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Archive for the 'budgeting' Category

Feb

The branding of electricity

By Kirk Closed

Categories: advertising, brand essence, budgeting, identity and strategy

Electricity is a commodity. And therefore, it sells on price alone.

But in 1998, local electric cooperatives from around the country, all of which operate independently, got together to distinguish the electricity they serve from that served by investor-owned utilities.

A brand was born.

The catalyst: energy deregulation. Since the late 1990s, many states have rewritten the rules in order to increase competition among energy providers. Facing the prospect of competing head-to-head with large, well-financed utilities, electric co-ops decided to unite their individual brands under one banner.

“Touchstone Energy” became the national brand identity for participating electric cooperatives.

Because members own the co-ops which serve them, cooperatives have a unique advantage in a competitive environment. Market research conducted during the development of the brand identified the following differentiating attributes:

Co-ops are active members of the local communities they serve.
Co-ops are directly accountable to their member-owner-customers (not to investors).
Co-op members have a voice in how things are run.
Co-ops are perceived as more people-focused.

After developing the Touchstone Energy name and identity, participating co-ops adopted the tagline, “The power of human connections,” and launched a national branding campaign (See current campaigns here.).

Correctly, the co-ops didn’t try to brand electricity. Instead they branded the co-op experience, based upon intangibles including integrity, accountability, and commitment to community.

Today, the Touchstone Energy brand represents an alliance of nearly 700 cooperatives in 46 states. Touchstone Energy co-ops collectively deliver power to more than 30 million members every day. They distribute power for 75 percent of the U.S. land mass over 2.4 million miles of power lines.

And the brand lives up to its promise. Industry research indicates electric co-ops rank well ahead of their industry counterparts when it comes to customer satisfaction. Data from the American Customer Satisfaction Index (ACSI), one the nation’s most recognized measures of customer satisfaction, gives Touchstone Energy cooperatives an average score of 81 out of a possible 100, outclassing the utility industry satisfaction score of 74.

Co-op electricity — it’s a powerful brand.

Dec

Best posts of 2009

By Kirk 2 Comments

Categories: art direction & design, brand essence, budgeting, client-agency relationships, copywriting, identity, loyalty, new business, roi, standards and strategy

This month BrandSTOKE is one year old.

I’m honored that you take the time to read and comment. My goal for 2010 is to engage more conversation. If you have any suggestions for topics or improving the blog, please let me know.

Thanks for your interest and support. I’ll try to do better next year.

Here’s a list of some of the most popular posts as well as a few personal favorites from the last twelve months:

On brand building:

On brands vs. commodities:

On simplicity and effectiveness of messaging:

On smarter strategy:

On getting hired:

Just for fun:

Nov

Patagonia: They also sell clothes

By Kirk 2 Comments

Categories: brand essence, budgeting, cause marketing, loyalty, mass media, promotion, retail and social media

There are brands and then there are affinity brands.

The difference? Community.

You don’t just experience an affinity brand. Your identity is enmeshed with it. You are a proud member of the club.

“Cult Brands aren’t just companies with products or services to sell,” says BJ Bueno, co-author of The Power of Cult Branding: How 9 Magnetic Brands Turned Customers into Loyal Followers. “To many of their followers, they are a living, breathing surrogate family filled with like-minded individuals.”

Few brands exemplify affinity branding as well as Patagonia.

Patagonia makes outdoor apparel for climbing, surfing, skiing, and other low-impact sports. Its clothes are renown for their durability and performance.

But at Patagonia, it’s not about the clothes — which is characteristic of affinity brands. Selling apparel at Patagonia is practically an afterthought. Or so it seems.

Instead, affinity brands build a community of diehard evangelists around a common cause or set of values.

Patagonia’s cause began with its founder, Yvon Chouinard.

Chouinard, a rock climber and surfer, got his start making tools for climbers. Around 1970, he became aware that steel pitons were causing significant damage to rock-climbing surfaces. Inspired, he developed new alternatives and introduced a style of climbing called “clean climbing.” The result: his innovations revolutionized climbing, despite destroying the sales of pitons which accounted for 70% of his income.

Planet first. Company second.

“What is it that we all so love about the experience of being in raw nature?” Chouinard asks. “And having known raw nature, don’t we have an obligation to protect it?”

At Patagonia, protecting it is the priority.

In 1986, Chouinard committed the company to environmental activism and paid employees to work on local community projects. In 1994, Patagonia switched to using pesticide-free (organically-grown) cotton as well as recycled polyester in its clothing. Always planet first.

Today, the scale of Patagonia’s commitment is impressive. The environmentalism page of its web site lists its numerous initiatives, including Conservacion Patagonica, working toward the creation of Patagonia National Park; The Conservation Alliance, encouraging companies in the outdoor industry to support environmental organizations; 1% For The Planet encouraging all businesses to donate at least 1% of their annual net revenues to the environment, and more.

Through its Common Threads Recycling Program, Patagonia uses a fiber-to-fiber system to make new garments from old.

“For us at Patagonia, a love of wild and beautiful places demands participation in the fight to save them.”

How do brands create affinity?

“Brand communities exhibit three traditional markers of community,” according to Thomas O’Guinn and Albert Muniz in “Brand Community,” a 2001 article published in the Journal of Consumer Research. “Shared consciousness, rituals and traditions, and a sense of moral responsibility.”

All are present within the Patagonia community.

Company “ambassadors” share knowledge and experiences from the field on its blog The Cleanest Line, its own video channel The Tin Shed, and its YouTube channel. Outdoor enthusiasts and preservationists connect on Facebook and Twitter.

True, there’s a big difference between summiting Everest and wearing a Patagonia hoody to the park. But an affinity brand allows one to participate in the common cause. As Patagonia says, “Reward comes in the form of hard-won grace and moments of connection between us and nature.”

Which other brands inspire community?

Sep

CFOs vs. CMOs: where’s the ROI?

By Kirk 4 Comments

Categories: budgeting and roi

istock_000008321652xsmall Suppose that in 2008 you invested in a barrel of crude oil.

And why wouldn’t you? Every year from 2002 to 2008 the annual average price per barrel has gone up, from $23 to $91. As an investment, it’s a no-brainer.

Unfortunately, today your investment is worth $66 (date of post), down 27%. Obviously, a poor ROI.

What caused the drop? Supply and demand. OPEC. War in the Middle East. Hurricane Katrina. The recession. Staycations. In other words, variables outside of your control.

Investments in marketing are no different. Consider the retailer who places advertising to promote a weekend sale. He is at the mercy of an infinite number of variables, such as competitive sales, football games, and Mother Nature.

Marketing budgets are no more risky than financial investments, which is to say CFOs are right to question them. The accountability of marketing for producing measurable results has always been a sensitive topic.

Many CFOs attempt to hold marketing to the highest of ROI standards. Some perceive it as a soft cost, one that is inept at proving its own value. They view excuses, such as “Sales were hurt by the blizzard,” as, well, excuses.

CMOs, on the other hand, accept that by definition, the marketplace is chaotic. Question their strategies, however, and you hit raw nerve. Deep in their hearts, marketers are troubled by their own inability to guarantee results.

Both sides agree: Marketing is an inexact science. CFOs use this knowledge as a bludgeon. They expect every campaign to be “Where’s the beef?” CMOs avoid the conversation, knowing that you don’t hit a gusher without a lot of dry wells and expense.

Ideally, marketing investments should be reviewed like financial ones. Managers should consider customer trends, competitive activity, market influences, pricing strategies, and the organization’s ability to deliver, as well as recommended marketing messages and channels.

Smart investors are not gamblers. Instead, they make informed decisions, based on calculations of risk and opportunity.

Do your CMO and CFO work together to make wise marketing investments?

Jun

Integration vs. specialization: who wants the hot seat?

By Kirk Closed

Categories: budgeting, client-agency relationships, management and strategy

istock_000007979164xsmall How do you decide between working with a full-service, integrated marketing firm or an array of specialists? (See recent post on the meaning of the terms full-service, integrated, channel-neutral and hybrid.)

Consider the difference between a department store, such as Macy’s or Walmart, and a specialty store such as Best Buy or Lowe’s. You go to the department store for convenience, everything under one roof. You go to the specialty store for greater expertise and selection within the category.

CMOs must make a similar decision. Hire a generalist firm or an army of specialists in research, strategy, creative, media-buying, web development, PR, direct marketing, SEM/SEO, video production, design, social media, and more?

Which approach is better?

The answer lies in whether you wish to be the conductor or not.

Imagine the discord if every musician in an orchestra played his or her own selection simultaneously without coordination. It’s the definition of cacophony.

Or picture a house built without a general contractor to supervise the subs. Not only would the schedule and budget suffer, but the home would likely be unlivable.

To achieve results in marketing, someone has to coordinate the effort. Will it be you supervising a collection of specialists or will it be a full-service marketing firm coordinating within? To help decide, ask yourself who will keep your marketing:

On brand. A full-service firm with integrated services is typically responsible for defining and maintaining brand standards throughout multiple initiatives. It will be better at keeping your messages consistent.

Specialists will be accountable only for their own areas of responsibility and will not be effective at tending the larger brand. Does the PR messaging match the ad campaign? Does the web site reflect the standards? That will be your job.

On strategy. A generalist firm will serve as your strategic partner, unless you employ a separate strategy consultant. An team of specialists will rely upon you to set the course and give them direction.

On budget. A generalist firm will be responsible for allocating and staying within the overall budget as provided by you. Assuming they are channel-neutral, they will provide strategic recommendations within your budget (See recent post on sharing the budget upfront for smarter strategy.) Specialists will be responsible only for their individual allocation. It will be up to you manage the overall budget.

In sync. Specialists will meet their assigned deadlines only. Did the creative shop get the ads to the media-buying service on time? Has the web developer followed through on the SEM specialist’s recommendations? When working with multiple firms, you will be responsible for keeping all of the trains running on schedule. A generalist firm, on the other hand, will manage the timing and coordination of all of the campaign elements.

Off of the firing line. The CMO is ultimately accountable for results. Specialists will be responsible for their areas of concern only. Generalist firms expect to be involved in goal-setting upfront and are willing to take shared responsibility for overall results if included in strategy development.

Both approaches work. Would you rather hold one firm accountable or shoulder the responsibility of coordinating the efforts of many yourself? Which approach works best for you?

May

For smarter strategy, share the budget upfront

By Kirk 1 Comment

Categories: budgeting, new business and strategy

istock_000001714082xsmall Ask any project manager: Knowing the availability of resources is critical to achieving the desired outcome.

Money is, of course, the resource, and while zero-base budgeting is a nice idea, unlimited budgets are practically non-existent in the real world.

So, when requesting proposals from marketing consultants, why don’t CMOs save everyone a lot of trouble and share the budget upfront?

Apparent reasons for not doing so are:

Reason: If the budget is revealed, the consultant will find a way to spend all of it whether the project warrants it or not.
Reality: There is never enough budget to do the job right anyway, so why not share it upfront and get more informed strategic thinking.

Reason: Once the consultant knows the budget, he or she will carve out more profit.
Reality: The CMO can always negotiate the consultant’s fee as a line item within the total budget.

Reason: The CMO wishes to hold some of the budget back as contingency.
Reality: Funds for contingencies can be set aside upfront.

Most importantly, the consultant will make much smarter strategic recommendations with full knowledge of the budget. The amount of funds directly affects the strategy and tactics. And the consultant won’t have to be sent back to the drawing board for overshooting the budget.

The ideal scenario: Trust exists between the CMO and the consultant, and they collaborate on the best strategy within the available budget.

Do you share the budget upfront?

P.S. Just found this excellent May 22 post, “Confronting The “B” Word,” from Nathan Ritchie on the same topic. Great line: “I can spec it to your budget or I can budget it to your specs. Which is more important to you?”