Fastest-Growing Brands Are 'Ideal-Driven'
What’s the common denominator across the 50 brands showing the fastest growth both in depth of customer relationships and financial value between 2000 and 2010?
All of them, regardless of size or category, have been built on an ideal of improving lives in some way, according to a new study done by WPP Group’s global research agency Millward Brown and Jim Stengel, former global marketing officer of Procter & Gamble, and now president/CEO of The Jim Stengel Company, LLC.
By “ideal,” the researchers don’t mean a traditional, altruistic social responsibility statement. Rather, they mean a “higher-order” purpose or benefit that the company/brand seeks to contribute to the world, with this purpose being the central driver and determinant of all of its strategies, decisions and actions. Or in other words, a brand’s “inspirational reason for being -- why it exists, and the impact it seeks to make on the world.”
While that may sound a bit esoteric, the concept comes into focus in the context of the specific brands that made this Top 50 list, points out Benoit Garbe, VP of Millward Brown Optimor, the research agency’s brand strategy consultancy.
For example, Starbucks’ declining performance in the late 2000s reflected a veering away from its central ideal of connecting people over coffee (pushing non-core products and placing efficiency over customer comfort in its store environment and service), and its return to that guiding ideal under Howard Schultz’s leadership drove its subsequent, dramatic turnaround, says Garbe.
Other examples: E-commerce phenomenon Zappos defines itself “not as being in the shoe and apparel business, or even the retail business, but in the ‘delivering happiness’ business,” Garbe notes, and that mission’s prominence on everything from its boxes to its employees’ T-shirts reinforces the company’s raison d’être internally as well as with its passionate customer base. Red Bull’s focus on “uplifting the mind and body” is manifested in its work force (an emphasis on hiring athletes and sports aficionados), among many other ways, he says. (Need we mention Apple?)
The principle also applies to the primarily B-to-B brands that made the list. Case in point: IBM, which defines its mission not in terms of being a leading B-to-B tech company, but as “making the world smarter -- improving people’s lives by solving problems,” Garbe says.
To develop the Top 50 list, dubbed the “Stengel 50,” Stengel and Millward Brown Optimor used the empirical research/survey data for 50,000 brands spanning 30 countries in Millward Brown’s database for the 10 years studied. Metrics for analyzing levels of customer bonding (loyalty/commitment) were used to generate a list of brands showing outstanding growth on this variable. These brands were then analyzed for financial performance (a weighted average of a brand’s absolute dollar growth over the 10-year period, growth rate in percentage terms, and value growth relative to its category), to determine if deep customer relationships translated into exceptional financial results.
This correlation was confirmed, and the brands that showed the greatest growth in financial value made the cut. (The researchers report that investing in these 50 companies over the past decade would have been 400% more profitable than investing in the S&P 500.) The list derived from this methodology comprises brands ranging in size from $100 million to well over $100 billion, spanning 28 B-to-C and B-to-B categories, rather than skewing heavily to the largest companies, as is the case with most research quantifying brand value, says Garbe.
In the next step, investigative research and interviews with experts were used to determine what the brands had in common -- which turned out to be “ideals.” Millward Brown's Neuroscience team then devised a method to uncover the implicit associations that people make between brands and ideals -- the types of associations activated by the Stengel 50 brands and their competitors.
The 50 brands were found to generate high levels of association related to five areas of “fundamental human values”: eliciting joy, enabling connection, inspiring exploration, evoking pride and impacting society (having a broad affect on society, such as challenging the status quo or redefining categories).
Based on this research, the partners say that having a central ideal or mission that both inspires customers and guides internal decisions is the “ultimate brand growth-driver.” (All of which has been summarized in a book authored by Stengel, GROW: How Ideals Power Growth and Profit at the World’s Greatest Companies, and is now being marketed by the Millward Brown Optimor consultancy as “The Brand Ideal Solution.”
Here’s the full list of the companies that made the Top 50 list, in alpha order. (Note: While BlackBerry now faces substantial challenges, it demonstrated exceptional value-creation performance over the decade studied, according to Garbe.)
*Accenture, management and enterprise consulting services
*Airtel ,mobile communications
*Apple, personal computing technology and mobile devices
*Aquarel, bottled water
*BlackBerry, mobile communications (fallen upon hard times since the research period)
*Calvin Klein, luxury apparel and accessories
*Chipotle, fast food
*Coca-Cola, soft drinks
*Diesel, youth- targeted fashion apparel and accessories
*Discovery Communications, media
*Dove, personal care
*Emirates, air travel
*FedEx, delivery services
*Google, Internet information
*Hermès, luxury apparel and leather goods
*HP, information technology products and services
*Hugo Boss, luxury apparel and accessories
*IBM, information technology products and services
*Innocent, food and beverages
*Jack Daniel's, spirits
*Johnnie Walker, spirits
*L'Occitane, personal care
*Louis Vuitton, luxury apparel and leather goods
*MasterCard, electronic payments
*Method, household cleaners and personal care
*Moët & Chandon, champagne
*Natura, personal care
*Pampers, baby care
*Rakuten Ichiba, e-commerce
*Red Bull, energy drinks
*Royal Canin, pet food
*Sedmoy Kontinent ("Seventh Continent"), retail grocery
*Sensodyne, oral care
*Seventh Generation, household cleaners and personal care
*Starbucks, coffee and fast- food retailer
*Stonyfield Farm, organic dairy products
*Visa, electronic payments
*Wegmans, retail grocery
*Zara, affordable apparel