“The marketplace is a wind tunnel, and the wind wants everything to be the same.” 

That simple statement by Bruce Philp, branding guru to ING Direct and co-author of The Orange Code, is what makes identifying and landing new prospects so difficult. But being different from your competitors isn’t all that it appears to be.

In the second of three interviews with CZ, Philp debunks the myths of differentiation:

Brand & Strategy: What are the myths of differentiation?

Bruce Philp: I think there is just one dangerous myth: differentiation is rational. That’s fatal thinking.

How so?

There are two reasons–and the first is practical. There is almost no innovation that can be sustainably proprietary anymore. Performance differences are either so slight as to be irrelevant as a basis for choice, or they are impossible to own for long in a world where fewer people make things than sell them.

You can be Apple, and live what is surely the hell of having to beat yourself every time you go to market, or you can be P&G and make a full-time job out of engineering performance claims year after year. Those are successful businesses, there is no doubt, and it would be foolish to argue that it’s impossible to differentiate with innovation.

But, for most companies, innovation is expensive. And it’s often pointless, and very easily emulated by competitors who, maybe even with pride, see themselves as fast-follow marketers bent on commodifying their categories.

And the second reason why it’s fatal to believe differentiation is rational?

It’s more complicated. I think that consumers, regardless of what they may say in focus groups, don’t want the burden of comparison shopping for everything on the basis of rational performance. It’s a lot of work, and it puts too much responsibility on them. They want a proxy for that.

A proxy for what?

Consumers want a reasonable excuse to make a choice that is right for them and not feel vulnerable as a result. Very frequently, this is the job of a brand. People look at what they think a brand stands for, what sense they have of its past conduct in this regard, and the authenticating coherence of its presence in the marketplace. Consumers ask, “Do the values motivating this company align with mine, as they relate to the product I’m about to buy?”

And if the answer is yes?

Then the choice begins there, and not on a spec sheet. It’s not very different than the way we would pick an auto mechanic. I can’t judge whether the guy who’s going to work on my old sports car knows what he’s doing, but I can intuit his love of cars, I can see that his workshop is clean, and that he seems to take pride in his work. I can be reassured by the way he looks me in the eye and firmly shakes my hand.

So differentiation is instinctual.

Yes. The door to trust is opened emotionally and instinctually. Only after that is it about performance.

I think this exposes differentiation for the art it truly is. The best work I’ve seen done in this part of the branding process has always started not with what a product can do, but with who made it and why. Almost unfailingly, that leads you to the basis for sustainable differentiation. This type of differentiation is virtually immune to what competitors might do, or how circumstances might force your hand tactically in the future.

Show me a category where this isn’t true, and I’ll show you a commodity business–now or imminently.

“The genie is out of the bottle,” says Bruce Philp branding guru to ING Direct and co-author of The Orange Code. “Advertising is not branding; it’s just a thing a brand does.” And mostly it’s just showmanship—and the dazzle isn’t enough to cause consumers to become loyal to your brand. 

The big question is: How does advertising fit into your marketing mix? Here, in the first of a series of interviews, Philp digs into the answer:

Brand & Strategy: What do you mean by “disingenuous” advertising?

Bruce Philp: Consumers know that you have chosen to don a costume and mount the stage to try to affect some sort of cognitive event. Advertising is, by its very nature, a contrivance. It’s not our brand’s voice, and everybody knows it.

So how should an organization integrate advertising into its plan?

Advertising has to work authentically within this consensual understanding and respect it. Marketers and advertising people both need to let go of the idea that a purchase decision is an event, and to think of it instead as the end of a process. Then remember what advertising is actually good for in marketing strategy terms.

And what is that?

With so many other ways to influence the consumer’s decision making process, advertising could hardly be said to sell anything–at least not very cost effectively (Snuggies aside). But it’s very good at beginning the dialogue that might lead to a sale (what advertising people rather dryly call “awareness”). Advertising can knock on the door, suggest an emotional promise relevant enough that the consumer might open it, and then be respectful and interesting enough that they’ll leave it open for the next opportunity to influence them.

I think that advertising should be purposed specifically with that in mind.

Any caveats about advertising?

We need to both expect more from advertising, and less: More in the sense that it can and should do better than just amuse people, and less in the sense that it shouldn’t presume to be able to go from zero to closing the sale in 30 seconds (Snuggies, again, aside).

If I were going to knock on your door to sell you a vacuum cleaner, I wouldn’t put on a puppet show in the hope that you’ll like me so much you’ll buy my Electrolux. Nor would I open by throwing the machine at you and screaming that your floors are filthy.

Advertising is a powerful and important tool for marketing. What’s changed in the last few years is that advertising is now a more specialized tool. Keep that in mind, and its inherently disingenuous nature will never be a problem.

It’s a bank that claims to not be a bank. 

And it doesn’t siphon off its customers’ money with hidden fees and service charges. Instead, ING DIRECT promises to help you save money—at a great interest rate.

In an industry in which “bank” has become a new four-letter word because of the sector’s general disregard for its customers, ING DIRECT has become a stand-out—even likeable—brand.

In an interview with CZ President Dave Goetz, Bruce Philp, principle of Brand Engineering and chief brand architect of ING Direct, and co-author of The Orange Code, identifies what your brand must do to trump the competition:

Brand & Strategy: You wrote, “… don’t dominate the category, subvert it.” How do you do that? 

Bruce Philp: People tend to use the word subversive when they really mean “iconoclastic,” or even just “unconventional.” My definition of subversive is much more orthodox.

Like it or not, when you position a brand, you have to face the brands against which consumers will compare it. In our case, we were going to be compared to the status quo, which would never be a level playing field for our low-cost business model. If the status quo doesn’t support your business concept, then don’t dodge the comparison—undermine it.

Reframe it and cast doubt on it.

Don’t try to fool people into thinking you’re the “best” something. Be the only alternative to a flawed something.

How did that work with ING DIRECT?

We said the last two things you’d ever expect a bank to say: “We’re not a bank,” and “Save your money.” And we said them with such confidence that consumers couldn’t help but challenge their own assumptions about both.

That’s subversive positioning.

You talk about the dangers of boredom when messaging to your audience. What are some signals that it’s time to rethink your advertising strategy?

I think it’s important not to lose sight of what advertising really is. Too many people in our business tend to unconsciously equate it to branding. But of course they aren’t the same thing, and probably haven’t been since, say, the 1970s. Advertising isn’t a brand, it’s a brand asking a consumer to do something.

When we think about boredom or wear-out, we have to think of it in terms of how we’re asking them—not what, and certainly not in what character.

Do you believe that consumers own your brand?

I don’t, even if they seem to say so in focus groups. I think brands exist by the consumer’s grace, but consumers don’t want to own brands any more than, say, they want to govern themselves by plebiscite. They want to be heard, but they don’t want brands to delegate leadership to them.

Left to their own devices, consumers can figure out what a product needs to do, but they’re not going to inspire themselves.

If you leave branding to consumers, you’ll wind up with low margin, commodity businesses. Great brands are like lighthouses, an illuminating beacon that consumers find in the darkness.

How do brands become this “lighthouse”?

“Gut” is really important. By “gut” I don’t mean an ability to predict how people will react to something. I mean the conviction to pursue your agenda as a brand and trust that, if it’s in the best interest of enough consumers, the marketplace will reward you.

It’s guts more than it is a gut instinct.

Apple is a poster child for this notion. Virtually nothing they do is entrepreneurial. Nor is it the product of permission marketing. Nearly all of what they do is the product of a fierce, singular, take-it-or-leave-it vision. I know that not every business can function like that, but it’s amazing how many of the ones we admire the most do.

What are other traits of this brand gutsiness, especially in a down economy?

The brands that seem to be acting like those lighthouses share the following qualities:

• They have not abandoned their purpose. By not dropping their principles like hot potatoes at the first sign of pressure, they have proven they’re authentic at the moment when doing so would have the greatest impact.
• They have reached out to their customers and tried to turn them into a community.
• They have not exploited the anxiety of the times.
• They have concentrated on value.
• They have listened hard to what people are really feeling and put a special effort into being genuinely empathetic.

What is your best positioning advice for senior leaders in universities and other third-sector organizations?

Dare to have a purpose.

In my work with such organizations in the past, I’ve very often seen a stultifying kind of commodity mentality. It’s a product of well-meaning people who believe that they’re betraying their callings if they focus on one constituency or one mission to the exclusion of all others.

The exception to this reluctance is the charitable organization that exists to fight a disease, for example. It’s no coincidence that these are some of the most strongly branded NGOs. They have a singular cause.

By contrast, organizations like industry associations and universities have a pathological fear of taking a stand. They don’t want to leave, as we put it in The Orange Code, “money on the table.” And it’s tragic to see how often they fail, or at least never seem to get anywhere, as a result.

What about those willing to take a stand?

Make a mental list of the most prestigious and superbly branded post-secondary institutions in America. Is there even one brand on that list that isn’t famous for just one or two defining vocations? I bet not.

What makes that a bit mystifying is that when a school decides to promote true excellence in one or two areas and succeeds at it, the entire school becomes more prestigious. Excellence is a reflection of the brand, not the curriculum. Just about any resume is better with Harvard on it—even if it has nothing to do with medicine, law or business.

The only thing that keeps a zigzag from being a straight line is the “zag”…the departure from the stasis. 

“When everybody zigs, zag,” says Marty Neumeier, president of Neutron LLC, a San Francisco based firm specializing in brand collaboration and author of ZAG.

Neumeier spoke with CZ about why organizations need both compelling and different ideas to be heard and seen in today’s noisy, cluttered marketplace.

Brand & Strategy: How do you define differentiation?

Marty Neumeier: I call it zag. When everybody else zigs, you should zag. Zag should be your mantra. You can’t be a leader by following another leader.
What makes differentiation so critical today?

Because of so many customer choices. Customers have control. Customers now have to eliminate choices because there is so much market clutter.

You argue that customers control the brand. How?

A brand isn’t what you say it is (as the brand owner); it’s what the customer says it is. That’s a new idea. Businesses think they are in control of their brand and that they are managing their brand…that it’s their property.

I think it’s their responsibility. But the owners of the brand really are the customers. They build the brand inside their heads and their hearts with whatever materials you give them.

How do you build a brand you’re not in control of?

You don’t stop at the strategy level. You keep zagging all the way through to the customer experience. It’s not just differentiation; it’s also execution and innovation. Start by asking a series of questions: Who are you? What do you do? Why does it matter?

In the beginning, most leadership teams answer those three questions simply and in a compelling way. However, they soon can’t yield simple answers. You need to get answers to those questions, and at the end of that process you’ll have what I call a trueline…the one true thing you can say about your brand that makes it both different and compelling to a tribe of customers.

Uh, what’s a tribe of customers?

We’ve had a hundred years of mass production that has fractured communities. People long for community. Making decisions within a community simplifies things. It’s a quick way to sort through your choices.

For instance, if you need to buy a car, you think, I need to buy a car. All my friends are buying Jaguars, so I have to have a Jaguar. Boom! Done! That’s what you get in your tribe…Jaguars, not Cadillacs.

Your choice links you to your community so you get respect from it. People can belong to more than one tribe so you have overlapping tribes. Thinking in terms of tribes is a better way of looking at things than is “How many people can we sell to?”

This is a scary proposition for most companies: How do you manage something that is in someone’s mind?

Can traditional marketing research identify tribal thinking?

Not yet. The emotional part is too complex for most formulas. However, while not quantifiable, there are patterns that signal whether you’re on the right track. So, pattern recognition becomes more important.

Can you create a clan for your brand?

It’s like my mother told me: “If you want to be a leader, find a parade that has no leader and get in front of it.”

It’s a simple experience that drives the droves back to Starbucks.

We all have our signature drinks—double tall vanilla skinny latte, easy on the foam.

It’s replicated day after day. Baristas even concoct our daily quenchers as we walk through the doors.

In Tribal Knowledge, author and former Starbucks marketer John Moore attributes Starbucks’ success to three basic truths:

• Building a business, not creating a brand;
• delivering remarkable customer experiences; and,
• creating a workplace that fuels its employees’ passion.

Moore calls these truths “tribal knowledge,” and recently spoke with B&S about how to integrate them into your business strategy:

Brand & Strategy: How do you convince an organization—especially one with a small budget—to redirect money from advertising/recruiting to improving the customer experience?

John Moore: You need to be willing to focus on the quality of customer connections and not the quantity. Nowadays, most people are looking for a direct conversation with the companies with whom they do business. I suggest businesses find their happiest customers and work to develop stronger relationships with them.

If you work on developing meaningful connections with them, in turn they will evangelize your business to their family and friends.

To make this ideal real, imagine the kind of surprise and delight you would generate if your top executives each phoned five customers per week. And if you’re scared to make those phone calls because you’re not sure what you might hear—you especially need to make those calls!

Is “word of mouth” really a marketing strategy?

Word-of-Mouth happens whether you’re aware of it or not. And if you’re not thinking about what your customers and prospects are saying about you, you should be. Remember, word-of-mouth happens online, too. People go right to the Internet to research everything from a purchase decision to a job opportunity to potential college choices.

If you want to spark positive word-of-mouth, you must earn opinions from people. Even seemingly small details earn opinions—good and bad—in the minds of your customers. In Starbucks case, just call your drink sizes different names. Some people like it, some don’t. Either way, it earns opinions from people and that results in word-of-mouth.

How do you get your employees on board?

I advise companies to think less about branding strategies and more about “being” strategies. Develop a business testimony about who you are, what you do, and why you deserve to exist.

Every organization must have a mission. And it shouldn’t be one of those gobbledy-gook corporate-speak platitudes. It must be memorable, motivational, and actionable. Every member of your organization should be able to articulate what you do and why. Purpose and passion are what attract people—both customers and employees.

How do you increase high-touch interaction with your customers, especially if you have thousands of prospective customers with limited opportunities for face-to-face interaction?

High-touch treats customers as relationships, not transactions. The bigger your organization becomes, the smaller you must act in order to develop and maintain those relationships.

Social media, like blogs, actually helps small organizations appear bigger, and helps large organizations act smaller. Having a blog will force a company to have a conversation with its customers. You can learn a lot from interacting with and listening to your customers—both their positive and negative feedback. But if you’re not confident about who you are and what you do, don’t do social media.

Why is it so important that every employee sees their direct connection to the customer?

David Packard of Hewlett-Packard said, “Marketing is too important to be left to the marketing department.” The truth is marketing is happening every time your employees interact with your customers. A happy employee will, in turn, make customers happy.

Your business has two audiences: your customers and your employees. How you communicate with each indicates how much you value them. Employees believe in a company in which they know what’s going on and feel they have a say.

In the end, a business really has just three goals: to make money, to make employees happy, and, to make customers happy. If you are able to do those three things, your business and its brand will grow.