Wednesday, December 2, 2009

Snub customers and pay the price

Twentieth century commerce was dominated by brand names.

Kraft, Sears, General Motors, Sony, Toyota, Coca-Cola, Tide. For consumers, those names were shorthand for quality, dependability, and service. It was not unusual for people to stick with a brand through their entire lifetimes, and often this brand loyalty was passed on to the next generation. There were Chevy families. Coke drinkers would never buy Pepsi.

Accountants call that "goodwill." It's that intangible extra value possessed by a company over and above its tangible assets like factories, trucks, and inventory.

Companies spend huge amounts of money over many years to establish their brands as trusted symbols of quality.

But brands cut both ways. Now, in the Walmartized 21st century, with customers demanding low prices and shareholders demanding higher profits, CEOs are taking the very actions that destroy those valuable brands.

Without telling us, they are putting more water in the bottle of lotion. They are reducing the amount of cereal in the box. They are shrinking the jar of peanut butter. They are using cheaper materials in appliances. They are outsourcing their service to subcontractors, and their help desks to India. They hope no one will notice, but we do.

Our anger is particularly venomous for the brands we trusted most, the ones we supported with our dollars over and over again. The ones we told our friends to buy. "It's the best," we said. "You won't be sorry."

We thought we had a deal with those companies. The deal was that we would pay a bit more, and they would continue to deliver consistent, higher quality than the so-called "off-brands."

Apparently, many of the companies decided to cancel the deal. We didn't get the memo.

When that happens, we stop being advocates for the brand, and become advocates against the brand. We say, "Remember when this company was the gold standard for quality?" and "You won't believe what these guys did to me!" It comes up in those everyday conversations over the backyard fence, at the hockey rink, on the 10th tee, on Twitter, on Facebook, and everywhere that people fill time with small talk.

Word of mouth, the most powerful marketing force ever. More powerful than all the ads and coupons and free samples and special sales and fancy displays and nifty packaging and discounts and celebrity endorsements and convincing sales pitches combined.

The brand's power begins to evaporate away, then it's gone in a rush. It's no longer the automatic choice. It's just another box on the shelf. We move on.

[Click here to read how Sears Canada destroyed its brand in our household]

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