- By Shaun Smith
- Oct 09 2015
What does the VW brand stand for now?All brands make mistakes, but what does Volkswagen need to do to win back our trust?
Jeff Bezos famously once said: ‘Your brand is what people say about you when you are not in the room’.
Yesterday, as I was giving a keynote speech, I decided to put the Amazon founder’s theory to the test. I showed a slide with three logo’s on it; Virgin, Apple and VW, and asked the audience to tell me what these three brands stand for. They told me that Virgin stood for Innovation, Entertainment and Customer service. They felt that Apple stood for Simplicity, Design and Coolness. When it came to VW there was just one word; ‘Disaster’.
Asked the same question a few weeks ago and the answer would probably have been Reliability, Quality and Prudence.
After decades of industry-leading products, VW arguably represented the cornerstone of best practice in auto engineering - the antithesis of corner-cutting cowboys. When you bought a VW, you felt assured. They were the Johnny Wilkinson of the automobile world, trusted and sturdy and a ‘safe pair of hands’. From the earliest Beetle, their marketing and advertising all reinforced the notion that when you bought a VW you were buying a product that placed reliability ahead of fashion. Their key message was ‘A vehicle that you might reasonably expect to hand over to your children rather than the breakers yard’. Billions of dollars were spent over the decades reinforcing those powerful brand associations.
All that marketing and design effort, all that money, all that goodwill, now wasted because the brand lost sight of its official core purpose: ‘to offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.”
To be fair to VW, theirs is not the only fall from grace. A quick google search will highlight a long line of corporate scandals –Toyota, Tesco, BP, CO-OP… the list goes on.
What went wrong?
As a customer experience expert, whenever a corporate mess unravels in the media like this, I often get asked hindsight’s favourite question - how could this have happened? And though every brand is distinctly different and their cock-ups of a different hue, I find myself answering with the same response - if you place profits above customers on the priority-list, it will always end badly. Unfortunately, it doesn’t take a lot for executives to focus on the wrong things because, in most cases, they are rewarded for doing so. If you tie executive compensation to earnings growth, that is what they will focus on. Jack Welch, the former CEO of GE once famously remarked: “Shareholder value was the dumbest idea in the world.
Sadly, in an attempt to artificially increase market penetration and increase earnings, VW’s brand principles were totally compromised.
So what happens now?
Well, if the new guy at the top has the boldness to make the brand take a serious look in the rear view mirror, and resist a quick PR fix, VW has a chance to win back fans. For this to happen though, the brand first needs to get back to basics and reflect on its ultimate destination - why does the brand exist?
Lengthy discussions and disagreements will need to be endured, but a core principle should be placed directly at the top of the priority list - everyone comes second to the customers, even shareholders. The needs of the customer should provide a context for every meeting and every decision going forward.
Putting the customer at the top of the corporate agenda rather than profits creates an interesting irony; recent research from Havas Media has shown how brands that have a real sense of purpose in creating value for their customers are more profitable.
“Meaningful Brands on average gain 46% more share of wallet and outperform the stock market by 133% with the top 25 brands delivering an annual share return of nearly 12% (that’s almost seven times higher than the STOXX 1800 stock index).” - www.meaningful-brands.com.
Purpose drives profits, it turns out. Simple to say but hard to do. Simon Sinek told us to ‘Start with Why’ and we would agree. What he didn’t tell us though, was HOW to turn this into behaviour throughout the organisation. So to answer that question, we have spent three years researching brands for our new book ‘On Purpose - delivering a branded customer experience that people love’. We conducted numerous interviews and then a survey of ‘purposeful’ brands as well as ‘comparison brands’. Our conclusion was that the quantitative research supports what we found in the interviews, namely the executives of the ‘On Purpose’ brands place emphasis on quite different things to many executives in typical companies. In particular, being ‘Purpose Driven’ and having a ‘Distinctive Customer Experience’ are high points for the brands we feature compared with comparison brands – hence the dual meaning of the title of our book; On Purpose - meaning both ‘Purposeful’ and ‘Intentional’.
We also asked some summary questions and, once again, the results were quite different.
“Overall, I would describe my organization as having a clear sense of purpose”.
- On purpose brands = 4.7. Comparison brands = 3.5.
“Overall, we deliver a distinctive customer experience across multiple channels”.
- On purpose brands = 4.4. Comparison brands = 3.1.
The road to recovery
So what do these brands actually do? In our book we describe the eight key dimensions from our research, as well as the forty tactics that sit beneath them. We relate how these principles apply to leading brands like Zappos, Lush, Premier Inn, Southwest airlines, Nissan and many others. But in essence there are three critical steps to becoming a purposeful brand:
1. STAND UP
Purposeful brands have a clear sense of who they are and WHY they exist. They stand for something beyond making a profit. They represent something of value in the minds of consumers. Think of Apple.
2. STAND OUT
They are different to competitors in a meaningful way that creates value for customers. They are intentional in delivering their purpose via their customer experience across multiple channels. They deliver consistently, which contributes to their reputation in the market place. Think of Lush.
3. STAND FIRM
They create cultures that sustain them and continually innovate to stay ahead. They invest in product and service innovation and are more concerned with using profits to invest in the business and the delivery of their purpose rather than maximizing earnings per share for their shareholders and chief executives. Think of Patagonia.
Becoming a purposeful organisation is not easy. You can’t force it, fake it or fudge it as brands like VW, BP and Tesco have discovered to their cost. It requires commitment, leadership and rigour - and above all, purpose before profit. As the author Daniel Pink so aptly sums up: “When the profit motive gets unmoored from the purpose motive, bad things happen”.
Missed our recent On Purpose presentation at the London Business Forum? We’ve captured some of the key points for you in this 4 minute video. Take a quick look
Our latest book ‘On Purpose: Delivering a branded customer experience that people love’ co-authored with Andy Milligan, is now available to order on Amazon.