This article by list members and marketing gurus Jacques Chevron and Phil Glowatz appeared in the September 9, 2002 issue of Brandweek (the Top of Mind column).
It should not be a surprise that Coca Cola and Amazon.com have recently
announced changes in their financial reporting procedures to avoid the kind of
scandals that have beset Enron, Worldcom and others. Companies that see their
brands as major assets must avoid even the appearance of impropriety.
After all, it is quite obvious that, when a corporation is perceived as untruthful, its brands suffer.
Brand trust is not something that can be created overnight. It is created over time, after people have been subjected to many exposures to the brand, so that they feel that they can anticipate what the brand will or will not do because they understand its ethos. If the consumer discovers suddenly that the brand's behavior doesn't conform to the image in his/her mind, the sense of trust in the brand probably goes down several notches. Brand trust also comes from the belief that the owner of the brand will not do anything to harm it. If the brand owner behaves recklessly, s/he may not have a brand.
But brand-killing big lies are relatively rare. The real question is how the many little lies we are exposed to every day affect brands. Examples of little lies abound:
One of the most frequently heard little lies occurs when we're on hold for
a company's "customer service." The synthetized voice states, "We value your
call," before trying, sometimes very hard, to make you hang up and visit a web
How could these same companies expect consumers to trust their brands? It shouldn't surprise anyone that many of the products/services they provide are increasingly becoming commoditized. Telephone/utility companies may think commoditization is the natural consequence of deregulation. The real cause may be, however, the widespread devaluation of their brands by fuzzy rate cards and false representations. If all companies providing identical services are equally distrusted, they all become commodities.
Companies that provide the same product or service can escape the commodity trap if they can find a way to generate trust. Take SouthWest Airlines, for instance; they tell it like it is: You get transportation from Point A to Point B and no frills (other than their famous, and funny, bag of peanuts, which they have labeled "The Frills"). Consumers know what they're going to get for their money. Their competitors, in contrast, have confusing fare structures with little justification for charging one passenger significantly more than the other for the same service. We'd call that a little lie. These confusing fares may enhance revenue in the short to medium term, but they do little for the brand. By contrast, SouthWest Airlines' stock valuation is now higher than that of all the other US airlines combined.
Honesty adds value to a brand because it generates and consolidates trust. Trust, in turn, can also help command a higher price than similar products or services. And some companies actively work to build and sustain that trust. For example:
Companies, and particularly those that fear becoming commodities, must
consider strategies to generate trust and show their consumers that they are
too highly respected to be lied to. For instance, rather than saying that the
customer's call is valued before making them wait, why not apologize for being
busy, say how long the wait will be, and offer to call the customer back - all
services that are currently offered by some firms. Another idea: Rather than
making rates so confusing that consumers never know if they have the one
that's best for them, offer them a simple MFC (Most Favored Customer) policy;
i.e., the company will evaluate their customers' use of its services and
compute invoices using the rates that are most favorable to them.
In these times of crisis of confidence, truthfulness not only makes for good business ethics, it also makes economic and branding sense.
About the authors: Jacques Chevron and Phil Glowatz have worked together on many new product, branding and positioning projects. Contact them at info(at)JacquesandPhil.com or (708) 784-0730.
© 2002 Jacques Chevron and Phil Glowatz