Attracting the right customers is the key to success in business, whether you have a new startup or a mature enterprise. In my role as an advisor to entrepreneurs, I often see struggling businesses trying to be too many things for too many people, resulting in customer confusion, initiatives executed poorly, and high costs, few customers, and slow growth all around.
For example, Xerox tried to broaden the use of “xerox” as the standard term for “photocopying” to extend its existing customer segment into office automation and all kinds of computing. As they watched their market share dwindle instead, they realized too late that these segments were already defined, and they needed a new focused brand to attract customers from other segments.
These days, branding is less about products or solutions, and more about the overall customer experience and expectations. If the shopping process, delivery and support level do not match their expectations, no innovative product features will compensate. The result will be less visibility, slower growth, with fewer delighted customers and little word-of-mouth marketing.
In my experience, the place to start is selecting your desired customer segment first, and then matching it with one of the following generic branding models, to best fit your desired customer segment. Then design your product, marketing, shopping environment, delivery model, and support around that model. Here are the common branding models I see working out there today:
- Premium or exclusive solution. Existing brands such as Tesla, Virgin Atlantic, Rolex, and Harvard University seek to appeal to an elite customer segment, implying prestige, exclusivity, and high customer personalization. The audience for this business model is limited, so make sure you can deliver to their expectations.
- Lowest-cost solution with minimal customization. At the other end of the spectrum, many startups and big companies, including Amazon and Walmart, expand their customer segment by being the most cost-efficient, with low overhead and little customization. Don’t attempt this model without high automation and big investment upfront.
- Family local business everyone can trust. Many customers are highly attracted to a home-town business, where they may know the owner and always enjoy the warmth and intimacy of personal customer experience. This is by far the most common brand out there, but without rebranding, it has very limited potential for growth and scaling.
- Tech-focused service that solves complex problems. Companies in this realm typically are thought of as services business, even though they may offer product components as well. The customer experience is a function of satisfaction with both the service, support, and usability of complex products. Examples would include ADT as well as IBM.
- Service businesses to find the best solution. Examples of this business model and brand would include Airbnb for finding places to stay and Expedia for the best airline reservations. To be successful in this type of business, you need to satisfy two customer segments; one being the solution provider, and the other being the end-user customer.
- Recognized expert and specialist in one domain. Depth of focus is both the strength and the weakness of this type of brand – the message is easy to communicate, but there is always the temptation to move to a mass market for growth. You can find specialists in almost every industry, and their success is gated to customer experience and reviews.
- Purpose-driven rather than profit-driven. For some market segments, there is no greater attraction than a worthy cause, where business success is a byproduct of the company focus, rather than the primary objective. Examples include Patagonia’s commitment to sustainability while selling clothing, and Whole Foods, the organic grocer.
- Public utility required by all customer segments. Becoming a recognized brand as a public utility may be difficult and costly since most of these positions are already occupied by large companies with long histories. You may be able to provide cheaper electrical power via solar, but bureaucratic regulations and credibility can be expensive.
In my experience with startups, brand positioning is often done last, after all the cost and quality tradeoffs, options, packaging, and support process are set. For example, technologists will try to build the best high-tech product, and then somehow expect to become the low-cost high-volume provider for the non-tech market segment. It’s a recipe for disaster.
Other companies try to change their branding when growth stalls somewhat later, without any changes to product or process, trying to attract an additional market segment for growth. This approach is equally fraught with peril. My message is to make branding an integral part of your solution design process and keep it there.