Branding tends to be viewed more as an exercise in creating awareness and building a differentiated image externally than as a cross-functional leadership exercise in developing organizational effectiveness. Yet, if brands are to be an integral part of a company’s strategy, they first need to gain traction internally, or what I refer to as aligning business, brand and behaviour . Unfortunately, employees often do not fully understand their own company’s brand strategy or their role in supporting its execution.

Leveraging HR

According to The CMO Survey®, over two-thirds of marketing leaders have primary responsibility for the firm’s brand, but cooperation with human resources (HR) is significantly lower than with functions such as IT, operations and sales. This is a major shortcoming, as HR should have a leading role in taking people along the brand-internalization process – from understanding the brand promise to being motivated, enabled and rewarded for delivering the brand promise to customers.

Executing a differentiated brand strategy from the inside out necessarily involves familiarising employees with ‘Purpose, Vision, Values’ documents that clearly and precisely describe the brand, but rarely do. While many companies will share similar values (some version of customer centricity, integrity, sustainability, innovation, quality and teamwork), documenting the more unusual values and behaviours necessary to execute the unique aspects of one’s strategy – take Volvo’s “Safety First” or Tesla’s “Make It (Ridiculously) Fun” – is crucial if internal stakeholders are to join you on the journey.

Once a brand identity is agreed, it is then essential that HR leaders communicate it across all the 'moments-that-matter' in the employee journey. Differentiated recruiting ads will help attract on-brand applicants through self-selection, while the selection process itself should assess candidates in terms of brand and not just skill fit. The induction process offers a key opportunity to showcase the brand, one that immediately models on-brand behaviours and viscerally engages people for on-brand behaviours that are subsequently showcased and rewarded.

Crucially, while these activities appear most relevant for employees in customer-facing roles, they should be extended to all functions. For example, being a travel afficionado, whether in a client facing role, marketing, product development or even finance, complements Louis Vuitton’s travel-anchored brand DNA and requisite strategic investments. This holds across industries, whether it is McKinsey looking for a particular attitudinal and cultural fit or Red Bull seeking people across functions who are active in the cultural and sports domains they sponsor.

For companies that represent a house of brands, the undertaking will be more complex but not impossible to navigate. Work environments differ according to brands. The culture at Unilever’s Axe will be recognizably different from that of its Dove and Ben & Jerry’s brands. In these instances, group values should focus on shared drivers of success, while allowing sub-brands to adopt differentiating values, such as “history, generosity, savoir-faire, success, boldness and elegance” at LVMH’s Moët & Chandon, which are differentiated from its sister company Kenzo’s “love of nature, openness, youthfulness, joy and optimism.” Likewise, the contents of many other HR processes such as training or annual reviews should be differentiated across internal group brands as much as from those of the competition.

Segment internal audiences

Strong leaders will know that a one-size-fits-all approach will not work when trying to win over a large and diversified workforce. People need to be segmented both in terms of their functional roles: what it means to deliver the brand will be different for someone in finance (who needs to evaluate brand investments), product development (whose creativity should be stimulated by the brand), or sales (who needs to balance brand storytelling with closing the deal).

Recruit brand champions and leaders

People will also have different starting points when it comes to their brand engagement journey.

Developing and empowering a small group of opinion leaders across teams and departments as internal brand champions is critical to brand success. These individuals tend to be vital in winning over brand agnostics and converting antagonists who may have other ideas for what success looks like.

To maintain momentum, internal brand traction across these audiences must be monitored. This should involve employee polls that employ on-brand progress indicators, rather than only generic-by-design ones such as the Gallup 12. And, reflecting their strategic role, HR managers – if not the CEO – should be evaluated against brand-traction metrics, just like the Chief Marketing Officer is with respect to external brand health.

Of course, leaders at all levels need to model the brand through their own actions. It starts at the top. After all, many of today’s top brands are modelled on their founders, from Gabrielle (Coco) Chanel modelling female empowerment to Dietrich Mateschitz’s thrill-seeking lifestyle that continues to define Red Bull. Ideally, each next generation of leaders is not only attracted by and selected based on the brand DNA, but is also creative and authentic at behaving on-brand when facing internal and external audiences.

Reaping the rewards

In 1955 in 'The Practice of Management', Peter Drucker wrote the “hardest thing for any big organisation is to keep execution discipline at the forefront.” Brands are a powerful organizational development tool to do so, by helping embed your strategy into the minds, hearts and hands of your people. Your role as a leader is to guide your people’s thousands of daily actions to align around the brand, making for a difficult-to-imitate competitive advantage.

Living the brand from the inside out not only pays with customers, but it also provides tangible savings that boost the bottom line. Hiring the right people produces productivity gains in two ways: externally, it improves the cross-functional delivery of a differentiated experience across customer touchpoints, from social media to purchase and service. Internally, gaining brand traction results in higher pride, a greater sense of common purpose, and higher motivation levels. And it should be no surprise that people like to work at organizations that provide an attitudinal and cultural fit, which reduces costly turnover.

(From:  https://www.forbes.com/sites/lbsbusinessstrategyreview/2024/01/19/leading-brands-from-the-inside-out /)

A human resources (HR) director of a famous luxury brand once bragged to me, “Not only do customers pay more for our products, but we also pay less for talent!” While this may well be true, is paying lower wages based on brand power is really such a good idea?

A school of thought known as “efficiency wages” challenges the seemingly straightforward notion that paying less results in higher profits. In reality, higher pay can lead to greater profits because employees work harder and stay longer – with productivity gains and employee turnover savings outweighing the increase in compensation costs.

My recent paper in Journal of Marketing Research (co-authored with Christine Moorman and Alina Sorescu) looked across industries shows that how a brand is viewed adds a surprising twist to the story. Specifically, we find that only brands perceived as “better” in terms of brand quality tend to pay less – resulting in a false economy consistent with efficiency wages – whereas brands perceived as “different” in terms of brand uniqueness pay more, but unknowingly boosting the firm’s bottom line.

Why do brand perceptions of being “better” or “different” affect pay?

Brands vary along two fundamental dimensions: the degree to which they are perceived as better (what academics refer to as vertical differentiation) and different (horizontal differentiation). For example, Lexus is seen as high quality, but not particularly unique. In contrast, Jeep is viewed as unreliable and therefore lower in quality, but it is uniquely perceived as rugged. Of course, brands can be perceived as low or high on both dimensions. Take, for example, Dior and Gucci: They are both universally valued for the quality of their craftsmanship and heritage of excellence. They are also different, with Dior renowned for its classic femininity and Gucci for its fashion-forward androgyny. Consumer preferences come down to a matter of taste.

So why would high-quality brands extend job offers with lower pay, and why would employees accept them? The answer is that well-regarded brands receive a greater number of qualified applicants, who count on the fact that being employed by them provides résumé power. The brands’ perceived quality literally rubs off on the employee and, knowing this, employees are willing to substitute lower current pay for more lucrative future job opportunities elsewhere. These dynamics provide high-quality brands with significant bargaining power – something many of them leverage to attract talent for less.

Brand uniqueness doesn’t offer the same advantage, because HR is tasked with finding a particular type of employee whose idiosyncratic characteristics help build and deliver the brand – be it in a customer-facing position or behind the scenes. For example, Dior’ s femininity, Gucci’s androgyny or Wildfang’s “tomboy chic” are each best suited by a different type of employee. Similarly, being a travel afficionado – whether in a client facing role, marketing, product development, or even finance – complements Louis Vuitton’s travel-anchored brand DNA and requisite strategic investments. These dynamics are found across industries, whether it is McKinsey looking for a particular attitudinal and cultural fit, Pampers selecting people who are passionate about infant care, or Red Bull favouring people active in the cultural and sports domains they sponsor. The nub is that HR needs to work harder to identify and attract matching talent when brand uniqueness is at play. And, when they find a match, they will not skimp on pay, especially as these candidates know their brand fit offers extra value.

HR is myopic about the consequences of these brand-based pay dynamics

Importantly, our research reveals that these pay decisions affect profits in unexpected ways. Specifically, we find that employees who might have been glad to accept less pay at high-quality brands end up putting in less extra effort and exhibit higher voluntary turnover – no doubt, in part, because they now have a stronger résumé. We find that these negative employee behaviours cost brands more than they save by offering lower pay, resulting in lower profits.

In contrast, firms that offer higher pay to employees who match their brand’s uniqueness tend to see this higher pay more than made up for in productivity and retention gains. The higher pay motivates employees to go the extra mile and their better fit creates complementary value. Association themselves with a unique brand will also not provide employees universally-valued résumé power at other firms, meaning employees are less likely to achieve the same higher pay elsewhere. Employees therefore tend to stick around longer, thereby saving brands hiring and on-boarding costs.

Unfortunately, unlike compensation, these productivity and retention dynamics and their financial consequences are difficult to observe, which leads firms to make suboptimal pay decisions with respect to both brand dimensions.

A call for marketing, HR and finance to better align their efforts

The bottom line is that HR managers at high-quality brands should use this brand power to attract talent, but not to supress pay, as doing so will ultimately hurt profits due to lower productivity and higher employee churn. Conversely, brands should seek out and be willing to pay more for talent that matches their brand’s uniqueness, trusting that this will eventually pay off in terms of productivity and retention gains. These brands benefit from hiring people who possess an excellent cultural fit and who authentically and naturally bring the unique brand differentiation to life.

This is easier said than done, of course, and there are structural impediments to getting it right. Specifically, The CMO Survey ( www.cmosurvery.org ), of which I am the UK Director, finds that marketing’s cross-functional cooperation with HR and finance is significantly lower than with IT, operations, and sales. In fact, marketing’s cooperation with HR and finance is the lowest overall. We hope that our research will encourage marketing and HR, in particular, to bridge this gap and work together closely to build and leverage the brand in attracting, rewarding, developing, and retaining the “right” talent.

Citation : “Brands in the Labor Market: How Vertical and Horizontal Brand Differentiation Impact Pay and Profits Through Employee-Brand Matching,” by Christine Moorman, Alina Sorescu, and Nader T. Tavassoli, Journal of Marketing Research , 2023.

Across four studies, my former doctoral student Matteo Visentin and I demonstrate that people are more likely to buy (but not to buy more) when directly asked how much to buy in response to a set of quantity options than when first asked whether to buy in response to a seemingly innocuous yes/no purchase-interest question. For example, in a study using actual half-price lottery tickets, nearly twice as many participants (62%) bought one or more tickets when selecting among quantity options ranging from 0 to 5 than those participants (34%) who were first asked to respond “yes” or “no” to “Are you interested in receiving part of your payment in the form of Monopoly® instant scratch cards?”

 We explain this finding in terms of how the response scales are partitioned. Our purchase-quantity scale has a single negative (0) and five (1-5) positive response options. In contrast, a dichotomous yes/no purchase-interest question has an equal proportion of negative (“no”) and positive (“yes”) response options, the latter of which subsumes all positive quantity options into one partition. While people did not appear to be randomly deciding whether to buy in response to either scale, the number of positive options anchored their decision to do so. In fact, the effect was eliminated when participants had their purchase interest assessed used a single negative (“no”) and five positive response options (“mildly,” “somewhat,” “likely,” “very,” and “definitely”).

 Our findings are of interest to sales and marketing, including in the charity and health sector. They suggest more people will donate online when directly offered donation options (“No thanks”, $1, $5, $10, and “Other amount”) than when first required to make a yes/no decision to an initial “Donate Now” option. Similarly, a fitness app reminder that includes one “not now” and multiple positive options—such as “walk 500 steps,” “walk 1000 steps,” and “walk more than 1000 steps”—should lead to a higher incidence of people taking a walk than a dichotomous “let’s go/not now” response format.

 You can access the research here https://rdcu.be/cyEGw.

I had the privilege to provide expert testimony in the World Trade Organizations' dispute regarding Australia's tobacco plain packaging measures.  On June 28th, 2018, the panel published its report (see https://bit.ly/2Kugjo6 ) dismissing the complaints against it. The report contains valuable branding lessons from marketing, economics, and psychology experts on both sides of the dispute (e.g,. search for "Tavassoli").

Cheaper, faster and stronger are the value drivers that business has prioritised for more than a century. We call them efficiency and effectiveness. The importance of experience, the third ‘E’ in this equation, is also undisputed, but its sheer magnitude is not. As Peter Drucker summed it up neatly when he said: “The customer rarely buys what the company thinks it is selling.”

In today’s global marketplace it’s time to review the accepted hierarchy of the ‘3Es’. I’m going to put the case for experience to leapfrog to first place. Why? One reason is that it’s difficult nowadays to create or sustain an advantage based on efficiency or effectiveness. In terms of efficiency, your prices need to be competitive to be considered, but with few exceptions it’s not the reason you’re chosen over your closest competitors.

Ditto for effectiveness. Your products and services need to be of the requisite quality to be considered, but any value difference is ever more quickly imitated. Businesses are running faster just to stand still when it comes to efficiency and effectiveness.

I also believe it’s time to reconsider just whose experience we’re looking at: it’s fashionable now to talk about customer experience – and that’s valid – but businesses could truly differentiate themselves by looking beyond the purchaser to the user – the consumer.

Efficiency still counts

This isn’t to say that you don’t need all three of the ‘Es’ to be successful – on the contrary. Cost-cutting is often essential. PWC’s survey of global CEOs last year found that 70% were launching a major cost-cutting initiative, roughly the same percentage as in the previous two years.

But common sense – supported convincingly by Deloitte data across industries – suggests that businesses simply cannot create maximum value via cost-cutting alone: companies tend to be value-creating (profitable) when they have higher-than-average costs compared to their peers and value-destroying (unprofitable) when their costs are below average. So, when it comes to efficiency, the hard-to-achieve objective is to identify and cut the bad costs (the fat) and avoid cutting the good costs (the meat) that are investments in increasing effectiveness.

Effectiveness matters

The challenge of competing on effectiveness, on the other hand, is twofold. First, in a global world, competitors will quickly follow suit when a quality advance has market appeal. Second, as industries mature, effectiveness gains rapidly hit diminishing returns, until customers no longer care about any performance difference between close competitors. Consider Gillette, which launched the disposable safety blade in 1903. It lasted most of a century, until the dual-blade Sensor Excel in 1993. Then, just five years (but more than US$1 billion in research, development and marketing) later, the Mach3 added a third blade. Rival Schick hit back with a fourth blade in 2003, so Gillette launched five blades in 2005. And 2016 brought a six-blade trimmer from Korea’s Dorco. But don’t hold your breath for a Gillette Mach7 any time soon. Like most maturing industries, each successive blade delivered nowhere near the incremental value of the previous one.

Greater expectations

However, companies continue to conduct competitive benchmarking studies in which they visualise the customer value proposition using effectiveness curves that measure the performance of certain attributes against the competition. An airline might consider its perceived on-time arrival performance and use this to decide whether a price premium is justified should they out-perform the competition (a point of difference), or a discount if they lag (a point of inferiority). Unfortunately, based on competitive benchmarking and diminishing returns, customers subjectively perceive most of these dimensions as points of parity. They award little credit to a safer airline because they wouldn’t consider flying with an unsafe airline in the first place. It’s important for the customer, but not in their choice of brand. In B2B procurement, suppliers have to meet standardised performance levels, creating commodity-market conditions that put tremendous pressure on prices.

But the real problem inherent in effectiveness thinking might be best illustrated by Michael Porter’s value chain, a concept core to companies’ operating models. The ever-popular value chain visualises a chain of activities common to all businesses, horizontally displaying primary activities – operations, service, logistics, marketing and sales – and vertically displaying support activities, such as procurement, HR, technology and infrastructure.

This effectiveness model presents a fundamental challenge to the efficiency thinking that guided the design of the assembly line in manufacturing. Whereas efficiency is all about producing the same level of output with less input, effectiveness is about producing a higher level of output with the same level of input. Both of them lead to productivity gains, but they have a radically different philosophy.

Mapping and measuring the customer journey, or its close relative the sales funnel, is a model that has survived for over a century. With big data providing insight into what customers searched and bought with incredible precision, it remains a powerful tool in helping companies capture value for themselves. But to capture value, companies must actually create value. And what a sale creates for the customer is a cost.

Value is created by the consumer, who might be a different person from the customer altogether: a parent who shops for the child or procurement in business-to-business settings who purchase but do not consume the offering supplied. Many businesses are still in their infancy when it comes to competing strategically on the basis of the consumer experience. 

Do you put enough effort into making sure the consumer gets as much out of what they paid for as possible? My guess is not.

Fortunately, we are on the cusp of change. We are at the dawn of the age of the consumer, one fueled by a new type of big data around how consumers are actually behaving – whether it’s fitness bands that track how fast and far you run to the industrial Internet that has transformed how Volvo trucks serves its customers. The old maxim says, if you can’t measure it, you can’t manage it. Well, when it comes to the consumer journey, increasingly you now can.

Those companies that are focused on the consumer journey, with its many moments that matter, are having a transformational impact. They are not just providing the basis for value creation, they are making sure it’s maximally achieved. As such, the consumer journey, of which the customer journey is only a small and discrete part, will be the real spine of competitive differentiation going forward.

Many of the world’s greatest brands are built on a rich heritage. A leader has to approach this powerful intangible asset with humility – accepting that the brand and the heritage that underpins it are far greater than any individual – and integrity, such that their words and actions serve rather than undermine it. If they cannot do so genuinely, then they are probably not the right person to lead in this particular role in the first place. If they can, they will find that bringing energy and continued relevance to the brand inside the organisation engages people intellectually, emotionally and behaviourally.