brand as business bit:  What makes an ad something people want to share with others?  Is there a secret formula for making ads that are most likely to be shared?

The March issue of the Harvard Business Review included a report by Harvard prof Thales Teixeira who tracked viewers’ eye movements and facial expressions while watching ads.  He outlined five ways to get and keep people engaged with ads, including:

“Build an emotional roller coaster. Viewers are most likely to continue watching a video ad if they experience emotional ups and downs.”

The HBR recently published reactions to the report including mine:

These findings overlook two important factors in ad effectiveness:  branded recall and conversion.  If an ad is liked and passed along but the brand is forgotten or no further action is taken by the viewer, the ad may generate buzz but will do little to build the brand or the business.

brand as business bit:  Last month we lost a great political thinker, James Q. Wilson.  In a tribute to “the pre-eminent political scientist of the last 50 years,” The New York Times described Wilson’s groundbreaking analyses of political behavior.

His work on how organizations offer incentives for people to join and support them seemed an interesting way to think about how brands attract customers:

“He distinguished three types of incentives — solidary (that is, incentives that promote solidarity), material and purposive — and he theorized that the specific type of incentive distributed by a particular group both shapes and constrains its behavior and effectiveness.

Thus, the Junior League provides solidary incentives by emphasizing the social status of and personal interactions among its members, while companies provide material incentives — i.e., money and other economic value — which buy them more tactical flexibility.

In contrast, the Sierra Club’s incentives are purposive, attracting members through its programmatic and visionary ideals. But such incentives also constrain purposive groups, which may lose support if they compromise those ideals by being too pragmatic.” [emphasis] mine

Brands attract people either through social status and community (solidary), value (material), or shared values (purposive) – perhaps the strongest brands use all three incentives?!

brand as business bit:  I love how some of The New York Times’ best business stories aren’t found in the Business section.  Case in point:  The Sports section’s recent recap of the 76ers turnaround.   It retraces private equity titan Josh Harris’s moves to rejuvenate the august team – and in doing so, it provides helpful pointers for any business leader who’s taken up the charge to get a brand on track:

• authentically participate in the community – “…Fans prefer that owners have some allegiance to their city. [Harris] has attended nearly every home game,” and has also emphasized his family’s long ties to Philadelphia.
• use fans to create more fans – “[CEO Adam  Aron]  invited fans to apply for free seats behind the basket as long as they dress up in Philadelphia-themed outfits.”
• emphasize the brand history – “Aron even bought the court on which Wilt Chamberlain scored 100 points in Hershey, Pa., giving pieces away to fans on March 2, the 50th anniversary of Chamberlain’s feat.”
• personally engage with fans – “Aron regularly jousts with fans on Twitter, sending out dozens of posts a day from his account, @sixersceoadam. After a recent loss, Aron commiserated with a fan who said he had punched his wall. ‘I put a dent in my wall too,’ Aron wrote.”

Change is good.  It’s more than good – it’s necessary for growth.  Companies need to evolve their offerings in order to keep things fresh and their customers interested.

But what happens when a company changes its business model in a way that strips away a valuable element of its brand equity?  Is it able to recover lost equity and maintain its appeal?  We’ll find out, given the recent announcement that ShoeDazzle is scrapping its monthly subscription model.

background:  Just three years ago ShoeDazzle made a grand entrance to the e-commerce scene.  The company’s innovative approach was based on offering a personalized selection of shoes, handbags, and jewelry curated by Kim Kardashian to members who paid $39.95 a month.

The company was founded by two attorneys (including Robert Shapiro of OJ Simpson trial and LegalZoom fame) and Kardashian.   Backed by Polaris Venture Partners and Lightspeed Venture Partners, the company turned heads in the tech, retail, and fashion sectors.  Last year it secured $40 million in a financing round led by Andreessen Horowitz.

ShoeDazzle now has over 10 million members.  When you join, you fill out a taste profile which enables the site to curate a selection of products and present you each month with a personal “Showroom.”  Over time, the site’s recommendation algorithm gets more sophisticated as it takes into account your actual purchases and so you end up feeling like you’re shopping from a collection of items handpicked just for you.

That, plus the inexpensive price tag, free shipping both ways, and phenomenal in-box presentation (see below), has generated legion of fans who serve as ambassadors for the brand (recent love tweets include “ShoeDazzle is the greatest thing since sliced bread.  No joke.” “OMG, shoe addiction” and “Just got my first pair of shoes from ShoeDazzle.  IM IN LOVE.”) and recruiters of new customers (members get points and discounts for every friend that becomes a member.)

now:  Given how successful ShoeDazzle has been, it’s no surprise it has spawned a throng of copy cats including Kimora Lee Simmons’s Just Fabulous and Rachel Bilson’s ShoeMint.  And as a result, there’s been some buzz about “subscriber saturation” and questions about the viability of the concept.

Enter Bill Strauss.  The cofounder and former CEO of ProFlowers, was recently named CEO at ShoeDazzle “because of his experience retaining high levels of customer satisfaction at a booming consumer Internet company,” reports an analysis in Fast Company.  “He’s very heads-down and focused on operational execution and delighting the customer at a large scale,” Andreessen Horowitz partner John O’Farrell told the magazine.

Strauss has decided to nix the company’s subscription model.  No longer will customers be required to make a selection each month; everything on the site is simply $39.95.

The move is not surprising, given Strauss’ background.  After all he built Proflowers into an e-commerce powerhouse by leveraging sophisticated technology to dominate search engines and build a highly productive customer database.   And at first blush, loosening the requirements and making purchasing easier would be a no-brainer for any website.

But, ShoeDazzle is more than an e-commerce site.  The brand is about more than getting good product to lots of people for a decent price.  In fact, Fast Company reports that Strauss calls the ShoeDazzle experience “akin to one you’d receive at a high-end boutique, where salespeople know your name and your tastes…ShoeDazzle believes consumers are ready for the more intimate shopping experience they get at real-world boutiques.”

This makes his elimination of the subscription model a curious choice.  It’s a move that seems to have stripped the company of important brand equity levers.  No doubt the change will bring some initial growth, but it represents some risky trade-offs:

- trading status for scale – Strauss explains that “what will differentiate ShoeDazzle in the next phase is building the company out to a gigantic scale.“  Scale may be good for your brand if you’re Amazon or Walmart, but not if you’re trying to serve up an experience akin to a “high-end boutique.”  By no longer requiring a subscription, the company has democratized the experience. The monthly commitment had served as a signal of status and brand exclusivity — now there’s little barrier to entry.

- trading connection for choice – “Some people liked the model,” Strauss says, “but a lot of customers told us they’d like to buy two or three times in one month and then maybe not for a few more months.“  So the new model gives customers more choice.  But it also allows for customers to slip away for months at a time, perhaps even forever.  Even though the subscription model had offered customers the option of skipping a month, most customers still visited their showrooms at least once a month.  Without the monthly commitment, there’s no foundation for a regular connection.

- trading urgency for ubiquity – There’s also no reason for a timely customer response.  Opening up the purchasing model will allow the company to “capture as much of that demand as possible,” Strauss says.  But is getting to a large prospect pool that may or may not be interested in buying at some point in the future better than engaging with a smaller customer base that has committed to buying something that month?

Sure the brand still has the cachet of celebrity – and the personalization aspect is a draw.  But as a writer in New York Magazine observed, “It’s probably only a matter of time before all retail websites follow this practice of automatically recommending things to you based on your size, brand preference, and past purchasing history.”

Last year, Andreessen Horowitz’s O’Farrell explained his company’s position with ShoeDazzle saying, “Like their 1920s counterparts, [founder] Brian [Lee] and his team realized the appeal of serendipity and anticipation.  ShoeDazzle members await the first of the month with its new selection with the same avid excitement Book of the Month Club members must have felt as they awaited the mailman with their latest monthly title…The result is a new and genuinely exciting approach to ecommerce that is transforming the way fashion products are marketed and sold.”

Now, it seems, ShoeDazzle is just another website with inexpensive products.

related posts:

• radical differentiation at lululemon
• retail tensions

What happens when a 125 year old $35BB company wants to get entrepreneurial?  When the company is Coca-Cola, it starts a new business unit, Venturing and Emerging Brands whose mission is to discover “the next big thing.”  It’s the force behind the company’s recent acquisitions of Honest Tea and a new product at Whole Foods, Cascal an all natural fermented soda.

Here to brief us on the group’s efforts is Mary-Ann Somers, VP, Strategic & Operational Marketing, who’s been a dear friend of mine for many years.  Prior to Coke, Mary-Ann held various leadership positions at Colgate-Palmolive, Unilever, Merck and General Mills, as well as being a founding member of an internet health and wellness start-up, so she contributes a unique perspective to her role as an intrapreneur.

In this behind-the-scenes interview, Mary-Ann tells us about:

• why Coke prefers to take positions with brands that are narrow and deep (vs. wide and broad)
• how her team works with user-entrepreneurs
• what “boom-splat” means (!!)

Learn more about Venturing and Emerging Brands at www.vebatcoke.com – and follow them on Twitter at @vebatcoke.

other interviews:

• Justin Mccarthy on Crossing the Chasm at Garmin
• Tiffany Vandemark on Chobani Fit
• John Costello on Behind the Scenes at Dunkin’ Donuts

brand as business bit:  There’s been a lot of activity in the fast food world these days:  Burger King just launched a new menu and ad campaign, Wendy’s introduced a new tagline and campaign, and Taco Bell is experimenting with a new menu and tagline.

My colleagues over at E-Poll and I thought it would be helpful to get a handle on just how each of these brands is currently performing.  Here are some of their research findings*:

brand awareness:

• Burger King – 86%
• Wendy’s – 80%
• Taco Bell – 79%

appeal:

• Burger King – 53%
• Wendy’s – 63%
• Taco Bell – 54%

high quality:

• Burger King – 13%
• Wendy’s – 26%
• Taco Bell – 9%

So, Wendy’s seems to be leading the pack right now.

Also, I thought the following results to the question “What is the slogan for the brand?” were particularly revealing:

Burger King

• Have It Your Way:   70% (reinstated in 2002 and used sporadically after having been retired in the 1970’s)
• Home of the Whopper:  9% (never really used as a tagline)

Wendy’s

• Where’s the beef?:   23% (used as a headline beginning last fall after having been retired in the 1980’s)
• You know when it’s real:   7% (began in Fall of 2009 and ran for 2 1/2 years)

Taco Bell

• Think outside the bun:  48% (began in 2002 and was just replaced this month)
• Make a run for the border:  21% (ran in the late 80’s/early 90’s for a few years)
• Yo quiero Taco Bell:   7% (began in the late 90’s and ran for a few years)

*results from E-Poll Market Research’s E-Score Brand service which surveyed a representative sample of 1,500 respondents aged 13+ years old in early March.

brand as business bit:  While perusing the aisles at Target awhile back, I stumbled across these really great packages of healthcare products and fell in love:

I was so pleased to read the story behind such an ingenious brand in Businessweek.   (Be sure to check out the sidebar on the playbook of gimmicks used in most drug commercials – it’s pretty humorous.)

Help Remedies has turned drug marketing on its head:

• The brand voice is clear and friendly, selling “as though it was coming from a friend, not a doctor in a lab coat—or an actor playing one.”
• Their target is “people in their 20s and 30s who are largely ignored by the big brands. That’s why, in addition to pharmacies and grocery stores, Help can be found at high-profile conferences [like TED] and in the minibars of Morgans Hotels.
• They use humor:  “‘If you try to maintain a tone of science and seriousness, it’s really alienating,’ says [co-founder Nathan Frank.] On the back of Help’s nausea medicine, the package jokes about how the pills are flavorless.  There are dozens of mock problems on their website… each of which links to a tongue-in-cheek solution.”

But what most distinguishes Help is that they are in drug category in the first place:  “Everybody in branding starts snack food and beverage businesses,” says [co-founder Richard Fine.] “They chase after these categories where there’s already a lot of brands…there’s 8,000 small beauty brands out there. In pharmaceuticals, you have the big companies, and then you have us.”

Love the zag!

Last week, the Wall Street Journal featured a piece about Lululemon Athletica’s “secret sauce.”   Although many stories have been written about the retailer of yoga-inspired athletic apparel, this one succinctly relayed the elements that distinguish Lululemon from other brands.

The article talked about the “mystery” of the chain’s strategy, which has propelled it to become a $10BB retailer in less than 15 years.  It’s clear Lululemon practices what designer Marty Neumeier preaches in his book, Zag –  The #1 Strategy of High-Performance Brands.  Marty explains, “Differentiation, the art of standing out from the competition, is not front-page news. What is front-page news, in a world of extreme clutter, is that you need more than differentiation.  You need RADICAL differentiation…When everybody zigs, zag.” [emphasis mine]

Here are three ways Lululemon zags:

1. It doesn’t do formal market research or customer relationship management.  “Instead,” the WSJ piece reports, “[CEO Christine Day] spends hours each week in Lulu stores observing how customers shop, listening to their complaints, and then using the feedback to tweak product and stores.”

It also trains its employees to be customer advocates (a role I recently wrote about in “The Sales Associate of Tomorrow.”)  Salespeople eavesdrop on customers as they fold clothes near the fitting rooms, so they can overhear complaints and pass them along.  And, customers themselves are invited to give input to the company by writing suggestions on a chalkboard that are sent back to headquarters.

Of course research and CRM are valuable tools for most companies – but, sometimes there is no better way to understand your customers than to simply listen.

2. It uses scarcity instead of discounts to generate demand. 

“The goal is to sell gear at full price and to condition customers to buy when they see an item rather than wait.  ‘Our guest knows that there’s a limited supply, and it creates these fanatical shoppers,’ says Ms. Day.”

Lululemon has trained its customers to “buy now” instead of waiting for promotions or looking for redlines.  In fact, the WSJ reports that it sells 95% of its gear at full price and it never puts its core items on sale.  Scarcity is a much more sustainable and brand-building approach to stimulating purchase conversion.

3. It doesn’t offer top-notch customer service. 

The piece quotes CEO Day as saying, “We aren’t Nordstrom.  We aren’t your personal shopper.” Lululemon’s return policy is “very strict,” according to the WSJ:  no products accepted after 14 days, and all must be unwashed and unworn, with original tags.

This is not to say that the company isn’t friendly or doesn’t care about its customers. A quick spin through its blog, tweets, and Facebook page and visits to its stores prove otherwise.  But it’s clear it’s not trying to be something it isn’t.

Zag-ing is really at the core of Lululemon.  The company was started by a guy, a surf, skate and snowboard business veteran.  He created an underground yoga clothing movement by selling products made from performance athletic materials out of a design-studio-cum-yoga-studio.

The company has enjoyed extraordinary success every since.  I’m sure Marty Neumeier isn’t surprised.  In Zag, he writes, “Traditional differentiation is an uphill battle in which companies lavish too much effort on too few competitive advantages:  the latest feature, a new color, a lower price, a higher speed. Radical differentiation, on the other hand, is about finding a whole new market space you can own and defend, thereby delivering profits over years instead of months.”

related posts:

• differentiation through specialization
• differentiate your way to success
• companies to keep an eye on in 2011

Get ready for interview guest to challenge everything you thought you knew about customer centricity!  Peter Fader is the Frances and Pei-Yuan Chia Professor of Marketing at the Wharton School of the University of Pennsylvania, and the author of the book, Customer Centricity.

Peter works with firms from a wide range of industries, such as consumer packaged goods, interactive media, financial services, retailing, and pharmaceuticals — and his expertise centers around the analysis of behavioral data to understand and forecast customer shopping/purchasing activities.

In this interview, Peter:

• distinguishes between customer-friendly and customer-centric companies
• outlines the problems with providing “super-super customer service” to every customer
• describes the difference between growth through customer equity and brand equity

Take a listen and then check out the book.  Also you can continue the dialogue with Peter via email at faderp AT wharton DOT upenn DOT edu or through Twitter @faderp.

other interviews:

• Martin Lindstrom on Marketing Manipulation
• David Aaker on Brand Relevance
• John Gerzema on Connecting with Today’s Consumer

brand as business bit:  In Fast Company’s recent write-up on Red Bull, Red Bull Media House managing director Werner Brell is quoted as saying:

“[Red Bull founder Dietrich Mateschitz] knew that success would be in how you market the product as much as the product itself.”

It reminds me of a favorite quote of mine from Geoffrey Frost who held the CMO position at Motorola and Nike. His approach to marketing:

 “Your ads are the most pervasive products you make.”

The FC piece outlines how Red Bull has embraced this notion and transformed content from a marketing tactic into a business unit and from a loss leader into a profit-center.