Activating Brave

Learning from the bold and the brave

Learning from the bold and the brave

Yes, the world in which brands exist is in a state of flux. Yes, we receive five times more information each day than we did 30 years ago. Yes, technology has profoundly changed how we interact with the world around us. Yes, customer expectations have transformed, and attention is harder to capture than ever before. Yes, we live in an era of category-of-one brands like Google and Amazon that dominate their respective sectors and become the anchor points for entire ecosystems of other players.

Despite all of this, and in virtue of this, the role of brands in today’s world is more imperative and valuable than ever. Branding has shifted from being about ensuring consistency to stimulating desire; from marketing-centric to enterprise-centric; from simply creating functional and emotional differentiation to fundamentally changing the way a business goes to market; and from communicating the consumer experience to actually shaping it.

So, what can we learn from how the world’s leading brands are achieving success in this environment? What sets apart the good from the great? They are Activating Brave.

In other words, harnessing the ability to take bold short-term action that responds to the needs of the marketplace while pursuing a clear and aligned long-term vision.

To simultaneously look through a microscope and a telescope,

To have the courage to intercept the future, not just flow with it, and,

To take decisive action that makes a real impact.

Only when you have the sanctuary of a deep understanding of who you are, and where you are going tomorrow, can you confidently make the brave short-term calls needed to win today.

Nike, for example, was able to take a huge calculated risk in launching the controversial Colin Kaepernick advertising campaign because its brand has always encouraged people to believe in themselves no matter what. Its brave action translated to a rise in its stock market value of $6 billion.

But, there is no one way to activate brave. Every brand needs to find its own path that intrinsically aligns with its market context, history and business strategy.

When analyzing the last five years of Best Global Brands’ data, we see that those that have achieved the greatest growth have all pulled on different dimensions of their brand to succeed. Amazon has seen its average Brand Value grow by 36 percent every year over the last five years, in part by continuing to diversify its offer, with Relevance driving the increase. PayPal has seen its Brand Value increase by 56 percent over the past three years years by focusing on acquisitions to drive greater Presence.

Although the journey may be different for every brand, there are some overarching key themes we are seeing emerge that enable brands to activate the bravery required to achieve success in the long-term:

 

  1. Positive Utility

It is not enough to make people feel good about a brand by simply focusing on the storytelling around the benefits of a product or service. Leading brands are driven by their desire to be useful, to create products, tools, and services that actually solve customer problems, and to use their marketing to serve and not just sell. They are driven by a clear sense of purpose which is focused on creating meaningful, positive impact in the world. And importantly, they do this on a day-to-day basis, being continually at-hand and intertwined in their customers’ lives.

Those brands that focus principally on Positive Utility to drive their businesses have a five-year growth rate of 14.3 percent per annum compared to 2.3 percent for those that largely rely on storytelling to shape their brands.

Driven by its desire to be the most customer-centric company on Earth, Amazon is the fastest-rising brand this year with a Brand Value growth of 56 percent. It has reinvented almost every sector it has dived into by offering the most useful, holistic 360-degree customer service experience across every customer touchpoint. Amazon revamped its Fire Phone to become the Amazon Echo smart speaker, Amazon MP3 to become streaming music service Amazon Music Unlimited, and its 2010 crowdsourcing platform for screenwriters into Amazon Studios’ Emmy Award–winning original TV shows. What’s more, according to Morgan Stanley, Amazon’s fashion business has now become the second-largest seller of apparel in the U.S..

Proving that it’s not just tech companies that can deliver an extraordinary level of utility, L’Oréal has shown that traditional CPG companies can also lead with experience, and has developed a number of service offers that utilize digital technologies to transform its customer relationships with the brand. ModiFace, a beauty tech company recently acquired by L’Oréal, allows customers to experience a live, step-by-step tutorial and coaching with a makeup advisor, virtually try on personalized makeup looks, and even shop online.

 

  1. Subscription Mindset

In 2018, 29 percent of the total value of the top 100 brands lies in subscription-based businesses, versus 18 percent in 2009.

This is because traditional notions of loyalty are eroding as we live in a service-driven economy where access is more important than ownership. Brands are winning by offering the most frictionless ways to leverage their products and services based on the personalized needs of their customers. Successful brands are therefore being born with a subscription business model, or have significantly adjusted their business models to offer subscription services.

Netflix’s Brand Value grew 45 percent this year, the second fastest-growing brand, after entering the table in 2017, and continues to demonstrate that customers are prepared to subscribe directly to a media company. Its brave decision to invest in original programming in 2012 has now garnered the company a staggering 112 Emmy nominations, more than any network or streaming service, and its stock market value is now greater than Disney.

Adobe has seen a 14 percent annual Brand Value increase from 2011 to 2018, having reinvented its entire business model from one-off product purchases to enduring relationships with its consumers through its subscription model. Back in 2012, the company made the bold decision to eliminate its software disks and upgrades by storing its creative suite software to the cloud, and charging customers a monthly access fee.

 

  1. Customer-Centricity

Anticipating emerging customer needs and being able to evolve the business and brand at speed to accommodate them is no mean feat. Leading brands are co-creating solutions with their customers, bringing the voice of the customer into every aspect of their business, and investing in future-forward customer exploration. This is then being coupled with a responsive culture that can flex and change to ensure that the brand constantly stays relevant.

According to our Best Global Brands data, the brands generating the most stable growth over the past 10 years are those with the highest overall scores on Relevance and Responsiveness. What’s more, the top 10 fastest-growing brands over the last five years are those where Relevance and Responsiveness are their topperforming dimensions.

Hermès has one of the strongest performances on Relevance of any brand in Best Global Brands and has demonstrated a double-digit increase in Brand Value over the past five years.  Sustaining that level of increase is attributed to the brand’s relentless commitment to, and pursuit of, a culture of excellence in everything that it does. Hermès has continued to stay true to its DNA and origins in leather goods, while growing into a host of other categories.

 

  1. Learning From Luxury

The luxury sector was the top-performing category this year with a 42 percent growth. Despite the shifting expectations of luxury, leading luxury brands have continued to show significant growth. Undoubtedly, luxury today is defined as both products and experiences, but each provides a sense of exclusiveness that comes from a unique or personalized service, or a premium experience that delivers an emotional reward at every touchpoint and exceeds customer expectations to surprise and delight.

The reason luxury brands have been so successful is because of their ability to anticipate and respond to these shifting cultural trends. They have managed to immerse themselves into street culture and provide levels of access that, while retaining their authenticity and a level of exclusivity, have made their brands more desirable to more customers.

This responsiveness is what we see from our Best Global Brands analysis. Those luxury brands who increased in Responsiveness over the past five years have 2018 Brand Values 43 percent greater than those who didn’t.

Gucci’s recent efforts to respond more rapidly to today’s business landscape helped it grow this year by 30 percent year-over-year. The luxury brand’s rapid growth can be attributed to the striking dynamic between Creative Director Alessandro Michele and CEO Marco Bizzarri. One of the many investments that Bizzarri has made in people is his ‘shadow committee’ of millennial employees, with whom he meets regularly to garner insight into their thoughts on the business and ideas for innovation.

Interestingly, we are seeing this desire for luxury drive the premiumization in other categories. Samsung has shifted its price point and design to rival Apple, unveiling phones valued at over $2,000, such as the Samsung W2018. W2018 buyers also received perks like concierge assistance at airports and subways, free software tech support, and a VIP hotline. The premium end of the mobile phone category was five percent in 2010 and now accounts for 30 percent in 2018.

 

  1. Role of Brand

The drive to make the brand a more important factor in customer decision-making is a critical way of fueling business growth. Having a stronger brand compared to competitors within a respective category is obviously key. However, companies that have also made their brands more influential in driving customer choice have seen substantial long-term growth. Starbucks made paying $5 for a coffee an acceptable price premium because of the importance of its brand, relative to other factors.

Take the automotive category as another example. The role brand plays in customer choice for the global brands in our study ranges from 30 percent for mainstream brands to more than 60 percent for luxury brands. What a company like Nissan has done is focus on increasing its Role of Brand by harmonizing its marketing activities for all products around a single core brand idea, and focusing on the overall Nissan customer experience. The company has made it more important that the car a customer is buying is a Nissan, not just an Altima or a Rogue. In doing so, it has significantly increased its Role of Brand, and its Brand Value is up on average 12.5 percent per year over the last five years.

According to our Best Global Brands data, brands that grew their Role of Brand over the past five years have achieved Brand Value growth rates 2.4 times higher than those brands whose Role of Brand didn’t increase.

There are three ways to think about increasing Role of Brand. The first is to simply focus on building a stronger brand. Above all, having a stronger brand will mean that it is more influential in driving customer choice than other factors, like price. The second is to reposition a brand by radically reshaping the customer experience, or by repositioning a brand against different, more important or more emotional choice-drivers, or perhaps currently unmet needs. The final option is to shift Role of Brand by disrupting category conventions or radically changing a business model, much like Steve Jobs did with the Apple iPod and iTunes in 2001.

Conclusion

The world brands operate in is continuing to change and evolve as customer expectations shift and technology empowers them to meet these expectations in new and different ways. No one can stand still. Change is imperative, and making bold moves is critical to long-term success. But, it can’t be anarchy. The whole company cannot simply innovate and change now to meet the short-term expectations of customers. There has to be a vision which galvanizes the organization and gives it the confidence to make the right choice to transform.

After all, that is what a strong brand does: empowers you to activate brave.