Former IBM marketing executive Kevin Clark explains how companies can maintain their customer base in a recession.
Topic: Maintaining a brand
Kevin Clark: Companies need to stay true to their core relevance even during times of economic distress. You find the ability to oscillate between surviving and succeeding. They're both forms of innovation, and brand innovation needs to follow the context of that relevance in an economy when it's booming; you need to be prepared for great opportunities to grow. And then when things are less so, you need to be able to project that relevance to be able to survive and be sustainable so that when things start to pick up you're well positioned to grow in both share and to have captured customer loyalty during the time when you made their dollar go further.
Topic: The transforming customer
Kevin Clark: Customers are using slightly different strategies. There are things that they choose to continue to do. It might be very important to, you know, the type of automobile you drive. Or it might be very important to maintain the kind of eating habits that you might have had in the past. So there are certain luxuries that people will continue to invest in while they cut back on other activities. We've seen that even some of the most affluent customers are going to big box retailers to cut back on certain types of discretionary spending and to make their dollar go further. So I think that the appropriate strategy to pursue as a brand-oriented organization is to think about the experience being delivered to customers and to maximize that experience in both good times and bad and to provide some continuity between both environments.
I don't think that customer loyalty is a thing of the past; although, measures which talk about lifetime customer’s value and lifetime customer loyalty, I think that you have to earn that loyalty again and again and again. It's not a given. You have to be able, at every step, to manage the experience that you're having with that particular brand so that people want to return and want to be part of that. The repertoire can be as fast and as narrow, as laundry detergent, where you're buying it on a fairly regular basis or something that's more considered. I spent ten years of my life as the brains behind the IBM ThinkPad Notebook computers. That was before the Lenovo transaction. In the more considered purchases, you need to be able to stack up because the ownership experience that you had was so powerful, was so salient that you limit your consideration set back to not which notebook would I like to buy, which ThinkPad would I like to buy.
I think that that's exactly what happens in the Apple franchise, alright, for people who are part of the more creative class. They don't think about now which notebook computer or which computer will I buy, they're thinking about which Apple will I buy next?
Question: Which companies are branding well?
Kevin Clark: Well, there are examples of companies -- take Bank of America, for example. Bank of America was at one time NationsBank in Charlotte. They went through and acquired Bank of America. Note that the company that did the acquiring was NationsBank. And they went through and wanted to find out, well, what is the best strategy that we might have for a new name for the combined entity? And it turns out that Bank of America tested very strongly, so they had the maturity to go ahead and adopt that name and use it across their new combined network in the United States.
Question: Rebranding the fallen
Kevin Clark: Simply renaming a company or an entity is not the first thing that you have to do. You have to start with what are the fundamental processes that we have to change that will make the business more viable, more desirable to our customers? And then perhaps a name change that matches to the new positioning, to the new vibrancy of the organization, would be appropriate. An example of a company that had very good marks in terms of brand strength was Enron. But Enron -- even if you renamed Enron, right? The legacy of how the company behaved would have followed it even with the new name. So naming itself is insufficient. You have to start foundationally at the positioning, the behavior and the experience, and then the appropriate name can follow.
I think if you look at what has just happened, Ford Motor Company has done an extremely good job of getting through this, gaining market share and it didn't require any additional funding from the government to maintain its visibility in the marketplace. The overall umbrella of the American auto industry versus the audio industry in general. I think that there's been a wakeup call and that wakeup call is about innovating on a set of axis that will be important to customers and that you're inventing things that they will need in the future, as opposed to simply fulfilling current wants and needs in the present which can change pretty rapidly; we've seen that.
So I think that the auto industry is taking a point of view that we need to provide leadership in terms of showing people paths forward in terms of transportation that will be useful, not only in terms of personal ownership but they're also starting to experiment with things like what you see with Zip Cars; “Can I own a portion of a car in a community and get the kind of car that I need for that particular day?” versus personal ownership. You're starting to see that in urban settings, and I expect those kinds of trends to continue and that the auto manufacturers will be fueling that and being part of the conversation going forward.
Recorded on: August 25, 2009