Forty percent of companies will not survive the next 10 years, predicts Cisco Systems CEO, John Chambers. It is safe to regard his claim as realistic, especially since the disruptive force of change is constantly on the increase. The music and travel industries have already faced it, and now it threatens many other fields: the digital revolution. Next in line are the financial services, trade, health care and industrial sectors. Not one company in these sectors should assume that their current business model will still be successful in 5 or 10 years’ time. The pressure to change is likely to increase, which will present entrepreneurs and CEOs with yet greater challenges – the Internet of Things, Big Data and augmented reality are just a few catchwords.
Some businesses are navigating this challenging environment very elegantly indeed. Tesla, for example, became one of the highest-valued car brands in the premium segment over just a few years. After only 12 years as a company, Tesla has a market value of around CHF 30 billion. For comparison, Audi is worth approximately the same amount, despite having been in the market 34 years longer than Tesla. Uber has established a company value of some CHF 50 billion in just six years. According to current estimates, after seven years of operation, Airbnb is valued at around CHF 25 billion, placing it not far behind Hilton, the largest hotel chain in the world. Seemingly effortlessly, these companies have established themselves as the strongest brands in the world, setting an example of how to future-proof brand management in the digital world.
What do Tesla and co. do differently from traditional companies? A comparison sheds light on some fundamental differences:
Brand Management in the Future
- Render competitors irrelevant
- Do away with traditional advertising
- Use the power of the customer
- Create a brand reality
- Brand management as a key interdisciplinary role
Traditional Brand Management
- Beat competitors
- High advertising budgets
- Restrict the power of the customer
- Cultivate a brand image
- Brand management as a sub-discipline within marketing and communication
If You Succeed in Rendering Your Competition Irrelevant, You No Longer Need to Beat Them
Many managers are obsessed with competitor comparisons. They constantly look to see what the competition is doing and how they can stand out. Everyone wants to be better, faster, prettier than the competition. Companies are actually limiting themselves with this behavior. Experience shows that most companies do not yet know their future toughest rivals. Future-proof brands carve out their own niche and thus render their competition irrelevant. For example, Airbnb sells the option of a home anywhere in the world. No hotel is able to offer that. Uber doesn’t sell taxi rides, but a private chauffeur at the touch of a button, while Tesla is not just a car, but an intelligent traveling partner.
Future-Proof Brands Do Not Require Traditional Advertising
Tesla has not invested a single dollar in traditional advertising, yet it has become one of the most attractive car brands worldwide. In 2013, car manufacturers spent over EUR 2 billion on advertising in Germany alone. Tesla CEO Elon Musk advocates experiences that enthuse customers so that they want to talk about them themselves. The company simply provides social media platforms to share content that stimulates discussion. The customers themselves therefore become the most important advertising channels. In the digital age, brands are no longer defined by what they say to their customers, but by what their customers say to each other about the brand.
Future-Proof Brands Increase the Power of Their Customers and Use This to Their Own Advantage
Inter-customer dialogue is the lifeblood of Airbnb and Uber. All users are invited to rate and comment on their experience. The results are not filtered and can be read by any member of the respective communities. The more customers that participate, the more valuable the information, and the more successful the brand. On the Tesla website, not only can customers browse and purchase cars – they can also freely share their desires and frustrations about Tesla through a customer blog. While traditional brands view discussion between customers with skepticism, future-proof brands actively encourage this kind of dialogue. This presents a fundamental change of paradigm: companies promote the power of their customers rather than seeking to curb it. They have long known that in this transparent digital age, power is increasingly moving from businesses to customers. They do not try to restrict this – rather, they harness the phenomenon for themselves.
Brand Reality Trumps Brand Image
In this transparent digital age, it is simply not possible for businesses to win over customers through a brand image without the brand reality behind it. Tesla draws in customers not only with its unique product, but also by offering unique brand experiences throughout the entire customer journey. It has never been more intuitive or more exciting to configure and order a car online. And buying a car has never felt better than in Tesla’s flagship store. Uber provides the perfect example of how to enthuse customers and how to be present for and indispensable to them in this smartphone-dominated world. Impressing customers is more important than ever – and it is also becoming more difficult and complex. This presents businesses with significant challenges.
In the Future, Brands Will Only Succeed with Interdisciplinary Management
How does Uber succeed in enthusing its customers? An app designed to be perfect, intuitive and user-oriented is at the heart of its business model. It appeals to those affected by the elementary lack of time in the modern world, offering ease and simplicity. Of course, the app would be worthless if drivers were not on time and credit card invoices were unreliable. An interdisciplinary team of over 100 people worked for a year on this year’s redesign of the Uber drivers’ app.
Uber provides the perfect example of how many disciplines must be involved in order to offer customers in the digital age an exciting brand experience. This is an about-turn from the way in which most companies today manage their brands. At best, branding is considered a subdiscipline of marketing and communication. In the digital age, the strategic corporate relevance of brands is higher than ever. Those seeking to use brands as a real value driver in the digital age require customer-focused brand positioning and interdisciplinary teams working to create an inspirational brand reality.