Tuesday, March 16, 2010

Economics of Cult Branding

Take a stroll down the "memory lane" of branding, and you will discover an English pottery maker building the first modern business brand.

Back in the 18th century "branding" wasn't part of the business vocabulary but Josiah Wedgwood understood another language.

Economics.

In 1763, Wedgwood convinced one of his favorite customers to let him name the line of pottery she had purchased, after her. And so with the blessing of Queen Charlotte of England, Wedgwood was able to trumpet the availability of "Queen's Ware", in his paperwork and stationery. It just so happened "Queen's Ware" grabbed the imagination of Charlotte's circle of friends which included musicians like Mozart and Bach as well as other members of nobility such as the Empress Catherine of Russia. Word spread throughout Europe and Wedgwood was able to boost demand for his table wares while fetching a premium price over similar products from his competitors.

Over time, companies like Procter & Gamble, Coke and Marlboro lifted branding to another level and now we see where some brands are icons that speak to deeply felt human emotions. Nike, for example, represents accomplishment. Harley-Davidson personifies freedom. Rolls Royce and Rolex are symbols of luxury.

Cult brands are a different story.

Cult brands don’t just sell products or services: they sell lifestyles. And they become a way of life for their customers, representing the ultimate level in brand loyalty.

Leveraging principles used by certain religious sects to create fanatical followers, cult branding is increasingly being viewed as an approach designed to help any brand inspire a group of unusually loyal customers. And since the strength of a brand rests on establishing an emotional connection with customers, cult branding is a way to intensify those feelings from the people you hope to do business with. With the passage of time, those feelings transform customers into brand evangelists.

Few brands do it better than Harley Davidson. There may be other motorcycles with the same engineering quality and performance, but can't charge even one-third of the price of what Harley Davidson can get away with. In fact, some devoted H-D followers will wait for months to get the specific bike they want.

Besides Harley Davidson, other well known cult brands are Oprah Winfrey, Volkswagen Beetle, Star Trek, World Wrestling Entertainment and Apple. And they share similarities when it comes to understanding the forces that drive unparalleled customer loyalty.



Today's economy, blinded by the speed of technological change has changed the meaning of competitive advantage. Innovative products alone don;t cut it anymore, not when any new invention can be copied within days. With everything available at a customers fingertips, "brands" are the only assets that cannot be easily copied or outsourced.

That's why cult brands are much more concerned with long-term profitability as opposed to short-term growth. Short-term growth might make you a darling on Wall Street, but it will kill the mojo you have with your customers. The Starbucks brand for example was compromised with the closing of some 600-plus stores that probably should not have been opened in the first place, a move that saw the company's overall value decline by about 75% in just a few months.

Are you willing to sacrifice short-term growth for long-term profits

Can you envision how a sustainable business for tomorrow helps everyone win - you, your employees, your shareholders and your customers?

Can you attract and nourish a cult of brand lovers that will apply the Pareto Principle (the 80/20 Rule) and drive over 80% of your profitability? It costs five to ten times more to create a new customer than keep an old one and the customers who love you the most are the ones most likely to spread the word and create new customers for you (just ask anyone who owns a Mac, an iPod, or an iPhone).

Do you know who your best customers really are are? In other words who is your "Queen Charlotte"?

Are you giving her a good enough reason to fall in love with your brand?

Have you stopped to consider what that might be worth?


"Cult brands aren't just companies with products or services to sell. To many of their followers, they are living, breathing surrogate family filled with like-minded individuals. They are a support group that just happens to sell products or services. Picture a cult brand in this context, and you'll have a much better understanding of why these brands all have such high customer loyalty and devoted followers"
MATTHEW W. RAGAS

http://www.seamlessbrand.com/

2 comments:

Lenny Boudreau said...

Awesome Post! Makes me want to buy a Mac...

Lauraine said...

I have no words for this great post such a awe-some information i got gathered. Thanks to Author.
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