Wednesday, August 22, 2018

The Clash of Cost Savings and Brand Delivery



This was a battle that I fought when I was responsible for the Hallmark brand. Do we put different brand names on the same products to save money? Do we license our brand identity to a reading glasses company to make some quick cash? The answer to both questions was "No, we don't." 

At one point in Starbucks’ history, the company’s financial managers determined that switching from two-ply to one-ply toilet paper in Starbucks’ bathrooms would save the company a significant sum of money annually. Despite the potential cost savings, however, senior management rejected the idea. Why? Because inferior toilet paper does not support Starbuck's essence of rewarding everyday moments.

I am aware of a bank that wants to stand for simple and easy, but it has made several decisions in the opposite direction. As a customer convenience, it had coin counting machines in each of its branches but when they kept breaking down, the bank went back to requiring that its customers roll their own change before depositing it. In fact, the bank won't even allow the deposit of loose change. They also require that customers fill out deposit slips, even though the back tellers could easily process a deposit without them. Further, though they are aware of ATMs that accept, scan and provide customers images of deposited checks, they opted instead for ATMs in which deposit envelopes are required and the check images are not available to customers. Further, they are aware of the ability to scan a check on a smart phone as a convenient way for customers to make a deposit but have opted not to do that.

My point with the bank example is that the bank had decided that it would stand for something important to the customer and potentially differentiating - simple and easy banking - but instead, decision after decision, presumably due to cost or other resource considerations, decided to do the opposite leading to a brand that is comparable to or perhaps even inferior to other banks on the simple and easy scale, something that the bank was claiming for its brand. This is clearly not good brand management.

When you decide that your brand will stand for something unique and compelling, this should drive every investment and process decision. If you are not willing or able to support your brand's intended promise with real actions consider making a different promise or no promise at all. Or, better yet, initiate a project to align the organization's processes, systems and metrics in support of the brand's promise.

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