The purpose of a brand is to create a customer
The data shows that purposeful brands outperform their peers. It’s great that businesses with a clear north star shine brightly.
We also need to be careful not to miss the point that the underlying driver of that success is their ability to create and keep customers along the way. That strength enables them to pursue a broader social mission rather than the other way around. It is a lesson that is too often ignored when building brands.
Tesla, the archetypal purposeful brand, is the embodiment of this truth. They have faithfully executed a strategy to chase down a paying customer base in their emission-reducing master plan. They even published it…years ago:
The strategy Tesla published on their website
That first sports car, the Roadster, was blisteringly fast, good-looking, innovative, exclusive, and it didn’t have a fossil fuel engine. Four of these elements made a value proposition that sat at the heart of what the small but potent segment of sports car drivers wanted, and the fifth added a wild point of differentiation. It was a brilliant approach. They were deliberate about the low volume/high margin part of the market they initially wanted to play in and made all the moves needed to secure buyers amongst that segment.
A focus on landing paying customers is not common. How many technology companies turn up with that kind of focus and discipline? How many make the effort to deeply understand what their customers value most? Instead, they tend to chase instant scale across segments with a proposition built around their technology and its far-flung potential rather than focusing on the real hot buttons for the category or segment they are trying to win over.
We can learn a lot from the playbooks of automotive brands. It is a highly competitive category, with an often slow and tumultuous sales cycle that requires customers to commit serious amounts of financial and emotional capital to make a sale (…and you thought you had it tough in your category!) Tesla brought a disruptive positioning, but not a completely new approach. Over the years the different auto brands have given us a masterclass in how to create paying customers:
BMW convinced a cohort to pay the premium for the Ultimate Driving Machine
Subaru made All Wheel Drive a point of principle and Aussie families flocked to them.
Suzuki made life feel fun for young people.
Toyota turned toughness into a premium for tradies.
There are many examples. These cars fill our roads which means they found a strong enough argument and convincing point of difference to become the customer’s choice in that segment. The ones who failed that test are gone.
Whatever role you want to play in your sector, the primary responsibility of a brand is to attract and secure a paying customer. Without that capability, and the cocktail of credibility, relevance and trust it takes, everything else is academic.
I experienced this first-hand years ago working with Volkswagen in a different context.
We were helping them figure out how to break through the glass ceiling they had in their Australian sales volumes. Investigating why this was happening led me to interview Dealer Principles and frontline staff around the country. One of the DPs I met owned multiple franchises in South Australia. We met in the office of his BMW dealership where he summed up the situation perfectly:
“When I walk through this (BMW) dealership I know exactly the type of customers that will walk through the door next, and why they are here. I feel the cohesion in the products on the floor. And when I listen in on the sales team talking to those customers the conversation is always building towards either ‘the ultimate driving machine’ or ‘sheer driving pleasure’.
Compare that to my Volkswagen dealership and it is completely different.
In that space there are so many different products. The next customer through the door could be anyone from any walk of life, and I hear my staff talking about anything and everything as they show people around the cars. No one knows what the brand is promising.”
The contrast was striking. BMW were crystal clear about who their customer was, what their point of difference was, and why those people bought their products. The whole business was set up to meet what those customers wanted. Their brand promise organised everything in line with the customers’ who, what and why.
In comparison, the Volkswagen brand simply wasn’t working hard enough for the customer (or the business).
The company was a global power player and the no.2 manufacturer in the world, and they were running a localised version of their global system. All the pieces were in place, and they had excellent products. However, they hadn’t found the argument needed to make this global brand resonate with the segments of the Australian market where they needed to win. This gap was showing up in the brand tracking numbers. They had over 90% awareness but (at that time) 92% of Aussies wouldn’t consider driving one. The brand wasn’t creating its future customers in the same way BMW was, hence the invisible sales ceiling.
With the issue identified the Volkswagen team at the time deserves credit for working across product, pricing, marketing and experience to address it. The following year they sold significantly more cars.
I am sure you can think of examples across different categories that fall into one of those positions.
a) Brands that have a real direction and cohesion are magnets for customers. They have the energy and clarity that comes from knowing exactly the role they want to play within their category. The staff are excited about it, the customers feel it, and ultimately the shareholders do too.
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b) Brands that are distracted by either themselves or a universal/macro trend. Instead of focusing on the customers they need to win they are aiming broadly and landing wide. Their brand is a loose collection of motifs, promises and taglines, which fail to define a distinctive proposition or direction.
This is the difference between having a winning brand strategy and leaving the opportunity on the sidelines. Whatever category you are in, whether you are B2C, B2B or D2C, a new player like Tesla, a high margin proposition like BMW or a mass market offering like Volkswagen, your brand has a specific job to do. It should present a clear, compelling and differentiated positioning that delivers the business goal and, as Peter Drucker asserted all those years ago, that goal is to create and keep a customer.