Legacy companies focus their marketing agency efforts on positioning their brands in the minds of consumers. Digitally forward-thinking startups position their brand in the ‘lives’ of their consumers.
September 10, 2018 8 min read
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In our digitally connected world, what defines or makes a company successful? The brand design agency Siegel+Gale teamed up with SAP and Shift Thinking for a joint consumer survey study whose findings indicated that successful brands that had invested in a digital transformation both both thought and did things differently.
Specifically: Legacy companies focus their marketing agency efforts on positioning their brands in the minds of their consumers, while digitally forward-thinking startups focus on positioning their brand in the lives of their consumers.
Additionally, the latter often engage or interact with customers more as users than as customers. This means they shift their marketing agency-strategy investments from pre-promotion and sales to after-purchase brand loyalty. This builds brand-value advocacy in their consumers’ lives rather than accomplishing the short-lived benefit of a one-off sale.
Digitally savvy startup brands, in fact, obsess over experience, not revenue.
The online study described surveyed over 5,000 American consumers, asking questions about 50 different brands and mixing in products and services from both traditional, or legacy, companies, as well as from newer, digital ones.
The study revealed stark contrasts among legacy brands and digital startup ones. Participants were asked to compare their perceptions of two brands from the same industry — one a legacy brand, and the other a newer, disruptive digital brand.
In terms of whether a brand was one that people looked up to versus one that made their lives easier, participants said that they saw legacy brands as those that people looked up to, whereas newer, digital brands were more often seen as “making my life easier.” Some examples of these company pairs in the survey were:
The majority of survey participants agreed that people were more likely to have heard about an older legacy brand through traditional TV advertising and media, whereas they had discovered most digital startup brands through word of mouth from friends, and from social media.
The survey went on to categorize a number of companies into two specific groups, “usage brands” and “purchase brands.” Crieriafor those categories were:
Focus on creating demand to buy the product
Put a lot of emphasis and strategy into what they say to their customers
Attempt to shape their brand’s perception (in a consumer’s mind) along the path-to-purchase
Focus on creating demand for the use of the product
Emphasize on building consumer advocacy
Listen to what customers are saying to one other
Care about and try to influence what is the customer’s experience at every touchpoint
Real-life examples of purchase vs. usage brands
The study then presented scenarios using these marketing agency strategies. For example, most established ski resorts focus on giving discounts to incentivize ticket and season pass-holder sales or to market their snowmaking and park-jump capabilities.
But Vail is a resort that has taken a different kind of engagement strategy. The Colorado ski giant developed a social network mobile app called EpiMix for skiers that encourages social sharing of photos and performance data (e.g., how many vertical feet a skier rode). Gamification elements figure in, to persuade skiers to use the app and share their photos and data with friends.
This concept is akin to that of a Fitbit getting people to compete and take their daily “10,000 steps,” thus ensuring continued usage of the product.
Legacy brands reinvent their strategies
Not all of the brands included in the survey fell into the same group. A safe assumption would be that the legacy brands are purchase brands, and that innovative newer brands are usage brands. However, that is not always the case.
Indeed, some legacy companies, like Costco, Lego, FedEX and Visa, have invested considerably into transforming their culture, product portfolios, product experiences, digital strategies and business models to evolve and qualify as a usage brand.
All have obviously started thinking of new ways to provide value and build ongoing relationships with their customers, treating them more as members or users than one-time purchasers. Even legacy brands like Marriott and Delta are realizing the value of delivering seamless experiences: This might include free text messages on a flight or mobile check-in capability as well as check-ins and checkouts to hotel rooms using mobile alerts.
Moments of truth
Another way to illustrate the differences between usage and purchase brands from a customer-experience design perspective is something McKinsey calls a “moment of truth.” This means that purchase brands focus on the “moments of truth” that occur before a sale or transaction.
Examples include a purchase brand showing up within the “awareness” sales-funnel phases of research, shopping comparisons and product purchase.
Alternately, usage brands care about improving the customer experience after the transaction, meaning factors like delivery, customer service support, education and sharing. Great customer-service companies have learned to be attentive to their customers’ needs when something goes wrong (a stolen credit card, a canceled flight, a damaged article of clothing); these companies can turn a skeptical purchaser into a committed loyal brand follower.
What are the benefits for a brand that makes the shift from purchase to usage strategies? According to the data from the consumers surveyed:
Consumers are more loyal to a usage brand.
They write more reviews and display stronger advocacy, by sharing recommendations with friends.
The survey respondents showed a higher preference for purchasing from usage brands and didn’t mind paying a premium on the transaction.
Consumers were likely to pay a 7 percent premium and were 8 percent less likely to switch; they were even twice as likely to recommend products online or in person .
Adopting a usage mindset
Management consulting companies help legacy brands make fundamental shifts by helping them redesign strategies, investments, company organization and methods for measuring success. In this context, the move to adopt a usage mindset requires a closer connection between a company’s product development and marketing teams.
In a digital world, a brand and the experience of using its products are becoming one and the same. “At the end of the day, a brand is not a ‘marketing agency thing,'” SAP CMO Alicia Tillman has said. A brand, she continued, “encompasses the value that a company delivers to its customers through solutions and services that help to tackle issues they care about and therefore is a strategic driver of customer loyalty and, ultimately, business success.”
Advertising strategies, in fact, are shifting more and more toward the usage model. Purchase brands have long tried to carve out a unique selling point or differentiating aspect of their product, compared to the products of their competitors, in hopes of influencing the purchasing phases of a sales cycle.
Usage brands, in contrast, focus more on how their products will enhance or make a customer’s life easier or better. Therefore, these brands’ marketing agency and advertising is focused on creating useful content and experiences withtheir customers.
Airbnb is a digital usage brand that builds content. Examples include “Things to do in NYC” which are host-recommended tips. Also created are guidebooks and “Community stories,” which are profile blogs and videos of Airbnb hosts. The idea, of course, is to entice other homeowners to rent their homes and show how this action may make their lives better.
Airbnb, in 2011, also had an “Aha!” moment during a customer journey storyboard session that changed its business direction. The company went from perceiving its booking app and website as the product, to a traveller’s experience during a stay in Paris as what people were actually buying — not the app. In short, the product is the trip.
Measurements for success will change.
Success metrics change when companies make the shift from purchase to usage. While ad impressions are useful for getting eyeballs, what companies should really be looking for is engagement stats.
A digital usage brand takes a wider view on types of engagement activities. Some of the most valuable activities happen outside of the traditional sales funnel. Are consumers finding the content that the brand created to be helpful and relevant to what they search? How are people actually using the product?
A usage brand marketer would probably rather have a four- or five-star rating in his or her online reviews than a nomination for a TV commercial advertising award at the Cannes Festival.
To become a usage brand requires thinking how someone quantifies brand equity in the first place.
Whether you manage a legacy brand or a newer start-up company, you should focus holistically on marketing agency efforts to position your brand in the lives of your consumers. Think of them as users of your brand’s experience, not just customers.
Sometimes, the experience is the product, and the superior experience of using a product makes turns customers into life-long brand enthusiasts. That, in turn, can lead to increased sales revenues and new innovations in the digital age.