, personal and personalities” that are at the heart of its branding efforts. All of its people processes are dedicated to attracting, selecting, developing and rewarding the hardworking "Fun-LUVing Attitude" that is one of its core values. All this so that its people can deliver fun moments-that-matter.

And Southwest is an example not too far-fetched for Brand Britain to learn from. Think of all the touchpoints that a migrant, foreign student, tourist or business traveller has. From acquiring a visa (something millions more will likely have to do post-Brexit) to arriving at an airport such as Heathrow, there are thousands of experiences that will shape people’s perceptions of this nation. When Glasgow wanted to improve its image, city leaders worked with taxi drivers. These moments all matter. And there are usually humans behind them.

What’s crucial, of course, is that leaders themselves behave in line with the identity: this is where Britain needs to take stock quickly, or else lose this opportunity. Because your people are more likely to follow your example than your carefully-crafted words. Similarly, in Brexit Britain, though the Brexiteers insisted they did not want to keep out migrants who worked and paid tax, their message is interpreted bluntly by many who hear it. But building a strong brand is not just about avoiding missteps or misperceptions. It is about behaving positively in brand consistent ways, and the government is in desperate need of a brand playbook at this critical time.

Nader Tavassoli is Professor of Marketing at London Business School, where he founded the Walpole Luxury Management Programme, as well as non-executive chairman of The Brand Inside.  This entry was published in the London Business School Review

By Nader Tavassoli 18 May, 2016

This is my list of top seven books on building powerful brands.My ordering of these books has a certain step-by-step logic, from outside-in brand design to inside-out brand delivery. The list first appeared here .

1. Simply Better: Winning and Keeping Customers by Delivering What Matters Most

by Patrick Barwise (Author), Sean Meehan

My colleague Paddy Barwise, and his co-author and LBS alumnus Sean Meehan, remind us just how important it is to consider the total product-service offering. There is much room to differentiate a brand by being“simply better” at providing the basic category benefits.

2. 

Brand Relevance: Making Competitors Irrelevant

by David A Aaker

3. Grow: How Ideals Power Growth and Profit at the World’s 50 Greatest Companies

by Jim Stengel

Both Dave and Jim’s books take on the topic of total product-service offering as well. They remind us to consider the offering from a customer perspective, and to provide and communicate value on their terms. For example, Jim Stengel’s chapter on Pampers describes how the brand was rejuvenated – tripling sales over 10 years – by not thinking about the product attribute of dryness, but how this leads to better sleep and as a result, baby development.

4. The Experience Economy: Work is Theatre & Every Business is a Stage

by B. Joseph Pine II and James H. Gilmore

This is a classic, one more relevant today than ever. It takes brands beyond promising and delivering benefits – which is increasingly difficult to do on functional dimensions in today’s competitive markets – to designing and delivering experiences. This requires an entirely different toolkit for organisations, whether in terms of gaining customer insight or delivering value across multiple touchpoints, to assessing customer satisfaction.

5. Uncommon Practice: People Who Deliver a Great Brand Experience

edited by Andy Milligan and Shaun Smith

6. Employees First, Customers Second

by Vineet Nayar

7. The Power of Habit: Why We Do What We Do in Life and Business,

by Charles Duhigg

These three books are all about building brands from the inside out, by changing employee behaviour. Without changing your people and organisation – something that  Grow  and others also touch upon – all the other brand work is for naught. Worse yet, if you raise customer expectations through great insight and communications without improving the delivery of that promise, the whole branding exercise is likely to backfire!

By Nader Tavassoli 31 Mar, 2016

The management proverb “Tough times call for tough measures” usually translates into an efficiency drive. That’s particularly true for industries dominated by price competition, such as commodities. And Hong Kong’s Towngas has had its fair share of price pressures, from deregulation starting in 1995 to competitors’ drastic fall in oil prices in 2015. 

But there is another way to add value to the bottom line than cutting costs, and that is by investing in building a strong brand. For Towngas’ residential business this was a journey that began from the outside in – with consumer insight – and continues from the inside out via their people who enhance the consumer experience.

That might sound easier for a high-end consumer product manufacturer or an experience-oriented company like Disney, than a commodity company, but that’s why Hong Kong’s Towngas is such an interesting example.

Seven steps for brand traction

The story of Towngas’s turnaround adheres to the seven steps of my brand traction model: 

1. Define the brand purpose
2. Map the customer journey
3. Match brand touchpoints
4. Deliver brand acts at “moments-that-matter” 
5. Provide brand leadership & alignment 
6. Gain internal brand engagement via brand practices 
7. Implement brand metrics

Re-energising the business model

Towngas is one of Hong Kong’s largest energy suppliers. It started life in 1862 as the Hong Kong and China Gas Company and was the territory’s first public utility. And, of course, Towngas knows the importance of keeping costs low. For example, its first digital foray was a mobile app that let people read their own meter, thereby saving on costly home visits by meter readers. 

Yet top-level management realised that cutting costs and even good service would only get them so far. Simply being cheap and smoothly delivering the basics wasn’t going to be the best protection for the future. So what could they do?

A transformational step Towngas took was to try to understand its true purpose. And to discover this it turned to their core customers, those residential customers who consumed the most gas. Why are they such good customers, and why are they choosing gas rather than other sources of energy, such as oil or electricity? The answer was to not think of customers but of consumers. They are people who love cooking; for whom cooking is not a chore but a lifestyle choice. And it’s easy to imagine the great cast iron woks being used to create all that delicious Chinese food over hot gas flames. With hindsight the answer is obvious, but it was a consumer insight Towngas had never acknowledged, yet alone acted on strategically.

The power of consumer insight

Once Towngas focused on what people were actually doing with their offering – an important question for any company to ask itself! – they could then map out what steps the consumer journey involved. In order to cook a meal, the cook has to know and decide what to cook, how to cook it, how to serve it, and what other than gas is involved. The journey was also not over when the food was prepared, as there was a mess to clean up. And many – though not all – of the steps in the customer journey were opportunities for Towngas to add value. For example, could they provide relevant input into helping one of their busy customers think of a meal to serve their family or friends? Could they improve on cookware, or how easy it is to clean the appliance? 

The answer was yes, of course, especially once Towngas considered the 12 million yearly interactions their people had with over 1.5 million customers. Some touchpoints were less personal, such as billing, but others involved human contact such as the call centre. Employees also regularly entered their customers’ homes for safety checks, servicing and installation – far more often than any cookware, appliance or kitchen supplier would. And thus their people became the eyes and ears of the company, gaining new customer insights. People went from providing an efficient service, to providing a “view from the trenches”, one fed back into the organization via new communication’s channels, and a flatter organisational structure.

From bland to brand

These brand touchpoints also provided the platform for bringing the brand to life, at “moments-that-matter” to consumers. For example, if you look at the company’s award-winning mobile app today, it is an in-hand pocket-size culinary guide that offers food lovers innovative culinary ideas and a variety of delicious recipes from around the world. And it includes a tab for daily recipes, step-by-step demonstration videos, and a recipe search. They also launched their own brand of condiments and Avenue, the first quality lifestyle magazine to be offered by a utility company to its customers anywhere in the world.

The company also thought about what Nike has done with its flagship stores and it started one-stop retail and service outlets for their more sophisticated customers called TownGas Avenue, as well as a restaurant called Flame that has won a best Western cuisine award. It has great food, hosts events with top chefs from around the world, and hosts cooking classes ¬– you can even get a diploma in culinary arts. And in order to encourage Hong Kong people to cherish food, Towngas partnered to launch a “Cherish Food Reward Scheme” on World Food Day last year, inviting local restaurants to offer rewards to customers who cherish food. All in the service of activating the new lifestyle brand.

Using their frontline insights, Towngas partnered with the French brand Scholtès to launch a new line of premium kitchen appliances. And it even started its own line of kitchens, Mia Cusina, with slick advertising campaigns. It has won awards for both and extended their business model through a partnership with property developers, who are selling apartments with their pre-installed kitchen appliances and cabinets. 

It also aligned their CSR efforts around the brand purpose. For example, it is a partner in the social enterprise CookEasy that helps provide nutritious and fresh food packs for families in need.

At the core of the brand is the deepened customer relationship. Towngas is so trusted – winning Hong Kong’s most trusted brand in 2011 for the first time – that it now sells customers household insurance and has one of Hong Kong’s leading credit cards. This might seem ridiculous for a gas supplier, but the alternative was to compete on cost. Today, its whole business model has been transformed from being highly commoditised to highly differentiated: from bland to brand.

Gaining traction

All of this fits with my seven step brand traction model. Here is a summary of some of the insights from the Towngas story.

1. Brand purpose

Don’t think customer and selling, but think consumer and doing. Why are people buying from you? Gas does not have inherent value for consumers, but cooking and sharing a meal with friends and family does. The answer is often blindingly obvious with hindsight, but this only makes the lack of purposeful action by the company more of a short-coming.

2. Customer journey

Managers often confuse the “sales funnel” – from customer’s brand awareness to trial to adoption – with the consumer experience , as part of which the purchase stage more typically is perceived as a cost by consumers, rather than value adding. Telling customers about the cost benefits of gas or assuring them about its safety, is useful but narrowly product-focused. Mapping out the diverse steps in the cook’s journey – and these may differ across customer segments – provided a canvas of intervention possibilities.

3. Brand touchpoints

Branding is more than a communications function. Towngas has developed several successful advertising campaigns, but these communicate the brand promise and set expectations. Customers return when these expectations are met or exceeded in the actual experience, that is, along the consumer journey. And this is not as much about the cost or quality of the gas, than about their own behaviours as cooks. Think of brand touchpoints as opportunities to help consumers better do what they want to be doing.

4. Brand acts at moments-that-matter

Not every intervention should be “branded”, that would be overkill. But there are some moments, especially those that are important and matter to consumers. These can provide the most meaningful brand experiences. For example, during each visit to a customer’s home, the technician will not just check the equipment but also ask a series of questions to really engage with their customers. They might give cooking tips or advice on how to clean an appliance.

5. Brand leadership and alignment

Transforming your business is not an exercise to be left to the marketing director alone. It is a cross-functional strategic exercise that must come top-down from the top. In the case of Towngas, this is currently Managing Director Alfred Chan, who Harvard Business Review last year ranked as the only Hong Kong leader among the World’s 100 Best-Performing CEOs. As all senior managers, he is part of a customer focus team and visit customers twice a month. And to align the organization, for example to create better lines of communications to the top, Towngas instituted a flatter organisational structure, one aligned around business and consumer segments.

6. Brand practices & engagement

Building brands from the inside out requires culture change and continuous training to get employees engaged with the brand and not just their jobs. Towngas created new customer-focused values and frontline employees are empowered to make decisions on the spot. And they are highly engaged, knowing that their knowledge and actions have taken the company to where it is. Unsurprisingly, Towngas has also raked in employer awards. After all, building a strong brand is rarely just an outward-facing exercise. It starts with your people being motivated by the brand purpose, and changing their behaviours – and thereby the organizational culture – in a way that delivers a differentiated customer experience.

7. Brand metrics

Measuring success is about having internal and external metrics that are specific to your brand and that feed in to both customers and employees. At Towngas, it is not just about customer satisfaction and employee engagement in the generic sense, but people internally are engaged with the brand purpose, monitoring key touchpoints, and whether customers perceive them as a trusted lifestyle brand.

And the final lesson is that a brand can never stand still. In a recent interview, Towngas’ CFO John Ho noted – after making the on-brand observation that he cooks with gas himself and enjoys cooking – “We’ve seen a lot of century old companies disappear: look at Kodak. One hundred and fifty years is about going forward.”

By Nader Tavassoli 10 Sep, 2015

How closely do CMOs and CFOs work together in today’s global, digital and ever-changing environment? According to recent research, more closely than you think. In a global EY survey, nearly two-thirds (63%) of CFOs polled said their involvement with marketing had increased in the past three years. This is true in particular when it comes to returns on brand investment, or brand equity. I would argue, however, that their involvement is entirely impoverished. To quantify brand equity – and what drives it – the right metrics have to be in place, and before that, the entire organisation has to align. This requires:

  1. Measuring things right – today, brand differentiation is increasingly about the delivered brand experience rather than just the brand promise communicated through advertising and sales

  2. Measuring the right things – entirely overlooked is brand engagement amongst employees – those who actually deliver on the brand promise. Not only do your people provide a leading indicator of external brand health, but they are a significant source of returns to brand via lower pay and productivity gains

  3. Aligning the 3Bs of business, brand and behaviour – improving on these metrics by changing peoples’ behaviours requires marketing to work in unison with human resources (HR) and operations; new territory for many organisations!

Measuring things right: Metrics across moments-that-matter

One of the greatest short-comings of marketing programmes today is their obsession with the purchasing funnel, one that is often mistaken for “the customer journey.” Here key metrics track brand awareness, consideration, purchasing and loyalty. This is what firms want from their customers; but it is not the actual journey their customers traverse. What the customer journey is, in reality, is a meandering across many brand touch-points that cut across often siloed business functions; where key interactions represent moments-that-matter. It is these moments-that-matter that provide an opportunity to provide signature brand experiences. And it the collection of these many experiences that builds the brand image over time by leaving lasting impressions.

Consider answering “how was your business trip”. This experience is itself made up of many smaller, more tangible ones. It might include purchasing the ticket, getting to the airport, checking in, in-flight experiences, disembarking and getting to where you want to get to. It is the impressions these experiences make that combine to create the brand image. And they don’t simply add up. A single bad experience can negate many positive ones.

For example, being charged an exorbitant fee for Wifi access – something several so called “leading hotels” still do despite Starbucks having abandoned this practice in 2008 – can outweigh even the most attentive concierge service. It is therefore not enough to track the average quality of customer interactions at each separate touch-point. Firms need to holistically measure satisfaction across the whole journey, in order to get a clearer picture of the brand’s health. And it is not just whether an experience is good or bad in a generic sense, but whether it differentiates the brand in a more meaningful way.

Customer journeys contain a plethora of seemingly mundane experiences that firms can turn into meaningful on-brand gestures – an entirely different way of thinking about brand communications. Take Singapore airlines, where you will find your seatbelt in a particular way when you return from the bathroom. This demonstrates service in a memorable way. And have you ever noticed how employees at FedEx seem to rush about? Could this be to highlight the brand promise of speed? Or consider Amazon whose brand is built on customer trust, especially when it comes to obtaining good value. When you purchase and item that is discounted before delivery, you might just get an email explaining that you are receiving a refund. Some of these refunds are tiny, say 24 pence, but they nevertheless have a powerful effect, far larger than the loss of revenue Amazon incurs or what an ad could buy.

Aligning the 3Bs

Customers buy actual experiences and not brand promises, at least not indefinitely. And these experiences are directly or indirectly provided by people. People can positively differentiate a brand and deepen the customer relationship, miss the opportunity to do so, or undermine it. And this source of experience-based differentiation is increasingly important in a world of functional product-service parity.

Differentiating brands in this way requires bridging the brand design-delivery gap by embedding the brand into daily employee behaviours. And, for this, HR and not marketing is in the driver’s seat with a tool set of processes spanning the employee journey from hiring, landing, developing, rewarding, and exiting. Think of your own HR processes. Are these on brand or do you recognise a design-delivery gap with a Cartesian-like separation of mind and body, between brand thinking and brand doing?  

Indeed, brand thinking is in desperate need of catching up with this reality across sectors. This is also true in business education. The history of and writing on branding has come mainly from consumer product markets, with scant attention given to B2B or service industries, where face-to-face interactions are more obvious brand touch-points. This has led to an exaggerated focus on the 4Ps – product, price, place and promotion – at the expense of the ‘P’ that stands for people. The new 4Ps of branding – people, people, people, and people – require coordinating an internal brand engagement process across company silos, one that recognizes that an external brand positioning ultimately lives and dies by the actions of people, actions that are shaped by and reflected in organizational culture.

Measuring the right things

In order to track the delivery of the brand experience, organisations need to measure brand engagement with the people who design and deliver each moment-that-matters. Not just employee engagement in the generic sense, but with the brand values, particular. Do your people understand the brand promise? Do they believe in it? Are they motivated by it? Do they know how to provide signature brand behaviours? And do they feel supported and empowered to do so? For example, do your people feel that the right on-brand behaviours – rather than the wrong off-brand behaviours – are recognised and rewarded? It is these types of internal brand engagement measures that provide insight into where brand-improvement efforts need to be allocated. Internal brand engagement is also a leading indicator of external customer-based brand engagement. Unfortunately, most organisations track employee engagement only once a year, if at all, and they do so in an entirely generic way without any consideration to the brand.

Now coming back to our CFO – who might find this focus on soft brand engagement metrics a tad bit fluffy – consider the hard returns that brand engagement can buy. Traditionally, brand returns have only considered customer-based brand equity, typically in terms of the top line. Will more people buy more for more? This is only half the story, however. It is the bottom-line that counts, and a major chunk of this tends to be related to HR costs. Brands with a high standing externally not only give companies a leg up in the perennial war for talent, they can also attract the right kind of people that provide a better fit – especially when HR hires on brand. These people more naturally provide an authentic brand experience, and they tend to be more motivated based on their brand engagement. This increases productivity and thereby lowers costs. 

But the real kicker is the fact that when the 3Bs are aligned the resulting brand strength not only translates into revenue gains with customers, but also in significant cost gains with employees. My research shows that strong brands attract better people for less. And I have researched this with my colleagues from front-line and even hourly workers all the way to executives and even CEOs. Depending on your cost structure, the resulting employee-based brand equity can be as or even more significant than customer-based brand equity.

So let’s return to those ROI discussions between the marketer and CFO. If we are not considering a significant source of return, are we actually making the appropriate level of investment? And without considering the brand experience are we deploying the brand investments in the right way? My contention is not, in both cases, and measuring the right things in the right way will help rectify the situation and provide a solid basis for aligning the 3Bs of business, brand and behaviour.

This musing first appeared in the London Business School Review .

By Nader Tavassoli 01 Jul, 2015

It’s a fundamental tenet of marketing: Consumers believe, on some level, that using a prestigious brand enhances their own image, so they’re willing to pay more for one. Similarly, executives like to be linked with employers that have well-known brands—and it turns out that they’re willing to “pay” for the association by accepting substantially lower compensation.

A team led by Nader T. Tavassoli, of London Business School, reached this conclusion after mapping the compensation of 2,717 U.S. senior executives against the brand strength of their firms’  leading products.  For pay figures, the researchers used Standard & Poor’s ExecuComp database; for brand strength, BAV Consulting’s consumer surveys. They examined the data for 2000 to 2010, making more than 10,000 compensation-brand observations in all.

With each standard-deviation increase above the mean for brand strength, non-CEO executives earned, on average, 2% (about $90,000) less a year. The effect was far larger for CEOs: Their pay dropped by 12% for each standard-deviation increase, saving their companies an average of $1.3 million a year. The larger effect, the researchers say, can be explained by what psychologists call “identity theory”: CEOs are typically the most prominent members of their organizations, so for them the self-enhancement from brand association is particularly robust.

The effect on pay was also more pronounced among another subgroup: younger executives. The researchers theorize that younger people have had fewer chances to define themselves professionally, so they see an immediate benefit to being identified with a respected brand. Also, experiments indicate that working for a firm with a powerful brand signals competence to future employers—and with longer careers ahead of them, younger executives especially value this boost.

Companies often spend a lot of time and money trying to become “employers of choice” by landing on Best Places to Work lists and the like. This study approaches employer attractiveness from a different angle, showing that strong brands can provide a competitive edge when negotiating with potential employees. A well-regarded brand can do more than help recruit top-quality executives; it can bolster the bottom line by significantly lowering payroll expenses. HR departments should leverage brand strength just as they leverage more-traditional benefits.

And at a time when many are calling for increased governmental regulation of executive compensation, these findings suggest an additional, market-based approach. “If top executives are prepared to accept lower pay for the privilege of running firms with strong brands, pay levels can be grounded, at least to some extent,” the researchers say.

About the research: “Employee-based brand equity: Why firms with strong brands pay their executives less," by Nader T. Tavassoli, Alina Sorescu and Rajesh Chandy,  Journal of Marketing Research

A version of this article appeared in Harvard Business Review .
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