Buyer2Brand

Rebranding is about realignment

I've written on rebranding before, but its a decision-making process that merits more discussion.

Most IT vendors are not "startups", in the strictest definition of the term. Most are small companies that are actively selling and winning first customers, then servicing and supporting those customers while working to improve their product or service. Most have active PR and other outbound marketing initiatives that build awareness and fill the sales pipeline. All assert their positioning in the marketplace relative to competitive alternatives.

In a new book Why Johnny Can't Brand (Portfolio 2005), authors Bill Schley and Carl Nichols explore when and why companies should rebrand. They argue that many companies rebrand prematurely or unnecessarily, shooting good brands in the foot instead of strengthening them. The three most common catalysts for misguided rebranding are: new executives trying to make their mark, the need for instant gratification trumping long term commitment, or organizational malaise/boredom.

To gain a foothold in the market, small to mid-size B2B technology vendors typically "chase the money" - closing business for the sake of the reference and the revenue, thanks to the sales staff's existing relationships. If branding's maxim is "customers create your brand", then what happens if some of these early customers fall outside of the positioned target market? Over the years it typically takes a vendor to attain critical mass, markets are in constant flux. Differentiation can be challenged by new competitors or emerging trends. Since "brand happens" with or without the vendor's active stewardship, the result over time can be a spotty understanding of exactly why customers utilize the product or service. The daily demands of customer growth and pace of market change can outdate, dilute, or distract a brand.

Such ventures are prime candidates for Rebranding - which doesn't always have to mean a complete overhaul. Rebranding can in fact have nothing to do with redesigning visual assets (logo, tagline) and instead focus entirely on operational or internal mindset changes. Rebranding is essentially an exercise in realignment. It is rediscovering the single unifying principle that aligns the organization with its customers. It means listening as those who bought tell you why you are special, why your offer resonates, and why your product is relevant. It is evolution more than revolution, but holds great power to re-energize a company.

If you are considering Rebranding, make sure it's not for one of the reasons Schey and Nichols cite above. A quick brand audit is a great way to get a read on if your brand is truly misaligned, not just fatigued. A reinvigorated brand can deliver more qualified sales leads & stronger customer loyalty, but brand equity needs time, dedication and maintenance to grow. Rebranding should not be undertaken lightly, and management support is a critical success factor.

Ventana Research on customer satisfaction

Ventana Research is a fast-rising midsized analyst firm specializing in performance management.  In the rapidly consolidating world of industry analyst firms, it's encouraging to see Ventana's growth as an alternative to Gartner and Forrester's dominance.  It does a good job at covering CPM/BPM from the perspectives of IT, supply chain, finance, operations, contact center, BI/data warehousing, and sales/marketing.  A lot of its research notes and articles are still publicly available - also nice while it lasts.

Ventana's Contact Center practice released some startling findings recently on the state of customer satisfaction in our industry.  Of 100 organizations surveyed, 95 percent agreed that improving customer sat is among their company's strategic objectives, but less than 5 percent said they knew what it would take to do it.  This is indeed frightening in an industry that invests 6 times more to gain a new customer than to service a current one, and waits 7 years to turn a net profit from the relationship.

Ventana wonders whether this is a problem of culture, a failure of efficiency and effectiveness, broken business processes, or poor information management.

The firm concludes the last problem is the root cause, but I think it's cultural.  Even if most IT companies could attain the nirvana of "a single view of the customer", the industry would still suffer from an assembly-line approach to managing customers.  Customers are processed and passed off departmentally from Marketing (the lead) to Sales (the close) to Service (the project) to Support (the headache) in an approach that is TOO process-oriented and not PEOPLE-oriented.  Ventana calls out the industry's "structural inability to relate to customers" - where support staffs are left to recover the relationship (or ultimately kill it).

So how does this all relate to Brand?  Ventana explains that customer sat levels are determined by ALL of the customer's interactions with a vendor organization, and are damaged by broken promises.  These leave emotional responses like frustration and disillusionment.  If strong brands are promises kept and positive experiences delivered, then an institutional focus on brand-building would foster a culture where customer satisfaction was of paramount importance.

Microsoft exec on Dot-com hangover

As part of my primary research study into the current state of B2B tech branding, I talked with Doug Free of Microsoft. Doug heads PR in Silicon Valley for the company, making sure that Bill G. and Steve B. and Ray O. are visible and connected whenever they visit our corner of the world. He was my client back in the 1996-97 timeframe when he headed marketing at an early web collaboration software company. His experience with branding goes deeper than logos and taglines, as he helped launched the GO Network for Disney when he worked at Infoseek.

Doug believes as I do that our industry is still suffering from "dot-com hangover". The conventional wisdom holds that branding is expensive because it necessitates a big budget to make a big splash. During the Boom, branding as a strategic marketing practice went out the window, and the term became synonymous with lavish launch parties at The Tech Museum and full-page ads in The Industry Standard. Good branding = high burn rate. There simply wasn't enough time - or even the need, it was widely believed - to steadily build one's reputation with customers over time when the IPO horizon for most startups was under a year.

Branding professionals must share some of the blame for this cheapening of our art during this period, as many of us were all too happy to collect high fees for actually planning the parties and placing the ads! Yet in doing so, we did B2B IT companies a disservice, missed an opportunity to soundly educate an industry, and are still suffering the fallout.

As Doug rightly points out, many tech marketers first real experience with branding was spending the "funny money" of the Boom, and he cited an example from his own experience. He recalled that one of his employers during the period wanted to run a major ad campaign to reach only a handful of key targeted investors. High-touch, low cost alternatives would have better driven the financing round but were rejected outright. Of course it was silly behavior in hindsight, Doug explains, but everyone thought - and was told by "the experts" at the time - that big spend was the way to build big brand. But every branding pro worth his/her salt knows that attention/awareness/buzz are the fringe benefits of a strong brand, not the goals themselves.

In all, Doug remains pretty discouraged with IT marketing professionals use of the term "branding" with vendor management teams. He thinks C-level understanding of the practice today extends merely to tactical design deliverables or is locked inexorably into the concerns of B2C markets. He asks what is easier: to educate an entire industry or change our language to fit the market? Doug was not completely pessimistic, however, and sees a lot of opportunity for branding to impact service-oriented B2B markets where Web 2.0, SaaS, and LAMP stack delivery models are coalescing.

Tech PR Veteran on Branding

Ed Niehaus and I sat down recently as part of my ongoing primary research exploring the current state of B2B tech branding.  Ed is an industry veteran who headed one of the top technology PR firms from the early 90s through the Internet boom - Niehaus Ryan Wong.  NRW launched Yahoo, Verisign, Apple's iMac, Veritas, and 3 Pixar movies.  The agency was one of the unfortunate casualties of the dot-bust, but luckily its founder lives on as a VC at Cypress Ventures. 

It's no secret that public relations is often the first program in the marketing mix that technology startups choose to outsource.  PR can be among the earliest third parties to influence how a new company positions itself in the marketplace.  PR becomes the first line of marcom offense in getting a vendor noticed and talked about.  Some may argue that PR firms and practitioners enjoy an undue share of influence over how and which new technologies and personalities move our industry.

My former employer The Horn Group was in friendly competition with NRW, so I've had nothing but respect for Ed.  He is one of the best at his craft.  He recognized early on that the firm's strong reputation engendered a unique opportunity to offer new clients a value-added service on Branding, hence trumping the leading advertising/interactive agencies at the time.  Ed believes brand is definitely a CEO-level discussion, one of the most strategic decisions, and so he wanted PR to have a seat at the table.  Now Ed is no fan of advertising - not even the inexpensive kind - and it's fair criticism to say NRW's service neglected the aesthetic design element in branding (it had no visual deliverables).  Still, Ed was out in front in recognizing the powerful role of PR in building tech brands.

Reflecting both enterprise and consumer tech experience, Ed recommends talking about brand with management of B2B companies in terms of the the vendor's reputation.  This approach would help the discipline mature and hold it to the same litmus test as all marketing spend these days.  Namely, does the activity drive either awareness or sales?  Buzz or share? 

According to Ed, brand comprises not just the positioning of the venture (i.e. product solving target customer pain better than competition), but its values and vision as well.  Brand is not the identity package itself, but elements reflect the entire "affective domain" of the company - its deeper sensory appeal to the buyer.  This is also impacted by buzz in the market, which is created by (surprise!) PR.

Finally, Ed had a parting piece of advice for most startups: stop expending 90% of your communications effort solving internal struggles, and only 10% talking to the outside world!  Could the solution he's implying be "hire a good PR firm", I wonder?

Branding for M&A vs. IPO

I recently interviewed Christine Hinton from VantagePoint Venture Partners as part of my ongoing primary research study on the state of B2B tech branding.  Christine is VP Marketing at the firm, which is a leading multi-stage investor in the tech and healthcare markets.  In her position, she actively advises the boards of VPVP's portfolio companies on marketing strategy, and previously headed the West Coast tech practice of leading PR firm The Weber Group (now Weber Shandwick).

Christine is a seasoned pro with some interesting things to say about branding for startups.  She thinks that engineers, the folks who typically run early tech companies, often have the wrong idea about brand.  First, they think that it's something that's wholly created by the company itself (i.e. not by the market/customers in response to the company's offering).  Second, they think that a good brand is defined simply as the vendor with the best "buzz".  Basically her advice to CEOs is "you can't buy it, you need to deliver it."

We had a lengthy discussion about the decision to brand on the company or the product.  Christine contends that in early stage companies there is no such decision to be made, that essentially the vendor and its offering are one in the same.  As a VC firm, VantagePoint's advice differs depending on whether the company is headed for ultimate liquidity via acquisition vs. IPO.  In today's market - where the consolidation is the rule of the day and less than 10 tech IPOs occurred in all of 2005 - the choice is clear.  Startups on an M&A track should brand on the uniques of the product/technology and the strength of the engineering team.  On the IPO track, branding the company, which is essentially the "product" sold to Wall Street, becomes paramount.  For better or worse in today's climate, where most companies can only hope for acquisition, Christine thinks some CEOs think, "why bother with branding?"

Given these distinctions, a discussion of the concept of Brand Equity is enlightening.  According to Wikipedia, Brand Equity is a measure of the total value of the brand to the brand owner, and reflects the success of its branding with target audiences in the marketplace. Measurement can be both quantitative (i.e. comparative pricing) and qualitative (i.e. brand loyalty). Successfully branded products or services typically command higher prices, and strongly branded companies can command higher market valuations - whatever the liquid event.  So re: the issues discussed with Christine, it's a wash.  Strong brands demand and command a premium with target audiences.

PR Pros on Top Tech Brands

I've spent most of my career on the PR side of technology, working on the agency side for firms such as Fleishman-Hillard and The Horn Group, and being the client while running  in-house marcom at startups.  So I enjoy a fairly large network of fellow PR practitioners. 

As part of my primary research project into the state of B2B technology branding, I decided to poll my network for their votes on "the Strongest B2B Technology Brands".  Note that I didn't ask for "the Best Brands" (a more subjective measure, imho).  The survey was conducted over email in October and the results, while far from scientific, do provide a useful data point on which vendors are succeeding and which are not in the minds of our industry's "buzz merchants".

Here's the definition of Brand that I included with the survey to spark the opinions of respondents:
A brand is a customer’s gut feeling about a product, service, or company (good or bad).  Brands are more about emotional resonance than rational thought. Good brands are a promise fulfilled and values shared – they are perceived as authentic, reliable, delightful, and trustworthy.  A brand is not a logo, an identity system, a product, or a strategy.

if you are a PR pro, your Top 3 votes are still welcome!

After 69 votes cast, here are the results:

20.3%  Oracle
14.5%  IBM
13.0%  Cisco
10.1%  Microsoft
7.2%    HP
5.8%    Intel
29.0%  Other (<5%)
100%

Mike’s Analysis:

• Oracle is no doubt a strong enterprise IT brand, and due to its aggressive stance in the industry of late, is arguably the strongest today.  The "Big O" (as a friend of mine who works there calls them!) captured the lead early in the polling and never dipped below 20%.
• No argument on IBM either, and it's the best example in our industry of a reinvented brand (consider where they were 10 years ago).  IBM has tons of brand equity (i.e. their brand is worth a lot of $$), but lacks a singular promise and an emotional essence beyond “stability”.  At this point they’re like Coca-Cola, they’re just there.
• Personally, I find Microsoft a curious choice as its lack of a direct selling model and dominance in B2C weaken it as a true B2B choice - but its high regard in the SMB market obviously places it third.
• Cisco was a strong brand, now weakened and a bit lost, although I hear they are on the rebound.  HP is weak/lost too, obviously.
• Intel’s weak showing is surprising.  Sun’s is not.  I was most surprised that SAP did not crack the Top 5.
• If you are reading this asking, "where are Dell, Apple, Google, eBay etc.?", you obviously aren't reading carefully enough!

My votes for the Top 3? 
Probably Oracle, Salesforce, and MySQL. 
All three companies share assertive, vocal leadership and a singular mission.  Respectively: Oracle is "total victory" (embodied by recent acquisitions and its Fusion initiative), Salesforce is "no more software" (cast as adoption of the SaaS delivery model), and MySQL is "affordable data management" (one catalyst of the open source LAMP revolution).

Geoff Moore on Innovation

Industry guru Geoffrey Moore, author of the tech marketing bible Crossing the Chasm and now a partner at Mohr Davidow, recently spoke at the Commonwealth Club in San Francisco.  His speech on the nature of innovation was powered by new theories advanced in his upcoming 5th tome, Dealing with Darwin (due from Porfolio Hardcover in January 06).

A disclosure: I directly represented Geoff in launching his second book, Inside the Tornado, while employed by tech PR firm The Horn Group.  Geoff is always an entertaining speaker - very laid back and folksy - and once again he did not disappoint in his theories or insights. 

The Darwin book deals with the nature of innovation, and how established companies can continue to evolve and thrive.  Innovation is back as a buzzword in enterprise tech, only today (as with everything) it must be tied to hard dollar ROI.  In his speech Geoff identified 4 Innovation Drivers.  An examination of these reveals a valuable lesson for tech marketers about what is at the foundation of a solid brand:

Differentiation.  Focusing on outpacing competitors is the best innovation driver.  This is the prize that creates customer value, and delivers the highest dollar return.  Coincidentally, daring to be different also at the center of the best and strongest brands.

Neutralization.  This innovation driver focuses on catching up to competitors, on maintaining parity in the market.  It is necessary to remain competitive, and does return some hard dollar value, but a vendor will never dominate a market by simply pacing the rest of the pack.

Waste.  Geoff said it's amazing the number of vendor examples he can think of where the innovation project was driven by none of the above reasons, and therefore was a complete waste of time, effort, and expense!

Productivity. This is innovation driven by a need to increase the efficiency and effectiveness of internal systems and processes.  A smart strategy, when executed well, actually saves money, and therefore returns measurable value.

Hearing this, I was compelled to assert a 5th possible Innovation Driver: Brand.  This is where a company's innovation efforts are aimed directly at improving its reputation with customers.  These projects and initiatives would seek to deliver customers the most consistently delightful experience with each and every interaction.  imho, Brand Innovation would not just be a B2C market concern.

Talking about Brand is like talking about God

It has been said that talking about brand is like talking about God.  Everyone has their own definition and beliefs.  Still, I've taken on a new professional mission - to evangelize the power of brand to transform the way my industry sells enterprise technology and satisfies customers.

To understand the current perception of branding and its value for the B2B IT industry, I have undertaken an ongoing qualitative research study, interviewing some of the leading technology marketing minds on their branding dogma.  In this blog, we'll examine and discuss findings from this project.

Buyer2Brand will strive never to be preachy in its tone, but instead present the beliefs and opinions of minds greater than my own, relate insights on the news with links to point of origin, and analyze emerging trends and best practices as asserted by sources we trust in common.

If you are a senior-level technology marketer, and would like to be interviewed, please drop me a line.