FusionBrand

The Death of "Positioning" & The Birth of Brand Wikification

    "Positioning" is dead, and McDonald's has just put up the tombstone. But what is really interesting for branding is what is taking its place.

    The signs of "positioning's" demise are everywhere. The number of branding failures, many based on "positioning," exceeds 90%, according to the consultancies Ernst & Young and McKinsey & Co. McDonald's, the premier mass market branding giant, announced that it has abandoned positioning. Says Larry Light, McDonald's chief global marketing officer: "Identifying one brand position, communicating it in a repetitive manner is old-fashioned, out of date, out of touch." Even more bluntly, Light highlights "the end of brand positioning as we know it," calling it "marketing suicide." Even a top executive at advertising giant Leo Burnett is willing to stand before his CEO peers and admit, "the old ways of marketing are not working any more."

     The best epitaph for the death of positioning was written in the April 2 issue of the Economist. The cover story, entitled "Power at Last," illustrated how consumers now buy based on research and personal value, not how on companies seek to "position" their products. "I am constantly amazed at the confidence level and sophistication of the average consumer," says Mike George, Dell's chief marketing officer.

    From the beginning, "positioning" had a fatal flaw in its DNA that made its death inevitable. That fatal flaw? A lack of measurement. In their landmark book Positioning, Jack Trout and Al Ries even turned marketing away from the benchmarks that drive the rest of business by stating "mind share is more important than market share." Market share is generally measurable; mind share, nfortunately, isn't.

    For a long time, this inability to incorporate measurements did not matter. In 1979, when Positioning was first published, the mass economy ruled. Armed with the monolithic power of the mass media, companies could "position" mass-produced products to mass markets. Any measurement besides total sales was too hard, too rudimentary or too late.

    But now, measurement is critical, whether it takes the form of customer equity, ROMI (return-on-marketing-investment), ROMO (return-on-marketing- objective), cash-to-order cycles, retention rates or any other spreadsheet-driven metric. Despite its importance, fewer than 20% of companies surveyed have developed meaningful metrics for their marketing organizations, according to the technology-based CMO Council. Over 80% of the companies surveyed expressed dissatisfaction with their ability to benchmark their marketing programs' business impact and value.

    The result of focusing on "positioning" instead of measurability has had an unfortunate impact. The research consultancy Forrester recently reported that companies are looking at disbanding marketing departments and distributing its function among sales, customer service, etc. While that is definitely eyebrow-raising, it's a logical outcome for a function that represents the second biggest outlay for most companies, yet cannot generate the metrics to justify those expenditures. "Awareness and "position" just don't cut it anymore in executive suites.

    "Positioning" has other defects as well. The exercise is a company-driven process that reflects how companies wish to sell ("the leading provider of ...") instead of determining what - and how - customers seek to buy. Such posturing worked well in the mass economy, but the tactic is doomed to failure in, as the Economist pointed out, a customer-driven world.

    Another weakness is "positioning's" commandment to seek the #1 or #2 space in a category. If those spaces are occupied by competitors, then "positioning" advises creating a category where you can play top dog. In addition to the fact that it now extremely difficult to establish a meaningful category in a highly competitive world, it also means that your branding strategy is being driven by your competitors. Branding must be driven by your customer demands for value, not by the market timing of competitors.

    So if "positioning" has faded into mass-economy history, what has taken its place? McDonald's advocates "brand journalism," or tailoring products and messages to both targets and media. "Positioning" advocates are apoplectic at such apostasy. "The notion that McDonald's should abandon the positioning philosophy and instead adopt a brand journalism approach is lunacy," says Laura Reiss, who is still echoing the precepts in her father's 25-year-old book. Lunacy? The abandonment of "positioning" and adoption of brand journalism has played a large part in the burger giant's remarkable turnaround recently.

    By recognizing that it is better served by adapting itself to customer requirements instead of preaching a "position," McDonald's is definitely on the right track with "brand journalism." but the term is awkward for several reasons. A better term for this customer-driven strategy that reflects today's branding realities is "brand wikfication."

    Born from the Internet's ability to link an archipelago of people and information, wikis are the mirror-image of blogs. While blogs reflect one person's worldview, wikis, written collaboratively by contributors from all over the world, reflect a common judgment on an issue. Definitions depend not on what Funk or Wagnall or Webster say they should be, but on what thousands or even millions of people agree on what they are.

    In much the same way, brands today are collectively defined by their customers. Based on personal or business requirements for economic, emotional or experiential value, this wiki-based definition derives from personal experiences, word-of-mouth, research and multiple marketing tactics. Companies can "position" themselves as anything, but unless there is essentially a customer-driven consensus on the brand"s wiki, then the "positioning" is no more than corporate posturing. Instead of seeking to unilaterally "position" their products, companies focused on branding today must devote resources to defining, delivering, measuring and sustaining the value that customers feel they receive.

     Brand wikification has numerous advantages over "positioning." First, it is a customer-driven, not a corporate-driven, strategy, ideal in a highly-fragmented, highly competitive world where deeper relationships ultimately mean greater profits. Second, wikification forces companies to respond to customer requirements, or risk their brand. Companies can "position" themselves as customer-centric or leading providers or whatever, but the "position" means nothing if callers are put on hold for eternities. Finally, and most important, wikification is measurable by a variety of metrics. If you know what customers value (or how they hold you accountable), then you can measure how you are delivering against those benchmarks for accountability. 

    So how can companies adapt to the realities of the customer economy and wikificate their brands? Stay tuned to an upcoming commentary.

HBR: Building the Customer-Centric Organization

According to an article in the April Harvard Business Review, the two most important elements in establishing a customer-centric organization are an enterprise database and a workforce that can both willingly share information and make a willing commitment to customers, rather than to products or organizational fiefdoms. It is a long, hard slog to become -- and maintain -- a customer-centric organization, but the result is a much more profitable brand.

Based on a two year study of Continental Airlines, Royal Bank of Canada (RBC), telecommunications giant SBC, casino Harrah's and 13 other firms, "The Quest for Customer Focus," by Ranjay Gulati and James B. Oldroyd, outlines four steps necessary to become a customer-centric organization. One key conclusion: it is the organization, and not the marketing department, that shapes and drives the brand: "Getting close to customers is not so much a problem the IT or marketing department needs to solve as a journey that the whole organization needs to make," the authors wrote.

The case studies are remarkable. RBC, Canada's largest financial institution, first made the all-too-common mistake of "positioning" itself as the leader in convenience. Its "position" even led it to build expensive new branches and
introduce products that were unprofitable. "But, to the company's surprise, a survey of more than 2,000 customers revealed that people didn't choose a bank on the basis of how convenient it was," the article noted. "Instead, what customers wanted was a bank that demonstrably cared about them, valued their business, and recognized them as the same individuals no matter what part of the bank they did business with."

The survey nine years ago was a wake-up call. RBC then dedicated itself to moving from a product-oriented organization toward one focused on customer (not brand) equity. "The results are telling. Dividends swelled from 68 cents per share in 1996 to $1.72 per share in 2003, driven by a 20% increase in high-value customers and a 13% rise in average customer profitability between 1997 and 2001. Between 2000 and 2004, the percentage of customers that purchased the bank's high-margin packages of bundled products and services doubled, from 35% to 70%, and the success rate of sales leads driven from promotion events rose to 45%," said the authors.

Other successes were just as noteworthy. Because it understands the flying behavior of its most profitable customers, Continental now focuses on maximizing the profitability of its entire network rather than each segment. SBC reduced defection rates among profitable DSL customers, without significant marketing expense. Harrah's is able to identify profitable characteristics in seemingly less-profitable customers, and so now focuses its marketing on increasing those profitable behaviors.

The difficult journey to a customer-centric organization consists of four steps:

1. Communal coordination: A central, enterprisewide database is key. This is a two-part process. The first involves retrieving and standardizing information from all customer touchpoints. It sounds easy and logical, but the technical and cultural challenges are immense. It took Continental four years of dedicated work to achieve this goal; almost a year was spent on data standardization alone. Harrah's took six years.
2. Serial coordination: Essentially, this step consists of creating business analytical capabilities that leverage the customer information repository. The business analysts then pass the analyses to the appropriate unit. Sounds easy on paper, but the authors point out that "serial coordination is not spontaneous and is fraught with obstacles. Traditional roles and structures create natural barriers to spreading information and lessons learned.  Some changes to a company's social and organizational structure will be required to overcome them."
3. Symbiotic coordination: Now the task grows even harder - from analyzing past customer data to predicting future customer behavior. This requires a two-way flow of information among the analysts and multiple business units. They collaboratively participate in four activities: "creating models to predict customer behavior; experimenting with various interventions designed to alter customer behavior; measuring the results of these interventions; and using feedback from the front line to improve the models and subsequent campaigns."
4. Integral coordination: In this stage, the organization can use customer information in daily interactions with customers, aided by employees who do more than pay lip service to customer service. One example: a flight attendant apologized to a customer for a flight delay he had experienced earlier that day. Continuous training is key. SBC conducts almost continuous training programs while Harrah's is putting more money into an enterprisewide marketing training program. Changing incentive programs helps. Harrah's spent $40 million in 2004 rewarding employees who demonstrated a customer focus, while SBC changed its compensation structure to encourage cross-unit cooperation.

Undoubtedly, it is difficult to make the organization the brand and center activities around profitable customers. It takes 
much more than incorporating a few buzzwords into a mission statement or even buying a CRM system. As 
RBC, Continental and other leading companies illustrate, "the customer focus journey takes years, not months,
but there are rewards all along the way, and for those organizations that have gone the distance, the payoff is remarkable."