Brand Arrogance: The Threat Within

 

Consumers don’t value brands; they value the idea the brand represents to them. This idea will always be worth more than the product, or the actual bricks and mortar of the business enterprise. When marketers behave arrogantly, the value of the idea people care about is instantly diminished. And once this happens, the road to redemption is long, difficult and expensive. 

A recent example of a marketer’s arrogance towards its customers is NetFlix.

The story is classic, almost cliché. In Netflix’s case, an innovative technology quickly ramps into an innovative business model with rapid customer acceptance and advocacy, and then inexplicably breaks its trust bond with the very people who were making it great. Other brands have done this as well. New Coke comes to mind.

Of course, much of the hubris and arrogance was initiated by Netflix’s CEO, Reed Hastings.  When the decision was made to raise prices and change how customers receive value without any consideration to the value of the brand’s “reason for being” and what it represents to people, the value of the Netflix brand was instantly diminished. Not even a gracious mea culpa from the CEO or promotional incentives will undo the damage done.

The Netflix brand paid an incalculable and heavy price.

The lesson for brand managers is clear:

People place higher value on trusting in the idea your brand represents – not the physical thing itself.  Before you change the physical thing, make sure the change will not damage the trust people have in the idea and its experience.

It’s not about the thing you make, the service you provide, promote and sell that matters.

Netflix customers didn’t care about the “service” provided. They cared about something far more important– being in control!  Without warning or consideration, Netflix took that away from their customers. Bad idea.

This is an important and often overlooked principle in brand management.  When a brand is successful (like NetFlix), it’s because customers value an emotional experience more than a functional benefit. When the brand delivers on the desired experience, trust is earned, bonds are made strong, and brand value grows.

Function, features and benefits come along for the ride. They have to be there, but they don’t matter as much as the perception of “use value” inherent in the brand’s promise.

Continue to provide customers with more “use value” than they pay you in cash value and your brand will always be trusted and command premium pricing. 

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