The 3Ls That Can Kill Your Brand. Forever.

As marketers, most of us pride ourselves for adhering to truth in advertising and being honest in all we say about our products and brands. Copywriter, strategist, social or content marketers, we always tell the truth. Right? Actually you shouldn’t be so quick or sure to answer that question.

"Red Bull Gives You Wings"
This “Red Bull Gives You Wings” image from Michelle Ramey Photography via DeviantArt.com illustrates a brand slogan that cost the company millions.

As marketers, most of us pride ourselves for adhering to truth in advertising and being honest in all we say about our products and brands. Copywriter, strategist, social or content marketers, we always tell the truth. Right? Actually you shouldn’t be so quick or sure to answer that question.

In many cases, we marketers unwittingly lie about our products all of the time.

Remember that adjective in a social post about being the “leading” brand in your category, or claiming that you have a “scientifically proven” solution because one survey with a small sample was in your favor? We can say these things if there is at least one incidence of truth, right?

To many marketers, little claims which can be substantiated in at least one incident, e.g., leading for just one month’s sales reports, or scientifically proven in a study that only covered a small portion of your markets, are perfectly acceptable. Yet to many consumers, these claims are fodder for lawsuits, let alone the lost loyalty from those who don’t sue you.

Here’s a couple of examples from a Business Insider article, March 2016, about how those innocent words or “suggestions” can get brands in big trouble.

  • Tesco, a SuperMarket in the U.K., got caught up in a scandal for using horsemeat in its “beef” products. So the company decided to run an ad explaining how this happened. However, Tesco also chose to imply that this was happening industry-wide. That resulted in the U.K. advertising regulator banning the ad and about a $300 million drop in the brand’s value.
  • Kellogg’s got its hands slapped by the FTC for claiming its Rice Krispies could boost a child’s immunity as the FTC couldn’t find anything but dubious data to back that up.
  • And one of the most interesting lawsuits that actually cost a brand a lot of money and respect was over Red Bull’s tagline claim that their drink could “give you wings” and intellectual energy. Obviously just a fun slogan to most. However, a consumer claimed he had been drinking Red Bull for 10 years and had no wings to show for it, or improved intellect (that last claim rings true). But a judge bought it and Red Bull had to pay out $13 million and $10 to every customer buying its drink in the past 12 years. True story!

If you Google “honest advertising that works,” you’ll get a few articles featuring logic-defying “honest” ads that expose a product’s flaws, almost to the point of dishonesty of how bad something is. These include ads for real estate and hotels saying how awful their places are in ways that are so bad they spark curiosity and make one want to experience the property to see for themselves. So yep, they worked. By being “honest” to the edge of being “dishonest” about your product, some clever copywriters have discovered the power of sparking curiosity to sell products. But there’s a deeper lesson here.

Marketing Success Is (Almost) All About the Data: Optimizing Customer Loyalty Behavior Initiatives

Much of what I’ve learned over the years about sales, marketing and customer service has to do with the critical importance of customer data, and how those data are converted to actionable insights. It’s how companies generate the right customer data, manage and share data the right way, and use it at the right time. It’s also how they use data to the best effect, to optimize loyalty and profitability, that makes them successful, or not, on an individual customer basis. Culture, leadership, and systems will facilitate effective information gathering, storage and application; and, CRM, CEM, ERP, or other acronyms notwithstanding, it’s impossible to be successful without having as much relevant anecdotal and dimensional content about customers as possible.

Much of what I’ve learned over the years about sales, marketing and customer service has to do with the critical importance of customer data, and how those data are converted to actionable insights. It’s how companies generate the right customer data, manage and share data the right way, and use it at the right time. It’s also how they use data to the best effect, to optimize loyalty and profitability, that makes them successful, or not, on an individual customer basis. Culture, leadership, and systems will facilitate effective information gathering, storage and application; and, CRM, CEM, ERP, or other acronyms notwithstanding, it’s impossible to be successful without having as much relevant anecdotal and dimensional content about customers as possible.

Bill Gates, often a prophet, said in “Business @ The Speed of Thought” (1999):

The best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.

He might have added, had he really understood how to create and optimize customer loyalty, that what information, particularly customer-specific information, a company collects, and how they manage, share and apply it to the customer will determine how successful they can become.

One of my key sources for the uses of information gathered by customer clubs and, particularly, loyalty programs, for example, is friend and colleague, Brian Woolf (www.brianwoolf.com). Brian is president of the Retail Strategy Center, Inc., and a fountain of knowledge about how companies apply, and don’t apply, data generated through these programs.

In a Peppers & Rogers newsletter, for example, Don Peppers quoted Brian in his article, “The Secrets of Successful Loyalty Programs”:

Loyalty program success has less to do with the value of points or discounts to a customer, and much more to do with a company’s use of data mining to improve the customer experience. Top management hasn’t figured out what to do with all the information gleaned. You have all this information sitting in a database somewhere and no one taking advantage of it.

You need to mine the information to create not only relationships but also an optimum (purchasing) experience. The best loyalty programs use the customer data to improve not only promotions, but also store layout, pricing, cleanliness, check-out speed, etc.

Firms that do this are able to double their profits. When these elements are not addressed, all you’re doing is teaching the customer to seek out the lowest price.”

Tesco, one of the world’s largest retail chains, is using its customer information for a number of marketing and process initiatives. In his book “Loyalty Marketing: The Second Act,” Brian described how Tesco leveraged customer data drawn from its loyalty program to move into offering banking and financial services:

With information derived from its loyalty card and enriched by appended external demographic data, they can readily develop profiles of customers who would most likely be interested in basic banking services, as well as an array of related options, ranging from car loans and pension savings programs, to insurance for all types of needs—car, home, travel and even pets. It costs Tesco significantly less than half of what it costs a bank to acquire a financial services customer. Without a doubt, having detailed customer information gives them a competitive edge.

A few years ago, Tesco parlayed its offline customer data to also become the world’s largest online grocery and sundries home delivery service. Additionally, Tesco uses its customer data to target and segment communications to the millions of its loyalty program members by almost infinite demographic, purchase and lifestyle profiles. In his book, Brian notes that Tesco can create up to 150,000 variations of its promotion and reward statement mailings each quarter. These variations, as he says, ” … are both apparent and subtle, ranging from the product offer (i.e., which customers receive which offers at what price) to the content of the letter and the way it is personalized.”

Tesco is absolutely a company that knows how to leverage customer information. Its customer database contains not just demographic and lifestyle data, food spending in stores and on home delivery, but also specifics about its customers’ interest in, and use of, a diverse range of non-food products and services. As Bill Gates’ statement suggests, incisive and leveraged customer data has enabled Tesco to put distance between itself and its competitors, in both traditional and non-traditional retail markets.

An understanding of the real value and impact of customer information, and a disciplined plan for sharing and using the data to make a company more customer-centric, is needed more than ever. A good analogy, or model, for CEM and loyalty program effectiveness or ineffectiveness in building desired customer behavior, may be what can be termed the “car-fuel relationship.” A car, no matter how attractive, powerful and technically sophisticated, can’t go anywhere without fuel.

Not only that, to reach a desired destination, the car must have the right fuel for its engine, and in the right quantity. For customers, the car is CRM and its key data-related systems components (data gathering, integration, warehousing, mining and application).

The destination is optimized customer lifetime value and profitability. The fuel is the proper octane and amount of customer data.

Leading-edge companies are focusing on customer lifetime value as a destination. They are collecting the right data and using the right skills, processes, tools and customer information management technologies to make sure that key customer insights are available wherever they are needed, in all parts of the enterprise. Jeremy Braune, formerly head of customer experience at a leading U.K. consulting organization, has been quoted as saying: ” … organizations need to adopt a more structured and rigorous approach to development, based on a real understanding of what their customers actually want from them. The bottom line must always be to start with the basics of what is most important to the customer and build from there.”

I completely agree. It’s (almost) all about the data.