INTRODUCTION
Cultivate the Apostles to Become a Beloved, Iconic Brand
Human beings are curious. They love to explore. And they love to shop.
Many consumers—up to 25 million Americans—go to malls on any given Saturday or Sunday. Sometimes they arrive with a list of priority items that they’re ready to purchase. Sometimes they just wander and browse. Sometimes they are looking to touch items that they will later buy online.
If you have a brand, this is your chance to stand out from the crowd. Retailers tell us that the strong brands sell without promotion. Consumers come into the store and ask for signature products. They say no to substitutions. Weak brands sit on shelves, waiting to be scooped up at a steep markdown by bargain hunters.
Great brands are forever if you work on them. Customers want them to be available forever. Brands make their lives easier and more predictable. They take the anxiety out of decisions. If a customer buys a gift, choosing a great brand reduces the risk that the receiver will show disdain for it. Great brands celebrate consistency and deliver smiles.
Consumers love to love brands. They love to talk about them. If you get consumers talking about a brand that they care about, there is no detail that’s too obscure. They love bending your ear with little facts. They want to show everyone that they really know. But what they know is never enough. They will ask: Where is the product made? What are the ingredients? How is it tested? Will it stand the test of time? Will my friends express envy that I own it and they don’t? They always want to know more. They want access to more. They want to have a totally transparent relationship with you. They want to know who you really are. They seek the truth. They search out not only all your brand’s technical and functional features, but also all its emotional elements. They care about your social policies: How do you treat and pay your employees? How do you treat your suppliers? Do you have a clean environmental footprint?
For successful brands, the payoff from having the first position in consumers’ minds is very high. Its owner will have a valuation that is a multiple of sales. Often it will deliver a cash margin in excess of 25 percent. When consumers love you, it’s a memorial. They will provide you with loyalty, a stream of purchases, a price premium, and advocacy with friends and strangers.
But if you ever fail them, it’s an abomination. They will damn you. They will scold you. They will scowl at your name. Worse, they will tell everyone they know what they think of you. And, in this digital age, word spreads quickly. They can tell the world with the click of a button on their keyboard. Reputations can be tarnished unfairly and fast.
To stay on top, your job is to deliver magic—every day, in every way. Your customers expect you to provide them with a flawless, complete experience. They expect you to provide value for money. Not a low price, but value, which includes their experience. They expect you to deliver with energy and passion.
Brands are fragile. Most companies waste them. Too often, once brands are big, the executives get sloppy. In a big company, they count the number of big brands in their roster. You need to go down four levels in the organization to find the individual who is responsible for a particular brand. That person’s job is to deliver predictable sales, sales growth, margin, and margin growth. Top management often does not see all the data—brand rank, brand advocacy, and share of category requirements among the most important consumers. They see a P&L, and they promote those who deliver “good numbers.” They get greedy. They prioritize short-term profits. They let competitors steal their market. They lose their first position in consumers’ minds. They add overhead that does not add value. They cut primary research. They cut materials research. They eat their seed corn. That’s one reason why in industry after industry, it is the new entrants that are growing fastest and taking share. These nimble companies live and die on the basis of a single position.
For the big brands that are lost in big companies, recovery once losses have started is very challenging. Generally this comes at a time of management change and shareholder activist pressures. Our prescription for success is best carried out before the activists turn their attention to your brand. You have more time when you’re not under the gun. We preach preemptive action. You have to move before you lose your core consumers. In Rocket, we talk about schismogenesis. This is an anthropology term that means that relationships are not stable. They are always moving either up or down. Conditions are always fluid. Once brands become sick, it is rare to see a full recovery. Generally we have seen long, slow declines. Sick brands become like inner-city homes in Detroit—abandoned, unloved, and unsalvageable. Teardowns of the future.
Preventing this requires a stream of innovation. It requires a constant, formal, qualitative appraisal by your best customers. It requires you to have all your senses switched to “on.”
Ask yourself this: When your customers use your products or services, what do they see? What do they experience? Is that experience pleasing to them? Does it touch them in an emotional way? Does it contribute something above the everyday? Is it elevating?
Answer these questions with energy, excitement, and pizzazz, and you will take a magic carpet ride. Answer the questions with negatives, and you face death by a thousand cuts.
It’s all about creating a bubble for your consumers, about surrounding them with happiness, joy, inner peace, and validation for their purchases.
Why do 75 million people per week go to Starbucks for coffee when they could crawl out of bed and brew their own coffee or grab a free cup at the office coffeepot?
Howard Schultz says that the answer is the brand and everything that has been built into that cup of Joe—the highest-quality beans, perfect roasting, fresh brewing, personalized combinations, ambiance, cachet, attachment, a real break, a familiar barista, and more. Starbucks has found a way to forge an emotional connection with its customers and its employees. Schultz and his team call each worker a partner. In 1991, Starbucks introduced Bean Stock to enable eligible part- and full-time employees to own shares. He says it was aimed at connecting their contributions to growth and the value of the company. Starbucks has configured its network of 22,000 stores to provide you with not only your morning coffee, but also late-morning lounging with friends on weekends, working with free Wi-Fi and power in the afternoon, using the local Starbucks as an office for a meeting, or rushing in for a quick pick-me-up drink. It knows how to romance you with a broad variety of coffee-based beverages and sell you a bagel, a lemon cake, or a croissant.
Before Starbucks, American consumers just drank coffee, purchased at a coffee or doughnut shop. Now many proudly carry a handcrafted beverage made exactly to their specifications. For these customers, the Starbucks latte, cappuccino, flat white, caramel macchiato, or espresso is their drink.
THE INTERVIEW: HOW HOWARD SCHULTZ APPLIES THE EIGHT BRANDING RULES AT STARBUCKS
You don’t need to apply all the rules all the time. But one company that has applied all the rules is Starbucks. It is a company with a $68 billion valuation1 that shows that the rules, when applied together, have a powerful impact.
Howard Schultz did not invent Starbucks. He was first an employee. Then he left. Then he engineered a buyout. His original plan was to have 150 stores, not 22,000. He did not have a full vision of a global footprint. He worked his way into becoming a powerhouse brander. He started with entrepreneurial spirit and courage.
In his own way, Schultz pursued the eight branding rules. He understood naturally that the engagement of employees—partners, as they are called—was the key to success. His intent was to become the employer of choice—to pay decent wages, provide healthcare benefits to even part-time workers, and create mechanisms for broad employee ownership. He worked every job in the store. He listened critically to suggestions. He invested in beautiful architectural designs. He created open access to his phone and e-mail for a broad cross section of employees, from baristas to office workers. And he listened with vigor, interest, and genuine appreciation. Starbucks mobile and loyalty platforms—with their payment options, status levels, store location capability, and gifting access—make it a leader in the digital space. Starbucks has proved the value of incremental stores and density in a range of geographies from Manhattan to Shanghai. It is the American Dream realized for a boy who started life in the housing projects of Brooklyn.
Schultz believes that credit for the success of Starbucks goes to its culture and its partners, the employees.
“We created a business based on connecting humanity. We want all our partners to benefit,” he told us on a rainy day in Seattle early in 2015. He explained that the invention of Starbucks was a result of bringing people together behind a common vision. It was about creating a responsible and caring place of employment and treating everyone with dignity.
Early in our conversation, Schultz mentioned the story of his father, a World War II veteran. His father was a blue-collar worker who, when Schultz was seven years old, was injured and laid off from work. The family had no savings, it had no health insurance, and there was no safety net. Schultz has created a company where employees share in the wealth, including healthcare, Bean Stock (equity in the form of stock options), access to college tuition reimbursement, and many other benefits, even if the employees are part-time.2
“I was trying to create the kind of company that my father never got a chance to work for—trying to balance profitability with conscience [for everyone] regardless of your station in life,” he said.
Schultz is a man who is willing to tackle tricky social issues: government gridlock, the challenges facing returning veterans, marriage inequality, and race relations. He has recently held a series of town hall meetings with store managers and baristas to talk about diversity and equality.
“We have had good fortune. We remember where we came from,” he said. “Success becomes more full and complete when it is shared. Our company has been able to grow fast for a long time because we share a tribal knowledge. Our culture has defined us.”
Starbucks has more than 22,000 stores and 300,000 employees.3 Sales per store are still under $1 million. Market value is now just 30 percent less than that of titan McDonald’s and three times that of industry darling Chipotle.
Schultz is very articulate about the Starbucks DNA. “More often than not, profit as a goal and primary purpose gets people in trouble. Performance is the price of admission. We have to perform, but we are a performance-driven organization through the lens of humanity,” he states. “The culture has defined the company. The equity of the brand has always been built from within. We always recognize that the brand was defined by the people wearing the green apron. We are a people-driven, culture-based organization.”
The Starbucks headquarters is located at the former site of Sears, Roebuck & Co. Placards call out for “coffee passion,” “engaged partners,” and “connecting humanity.” Schultz’s words are written on the walls: “Grow with discipline. Balance intuition with rigor. Innovate around the core. Don’t embrace the status quo. Never expect a silver bullet. Get your hands dirty. Listen with empathy and overcommunicate with transparency. Tell your story, refusing to let others define you. Use authentic experiences to inspire. Stick to your values—they are your foundation. Hold people accountable but give them tools to succeed. Be decisive in times of crisis. Be nimble. Find truth in trials and lessons in mistakes. Be responsible for what you see, hear, and do. Believe.”
Schultz is altruistic and impassioned, and says that he aims to use the company’s scale and success for good.
Inside Starbucks, there is a belief that store presence drives sales—that looks do count. At investors’ meetings, a clear relationship is shown between store density in a city and sales per capita. The company is also intent on creating new occasions—for example, full breakfasts, lunches, cold refreshment beverages in the afternoon, and tasting menus for the evening.
The seven-point strategy4 for Starbucks is simple:
1. Be the employer of choice.
2. Lead in coffee.
3. Grow the store portfolio.
4. Create new occasions.
5. Grow the brand in consumer packaged goods.
7. Extend digital engagement
Schultz is able to connect with employees who are many levels lower in the Starbucks hierarchy. He says that this allows him to stay in touch with what’s going on. “I have deep-rooted relationships all over the world with our people, and I’ve encouraged it. I think people feel they have a license to communicate directly with me. With that comes a level of understanding and insight that you would not get through a survey or by walking around.”
Headline: Willing to Tackle Many Issues—Business, Social, and Political
It is no wonder that Schultz’s first book about Starbucks was titled Pour Your Heart into It. It is about “imagination, dreams, and humble origins.” It is the story of the company’s early days: how he used values, culture, pride, and ambition to grow from a few stores to 1,600 at the time of the book’s publication in 1999, and developed a culture that stretches across lands. He has a core belief that big companies can act like small companies and that doing the right thing pays off every day.
Schultz believes that retailers need to rigorously control quality and the customer experience. “Success is fragile, and you’ve got to earn it every day, and we can’t be a company that is sitting here celebrating and embracing the status quo, because the customer is not celebrating what happened yesterday. We’ve got to perform today. We’ve got to be hungrier, smarter, and push for reinvention and self-renewal more than any other time because of the seismic change in consumer behavior as a result of technology and mobile phones.”
He states, “We’re now processing almost 7 million mobile transactions a week. That’s about 16 percent of tender. The loyalty program has been a major source of success. We’re now piloting mobile order and pay. We’ll bring it to the rest of the country in calendar 2015. We’re experimenting with delivery soon. All these things are designed to make Starbucks relevant. We have to be hyperrelevant, and we’ve got to surprise our customers and in doing so galvanize our organization about working for a company that’s innovative and in-the-know.”
Schultz’s advice to young entrepreneurs is to follow your dream—but to do it with rigor and study, and to get experience. “I say to young entrepreneurs, ‘If it’s not personal, if you don’t love it, if you’re not willing to sacrifice almost anything for it, then don’t do it. You’ve got to dream big and have a little bit of luck.’” Schultz continues, “I don’t think any of us had the audacity to believe we’d have 22,000 stores.… But now that we’re here, we realize the opportunity is much, much greater. I think it’s okay not to know how big something could be. Just keep dreaming about it and keep pushing.”
Tribal knowledge has been imprinted into the company in its heritage and tradition. Schultz engages his leadership team in town hall meetings about key business, social, and political issues. He uses the discussions as a platform to demonstrate that Starbucks is more than just a coffee retailer.
Within a short drive of its headquarters, at 1124 Pike Street in Seattle, Starbucks has opened its first Starbucks Reserve Roasting and Tasting Room. This is a 15,000-square-foot former Packard car showroom that has been meticulously turned into a flagship for everything Starbucks. As the Starbucks partner at the counter explained to us, “This space truly has heart. You can tell the minute you walk in here. I am excited to come to work here every day.”
The store is a stage on which to tell the story of Starbucks. It is as much about theater as it is about retail. For $15, you get to taste three types of espresso, from bold Kona with notes of chocolate to a lighter blend with citrus and vanilla. The baristas educate you on the choices. You are in the center of a live coffee-roasting facility where all of Starbucks’s global specialty coffees—called Starbucks Reserve—are processed for distribution around the world. Starbucks says that food is an essential part of the Roastery experience. The food menu was created to complement the flavors of the coffees offered—like wine pairings in fine restaurants. Tom Douglas and his team provide fresh seasonal pizzas from the Serious Pie restaurant inside the building, as well as the pastries, sandwiches, salads, and sweets offered in the Roastery café.
Schultz says the company is prepared to invest in other Roastery locations around the world—like the one on Pike Street—to celebrate and authenticate the brand.
He is not blindly confident: “We have a lot of challenges. We have a lot of issues. Change requires great thoughtfulness and sensitivity well beyond strategy and execution. It requires a deep level of understanding of how to move the organization forward, how to share success, how to build trust, how to bring people along. This is built around leadership, and leadership comes in many forms and many shapes. The hardest part of leadership is leading when it’s inconvenient and not when the wind is at your back, being decisive, and making decisions when you don’t have perfect information. And it’s lonely.”
He continues, “Challenges are the soft side of the business: maintaining and enhancing and improving the culture, taking responsibility for 300,000 people and their families, making the kind of decisions that make our people proud, betting on the right things, maintaining the entrepreneurial DNA of the company while it gets bigger, having courage and conviction, celebrating success, not punishing failure, encouraging risk taking in the company.”
He understands that the partners entering Starbucks today are different from the first generation of employees. “It’s a more idealistic workforce. I think they expect more from the company they’re working for. I think most people have worked for other companies before they come to Starbucks, and they’ve been disappointed, so there’s a level of cynicism, and the burden of proof is on us to perform early on—show them we’re different.”
When asked about the ability of hot coffee beverages to travel and, as an extension, about the real prospects for delivery, he smiles. “You will see,” he says securely. “We have mastered that challenge. It is all about incremental volume on top of a good business.”
He continuously pushes the boundaries to avoid becoming “predictable, inaccessible, or irrelevant.”
Starbucks has generated an 18 percent operating margin, a 10 percent target global growth rate, and successive 30 percent total shareholder returns, adding 1,500 stores a year—more than half its locations are now outside the United States. In China, there are 1,500 stores with 20,000 partners.5 The company has completed the rollout in the United States and Canada of baked goods from its acquired bakery company, La Boulange. Starbucks Evenings stores serve coffee, wine, beer, and small plates. Starbucks furthered its commitment to innovation and transforming the tea industry by acquiring Teavana mall stores and opening new Teavana Tea Bars.6 The company launched Oprah Chai tea. It now has more than 9 million My Starbucks Rewards loyalty members.
At the company’s headquarters, Schultz is quoted in big bold letters on the wall:
We inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.
Creating a culture of warmth and belonging, where everyone is welcome
Acting with courage, challenging the status quo, and finding new ways to grow our company and each other
Being present, and connecting with transparency, dignity, and respect
Delivering our very best in all we do, holding ourselves accountable for results
We are performance driven through the lens of humanity
We are on a journey
Schultz concludes, “I’m more inspired today than I ever have been. We have a chance to be the kind of company that makes history in the world. It’s about redefining the role and responsibility of a public company and doing what’s right for our people and the communities we serve.”
There is a science to building a brand. It involves extensive quantitative and qualitative research. You get deep inside the consumer’s head. You understand how and why she buys. You understand her hopes, her dreams, and her aspirations. You understand the context of her life and the trade-offs she has to make. But this is not sufficient to create a brand.
There is an art to brand building, too. Great brands anchor themselves in the customer’s emotional space. A great brand is about loyalty. It’s about love. It’s about providing the customer with enough truth and enough myth to carry her through her day.
It’s about stories.
It will be the backstory about your brand—the one your customers repeat to their friends with energy and force—that will allow your company to earn extraordinary returns and create annuities that last forever.
In Rocket, we tell the stories of companies that have done this. Some of the stories you’ll know or have heard about—for example, those of Apple, Amazon, and Toyota. We offer you the chance to understand their evolution and the thought processes of their founders. Other stories may be new to you. But we find that the stories of mortals—the hard-working business executives who built brands that stand the test of time—are just as insightful and perhaps more inspirational given their ordinariness. You don’t have to be a genius like Steve Jobs to create a great brand like Apple.
There are many secrets to success. In the course of our work for more than 80 percent of the world’s largest brands over the past five decades, we have encountered many similar patterns of winning. In this book, we have synthesized our findings to create a set of eight branding rules. You need to follow them if you are to be truly successful, if you are to build an enduring brand.
Rule No. 1: Don’t Ask Your Customers What They Want (Because They Don’t Know Until You Show Them)
The most famous story concerning this rule is about a global communications giant that was exploring the development of the cell phone. In focus groups, the company asked salespeople to look at the box phone and then asked, “When will you use it?” The salespeople said that they would sooner put a quarter into a phone booth rather than pay $500 or $1,000 for an unwieldy box. As a result, the company put cell technology on a back burner. This was an expensive error. It cost the company billions of dollars to buy its way back into the business after it had taken off. The consumer could not imagine a better way to make a phone call and certainly could not imagine paying for it. The big leap forward requires curiosity and courage, instinct, and a taste for the jugular. It requires you to look beyond simple answers and impulsive consumer rejection.
Rule No. 2: Woo Your Biggest Fans (Because They’re Absolutely Worth It)
Few companies count the value of their best customers’ purchases and the value of the purchases that those customers promote through word-of-mouth advocacy. Our research supports the rule of “4+.” Generally, the best customers—we call them apostle consumers—are personally responsible for a full 20 percent of the sales and 40 percent of the profits of their favorite brands.7 They are also responsible for between four and eight times their own sales through advocacy with their “followers”—family, friends, and colleagues. Their hearty recommendations and trial by friends can deliver more than the balance of your total profits.
One apostle begets many others. The math of multiplication of $1,000-per-year consumers is amazing. In 12 generations, you can achieve more than $1 billion. This cycle of 12 generations can happen within three years. The law of propagation is this: innovation times trial times uniqueness and power equals uptake.
Rule No. 3: Always Welcome Your Customer’s Scorn (Because You’ll Come Back Stronger)
Toyota says that a complaint is a gift. The company uses process control and redesign to track and process any customer complaints. This operates as a system to stamp out design errors and repeated customer complaints. Complain once, let me fix it. Complain twice, shame on me. Complain three times, and I should be replaced.
Toyota’s approach—reliability, durability, and “complaint as a gift”—translates into higher resale value, a higher repurchase rate, and deeper loyalty. When the complaints are vehement, listen and get ready to change. As CEO, open your e-mail to get direct feedback. Always give a polite and thankful response. Capture and respond to scorn. Change as a result.
Rule No. 4: Looks Do Count (Because People Really Do Judge a Book by Its Cover)
Humans use their eyes in every purchase. They look for beauty. They look for vision. They dream about a better world for themselves and their loved ones. You can create a storybook.
The best dreamscape company in the world continues to be Disney. Little girls visiting Disney World go to the Magic Kingdom. They see Cinderella and Snow White. They carry the image in their subconscious. For many, it draws them back when they decide to marry. Disney has created a rich business by fulfilling fantasy. Customers can be princesses marrying their prince—and they do it in droves. You can count thousands of bricks with the names of couples who took their vows in the fantasy world of the Magic Kingdom (at Disney World), now celebrating its sixtieth birthday. They paid up to $250 to have their names immortalized. Visual brilliance costs a lot, but its value is priceless. It allows you to put a framed picture in the minds of your most important consumers.
Rule No. 5: Transform Your Employees into Passionate Disciples (Because Love Is Truly Infectious)
Walk into a Container Store with a vague idea about a storage problem and ask for help. Within moments, a counselor will have you spellbound as you describe your problem or problems, and soon he will be offering solutions. The employees know how to charm you into better organization so that you can manage your closet, kitchen, bath, and office more productively. It is a perpetual favorite company to work for. Container Store associates are treated with respect, are paid twice the wage of competitors’ employees, and turn over at a fraction of the average rate.
Passion equals knowledge. Knowledge equals solutions. Solutions translate into sales. It’s so simple but so infrequently exercised.
Rule No. 6: Better Ramp Up Your Virtual Relationships (Because That’s What Your Customers Are Doing)
The world has moved to 24/7. The consumers with the greatest disposable income have the least time. They have the greatest education. They have high-speed Internet lines at home and at work. And they want to buy what they want to buy when they want it.
Amazon is an emotionally cold company. You search and get a random list. It has telephone support, but the company never flaunts it or makes it easy to access. But millions of people are now in Prime, a membership program where customers pay $99 to get free two-day shipping and other perks. Amazon gets to process all your purchases. The company calls this collaborative filtering. It is the ultimate in suggested sales. There is no “person” choosing for you—it is a computer algorithm. But in 21 years, with relentlessness and a passion for growth and share gain, this company has garnered a market value of $137 billion and sales of $90 billion. The value of Amazon is now greater than the combined value of Macy’s, Nordstrom, Kohl’s, JCPenney, Best Buy, and, of course, Barnes & Noble. This is not an accident. It is the future. Digital is not just a channel.
Rule No. 7: Take Giant Leaps (Because You’re Not Going to Win with Timid Steps)
If you want to win big, you are highly unlikely to succeed if your plan is built on tweaking your current competitors’ products. Big wins require big dreams. They require innovations in product, packaging, source materials, distribution, sales system, customer engagement, after-sale service, and meeting the needs of the apostle consumers. Timidity and incremental improvements to existing products is the road to World War I trench warfare. Giant leaps permit rapid growth and share gain. All of the top 10 brands in BCG’s consumer index got there with easy-to-describe, graphically dynamic, simple value propositions. Each has a major consumer catch point and a symmetric set of consumer support points. They were not extensions. They did not reflect value engineering. They grabbed the consumer by the shorts.
Rule No. 8: Find Out What Schismogenesis Means (Because It Will Save Your Relationships)
We have always believed that brands are not stable. Our research for this book proves it. Consumers say that brands are either getting better faster or sinking fast. The world of retail is the best case in point for rapid growth, fast shrink. Once the dark winds are in your sails, it is almost impossible to break their hold. Think Sears, Kmart, or JCPenney. How do you know where your brand advocacy is headed—up or down? Learn how to use quantitative metrics, such as BCG’s Brand Advocacy Index. Track them like the third leg of your P&L—revenues and profits, share of the properly defined universe, and advocacy. If you are not improving, you are in decline. If you are not top dog, you are likely to be surpassed.
The Apostle Brands
You may think you know why you love Apple, Starbucks, or McDonald’s. Who hasn’t bought an iPhone, gotten a grande latte, or picked up a Happy Meal for a ravenous child?
But our eight rules provide you with a game plan for converting your customers into loyal shoppers—customers who advocate your brand and urge their family, friends, and colleagues to try your products. We have formulated the rules on the basis of BCG’s 52 years of client experience, a unique quantitative study of U.S. consumers, and a series of in-depth interviews with top executives.
In the course of our work, we have discovered that there are ordinary brands and what can be called apostle brands. Apostle brands are rare. Few companies have brands whose signature products and services are widely revered everywhere. There are 10,000 multimillion-dollar consumer companies around the world, but only 100 of them can properly claim to have apostle brands. They offer magic and light. They provide entertainment, nourishment, imagination, and utter joy. They inspire enduring trust, loyalty, love, and almost evangelical endorsements and advocacy. To their fans, followers, and believers, they are like religions. They capture a disproportionate share of discretionary dollars.
The list of apostle brands is based on the BCG Consumer Sentiment Survey, which offers deep quantitative research from some 15,000 adult consumers of all ages and incomes. This survey is founded on a database that we have developed over more than 10 years that covers 20 major countries and contains more than 400,000 consumers.
The top 10 U.S. apostle brands are Apple, Amazon, Walmart, Netflix, Costco, Samsung, Coca-Cola, Target, JetBlue, and Chick-fil-A.8
It should be no surprise that Apple tops the list. If you ask most consumers in the United States or Europe to name one favorite brand, they usually say, “Apple.” But the company has not always enjoyed global success. For much of its history, it was actually struggling. For many years, it was a microcomputer firm in a secondary position. It created beautiful, technically differentiated, elegant products that were broadly rejected by the largest potential market: business organizations. Eventually, the company’s founder was fired by the board and replaced by a marketer. But this didn’t work. The organization floundered. In desperate straits, it asked its founder to come back. It was the return of the prodigal son.
The young Steve Jobs was driven and impatient, but he had an instinctive understanding of what customers really wanted. He appreciated the importance of the emotional connection between the brand and the customer. When Apple finally reached into the soul of millions of music lovers, its fortunes skyrocketed.
In our survey, we asked customers how Apple made them feel. The top five answers were, “Smart, like I made a good decision,” “Excited,” “Worry-free,” “Comfortable,” and, “Like I did something good for myself.”9 Another emotion that respondents expressed was that Apple made them feel “successful and accomplished.”10 The company offers a classic story of innovation, apostles, and legacy. Steve Jobs was the innovator. Music fans became his apostles. And the legacy is a company boasting $500 billion in market value some five years after his death.
Apple delivered record figures for the last quarter of 2014: $74.6 billion in revenue. Its net income for the quarter was $18 billion, up 37 percent year-over-year. Business Insider, a news website, waxed enthusiastic: “Apple just delivered an earnings report for the ages. It simply demolished expectations thanks to fantastic iPhone sales. Apple sold 74.5 million iPhones, up 46 percent compared to the year prior, its biggest ever quarter by 23.4 million units. Analysts were only expecting 65 million units sold. This growth is truly phenomenal.”11
The other companies in the top 10 can tell a similar story of brand growth. They have found a way to connect emotionally with their customers—and then deliver the technical and functional features that satisfy those emotions. For Amazon, it’s about the variety of the products, the prices, and the shipping. For Walmart, it’s all about prices. Walmart demonstrates the simplicity of a formula for consumers. It has a unique, powerful appeal for lower-income consumers. For Netflix, convenience, accessibility, and entertainment factors are dominant. For Costco and Target, it’s a combination of price, selection, quality, and range. For Samsung, Apple’s great rival, it’s about the quality of the products and the value. For Coca-Cola, the overriding theme is taste, refreshment, and accessibility. For JetBlue, it’s all about the service. For Chick-fil-A, it is about uncommon value, the quality of the product, and customer service.
At the end of this Introduction we have provided an exhibit. It is a Wordle—a visual depiction of the most common words consumers use to describe the top brands. For the most valued companies, this is often one to five words that every fan utters. It is a simple test of your brand to ask, “What is the Wordle we are trying to evoke?” If you, as the founder, can’t create it, your consumer is unlikely to be able to do so.
Apostle Customers: Looking for the Elusive “Demand” Space
What apostle brands do better than their rivals is convert customers into ultraloyal followers. We call these people apostle customers. They are the reason why the apostle brands are so successful. They are worth a multiple of the value of their own purchases. They recommend the brand that they love passionately and unequivocally. They take friends and family members who might be tempted to go to another retailer or buy another product, and they prod them to embrace the apostle brand instead. They bring them to the store. They carefully explain the backstory behind their beloved brand: the quality differences, the value, the authenticity, and the reasons to believe in it. They do this using the language of their peers. This is the power of word-of-mouth advocacy. It’s so much better than a slick advertising campaign. Apostle brands win on the words of their users.
An apostle customer can be an eight-year-old elementary school student, an eighty-year-old retiree, or someone anywhere in between. Likewise, apostle purchases can come in many different sizes. They can take the form of a $4 espresso at Starbucks, an $8 burrito at Chipotle, a $16 ticket to a Pixar movie, a $660 Rimowa suitcase, a $7,500 Hermès Birkin bag, a $74,000 Audi A7, or a rare $250,000 Patek Philippe watch.
How do you convert customers? Apostle brands provide a complete expression of trust, loyalty, and knowledge; a commitment to standards of quality and purpose; and a promise of uniform delivery, pleasure, and personal fulfillment.
They can do this because they understand what really determines customer choice. It is generally thought that demographic factors hold the key: a customer’s age, gender, or economic group. These all do play a part, of course. But during our client work and extensive research, we have established that the biggest determinant of customer choice is the occasion of use, which is typically grounded in an emotion: when customers consume the product, whom they are with at the time, and, most important, how they want to feel. In other words, they prioritize different products with different features on different emotionally based occasions.
So you need to focus on your customers’ needs and wants or demands. Ask the right questions, and you can create a map of different kinds of demands. In the jargon, these are “demand spaces.”12 A “space” is an occasion or an emotional moment, and each unique space has a unique set of demands. These spaces are usually expressed in everyday language—the kind of language used by apostle customers when they advocate brands to their friends and family.
When Frito-Lay, PepsiCo’s snack-producing subsidiary, reviewed its business as a series of demand spaces, it found that it should be competing not just in the salty snack market, but in the much larger macro snack market. As we show in Chapter 3, it mapped out the different spaces in a market where Lay’s and Tostitos compete with crackers, nuts, candy, and chocolate, but also fast food and frozen snacks. The largest space was called “Fun Times Together.”
The secret to discovering the right demand spaces is to do the right kind of research. Ask the right questions. Don’t base your conclusions on syndicated data (the historical purchases by category reported by Nielsen and IRI). Once you’ve created a map of the demand spaces, and can see your business and your market in a very different way, you can very easily establish whether you have a “right to win” in one or more of the specific demand spaces. You can do so only if your brand owns the relevant emotional attributes of the space.
For instance, Hilton Worldwide found that the “cool and hip” demand space, while attractive from a marketing perspective, was not aligned with its flagship Hilton brand. It was too small, and Hilton really didn’t have a right to win against some of its boutique rivals. Instead, it opted for the “recharge and refresh” space, which was large, encompassing both business and leisure travelers.
Finally, you can close the loop by establishing the commercial opportunity of the demand space and the share of the market where your brand has a right to win. Once you know this, your challenge is to create “bull’s-eye” products to match all the demands in the space precisely. You can fully align all the activity of your organization—from marketing and finance to R&D and operations—around the idea of winning your target demand space.
We call this process demand-centric growth.
Schismogenesis: Why Brands Fail
Brands are fragile. They are subject to the laws of schismogenesis. They always were. But now, in the digital age, they can be wiped out in an instant. To be successful, they need constant nurturing. You can’t afford to switch off—not for a second. If you do, you won’t endure. You won’t create an apostle brand.
Even the greatest brands need to be on their guard. Apple, as we’ve seen, is the world’s favorite brand. But it is also among the world’s least favorite brands. “I think they are overpriced, overhyped, and more flash than function,” one consumer told us. Others said that Apple was “arrogant,” was “secret and elitist,” and “rips people off.” In other words, if things ever turned against Apple, there are consumers who would happily denigrate it further.
Right now, Apple is standing tall. Few companies have done what it has done and created an apostle brand. However, often the next generation of executives loses focus. They don’t understand the demand space they are playing in. They “forget” the rules—assuming that they knew them in the first place. They become insular, arrogant, and complacent. They become the person who “speaks to investors” and caters to the needs of the board. They lose the passion that got them to the top. They become blind to the market and to competitive intruders.
Many companies allow their great ideas to be squandered by obscure, poorly executed strategies, by doubting or delaying colleagues, or by other misguided organizational prerogatives. They value-engineer their product—saving on short-term costs while sacrificing integrity—and end up devastating their customer base. They skimp on ingredients. They compromise by revising beloved recipes. They stop listening, and they stop learning. They retreat to what they know, doing more of the same even when new and vital consumer values become obvious, when distribution channels shift in radical new ways, and when vibrant start-ups and global challengers are growing around them.
You don’t need to be one of the failures.
These companies urgently need to learn the lessons of the apostle brands. In the chapters that follow, we tell the stories of how consumers find out about and follow their favorite brands, and why they love the brands they love—and how brands and businesses can build enduring trust, advocacy, and love.
During the course of the book, we identify the critical elements for success as an apostle brand. These are brand principles, and they complement our brand rules:
Inspire. Behind each of these brands is a singular inspiration. Apostle brands begin with a bold, unique vision aimed at a big market and a broad arena of consumers, a vision that is conceived and articulated by a highly committed, creative, often obsessed leader. The vision is authentic, purposeful, and motivating.
Empathize. Apostle brands are built on unique consumer insights. These brands offer first-time solutions and answers to consumers’ profound fears, dissatisfactions, and unmet needs. The creators of apostle brands are listening to and empathizing with consumers. They fully understand their consumers—who they are, and when, why, and to what degree they experience these needs, longings, and wants. They are surveying the landscape to look for and identify critical new demand spaces. They communicate that they care deeply and longingly.
Dazzle through design. Apostle brands design products, services, and retail spaces that provide functional, technical, and emotional benefits that are almost magical. They develop the “no compromises” ideal and build it at virtually any cost. Their products, services, and retail systems include features that respond directly to consumers’ most ardent needs, wants, and dreams. They deliver highly interactive design that anticipates and responds to fundamental human desires.
Innovate and refine. Apostle brands continuously innovate and respond to consumers and what they’re asking for, refining and improving their offerings with boldness, specificity, simplicity, and conviction. These brands make their fundamental value proposition clear, real, and widely known. They learn from and adapt to consumers.
Engage and evangelize. Apostle brands engage early users in a shared experience. They help those first consumers understand the company’s value proposition, and then rapidly work to build a full portfolio of offerings catering to these consumers’ needs. They then recruit these apostle consumers to spread the word worldwide. Apostle brands make their money not just from the net present value of their early adopters’ purchases, but also from the value of all the referral customers whom the early adopters, in turn, recruit, attract, or both. They stoke new users to offer other consumers their personal endorsements, positive reviews, and gushing enthusiasm and encouragement.
Treat people well. An increasing number of apostle brands also boast a positive, holistic “good business” philosophy that reflects consumers’ values, personalities, and ethics. They aren’t just paying lip service to corporate social responsibility. They are not engaged in superficial “good cause” marketing. Instead, they’re doing well by all the people they touch—their customers, their employees, and the communities where they make and distribute their goods. Treating people well and helping others is at the core of their strategic vision and everything they do. They do this because they deeply believe in it and because they believe they can recruit better people with that bedrock belief.
The Structure of the Book
Rocket is our bible on apostle brands—and how to become one. The eight chapters are devoted to the eight rules. In general, there are two featured companies in each chapter, with insights drawn from exclusive interviews, deep research, and decades of client work. Each chapter tells the story of the entrepreneurs behind the companies—and does so in a detailed way, with the backstory of their success. We could have presented a narrow story that is concerned solely with the rule in the chapter heading. But we knew that you would want to hear the whole story. As with their brands, you can’t begin to understand these people’s success without understanding the backstory—how they got to the top, what drove them, and what inspired their thinking about business and brands.
Throughout the book, many themes recur, uniting the different rules. They include the following:
Put your apostle customers at the center of everything you do. Listen to them, collect feedback from them, pay attention to them, and regard them with admiration and appreciation. Every apostle brand has a way of articulating this point. Juan Roig refers to the customer as el jefe: the boss. Isadore Sharp talks of his “golden rule”: “Do unto others as you would have them do unto you.” Focus on the advocates of your brand. Identify the “cravers”—consumers who love your products and will tell everyone they know to buy them. Don’t worry about the general population.
Discover what really determines what your customers want and need. Create a map of the demand spaces and the “bull’s-eye” products that will satisfy them and turn you into a winner.
Always be switched on. Don’t rest on your laurels. Renew or die. Innovate with urgency and authenticity. Create a powerful, believable story that inspires customers.
Establish an emotional connection with your customers. Technical and functional features are important, but they need to meet the customer’s underlying emotional needs. These are the things that endure. These are the ties that bind.
Above all, use the demand-centric growth process to chart your course. It can unlock enormous opportunities.
Follow the Eight Branding Rules, Create Your Own Stories, and Achieve Immortality
Apostle brands represent a new class of brand winners. These companies behave differently and better. They source ethically, pay fairly, establish an advantage based on design, boast keen insight into consumer dissatisfactions, and have relentless experimentation in their veins. They do not exploit their followers, but seamlessly and completely respond to their hopes, dreams, and wishes. They follow what we call the yellow brick road—creating a path to home and providing safety, a sense of being cared for, and emotional satiation. They lay the seed for the telling and retelling of highly positive, inspiring stories.
Follow our eight branding rules and you’ll have the power to create your own apostles—consumers who will carry your message, teach and convert, listen and tell you more, and help you deliver to your full potential.
Throughout the book, we show you how the rules have been applied across a range of companies. We hope they make the concepts and principles of success come alive for you. We also provide you with a set of tools, including demand spaces and the Brand Advocacy Index, that you can use to renovate your own brands.
We recognize that you can’t simply replicate the Apple or Amazon story. Your company will have its own constraints, market conditions, challenges, and opportunities. But we think that you can imagine a better future. You can take your brand to a stronger and more powerful position.
We hope that you will be able to weave your own story with the help of the rules and the tools in Rocket.
This book is, therefore, a manual for mortals who want to build a brand that lasts forever.
TOP 15 BRAND WORDLES
Source: BCG 2014 consumer survey.13