INSIGHT: Reclaiming Brand Value in Post Recession Retailing Part 2
Under intense pressure to make sales, many retailers-including elite, once unshakeable brands-developed functional, multi-layered discounting strategies that buy volume at the expense of value. Customers have been enjoying the fruits of a brand-value meltdown that's allowed them to buy even better-grade merchandise for as little as 15% of MSRP. This attrition of brand value directly affects margins, diminishing ROI and severely reducing corporate profits.
Retailers can't just expect consumers to go back to paying full price when things get better economically. To bring that profit margin up to where it used to be, retailers will need to redefine the dimensions of brand value and re-engage their consumers' interest with better formulas at the point of sale.
There are brand-defining customer codes that provide the foundation for identifying and communicating to the post-recession shopper. If a retailer is able to crack these codes, they'll reignite old relationships within the new rules of customer engagement.
In part two of the series, we will discuss customer codes that you can use to elevate your brand value.
Relation Code: The Brand Has Value Because the Brand Validates Me and I Validate the Brand.
This is all about OUR RELATIONSHIP -- me, the customer and, you, the brand. While we may not be the same physically, what we do share is common ground concerning the things that matter most to us. Anthropologie does a good job of giving their brand a human face. Here we have a brand who, if it were a person, would be described as unique, individualistic, slightly quirky, and very urban chic. The Anthropologie stores are expressions of those same characteristics. This is conveyed not only in the physical space but also in the product assortment, the visual merchandising, and even the displays. Consumers who shop in the Anthro stores don't see the store as a thing but rather like their favorite girlfriend. Why? The store and the customer validate one another; they share common ground.There is tremendous value when a brand and a consumer can validate one another-the result is that the brand becomes the consumer's brand of choice.
So how do you make the Relation Code work for your brand in the post-recession market? Showcase shared values. Recognize the commonalities that the brand and the consumer both share. Demonstrate that you, the brand really understand the things that matter most to your consumer. Communicate it at the point of sale using your consumer's visual lexicon, their language. It demonstrates that you see things exactly the same way as they do. Message with authenticity, honesty, and above all, integrity. When a brand and a consumer validate one another, guess what happens? The brand becomes the consumer's brand of choice.
Recognizing that the Relation Code is about us, our fourth code is altogether different. Sometimes you have to recognize that it's the customers who define your brand and NOT the other way around.
Identification Code: Your Brand Exists ONLY Because I Exist.
This code is all about the celebration of ME. When you accept that your brand does not and cannot exist without me, guess what? You succeed.
Here's how it works. There's me, the customer. I am the center, the core for your brand's existence. I am the bigger player. And then there's you, the less important player, the brand. You, the brand revolve around me, the customer. Once you remove me from the situation, guess what happens? You, the brand have no reason to exist, and you fade away. Think of it as a planet without its sun. We've all heard of the Life is good brand. Yes, it's a brand, but more importantly, Life is good is about a state of being. The people at Life is good didn't invent the concept of "life being good." What they did is take advantage of it. They celebrated their consumer. Customers that subscribe to the "life is good" motto also subscribed to the brand. Just think where we would be today if the graphic tees with stick figures and catchy phrases didn't exist. We would still have people walking around living by the motto of life being good-brand or no brand.
The Identification Code's success comes from when you, the brand learn to accept the role that your customer plays in defining your brand's value and recognize the role your customer plays in giving your brand its meaning. Be sure to thank them publicly-and often.
Recessions are a wakeup call for all of us. The United States has had 23 recessions since 1900. They are a reminder to us that it's about developing, building, nurturing, and maintaining relationships with our customers through the ups as well as the downs. The key to all of this is recognizing and understanding what is the right way (but more importantly what is the most appropriate way) for you, the brand to build and nurture that relationship with me, your customer. Once you do that, you are in a much better position to rebuild and, better yet, regain your brand- value margins.
For more retail perspectives, please contact JP Terlizzi.