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Good morning, everyone.
We’re going to hear a lot at this conference about the value of a strong
brand.
And for good reason.
BusinessWeek and Interbrand recently estimated that the 100 most valuable
brands are worth a staggering US$1 trillion dollars.
Coca-Cola’s brand is valued at 67 billion dollars, accounting for around
60 percent of its market capitalization.
Xerox’s brand valuation of nearly 6 billion dollars is worth more than
90 percent of its market cap.
Strong brands indeed do a lot of heavy lifting.
They help you maintain a healthy market share.
They let you price at a premium, up to 40 percent or more than generic products
and services.
Some “cult brands” even lead people to form communities around
them.
Think Starbucks, Apple and eBay.
Some, like Harley Davidson, even get their customers to tatoo their brandmarks on their bodies!
Needless to say, strong brands help you stay out of the quicksand called product
commoditization.
But let me ask you this question: Can strong be wrong?
Can a strong brand actually be counterproductive?
The answer is: sometimes.
Strong can be wrong if the brand is stuck in the past.
Strong can be wrong If the company’s brand has failed to evolve with
the company itself.
Think about that '80s hairstyle called the "mullet." Business in the front. Party in the back.
Some hearty souls still cling to this fashion statement.
Mullets certainly bestow a strong, distinct image on their wearer.
But what was right for the '80s might be wrong for this decade.
The same can be said of brands.
Brands should be living, breathing, evolving assets.
As companies evolve to respond to changes in the marketplace, brands must evolve
with them.
That’s certainly the challenge that UPS faced as we entered the 21st
Century.
The problem was not that UPS had a weak brand.
On the contrary: The UPS brand was distinct and had been built through more
than 90 years in business.
It was a brand that gained in strength as we evolved from a bicycle messenger
company in 1907 to a company that delivered department store orders to homes
in the early part of the 20th century, to a common carrier of small packages for
homes and businesses in the '50s, to a global package delivery company in the
'80s and early '90s.
So the strength of our brand wasn’t the problem.
The problem was that our brand wasn’t keeping up with the company we
were becoming.
In his book titled The Brand Gap, Marty Neumeier writes this:
“A brand is not what you say it is. It’s what they say it is.”
By they, Neumeier means your customers.
Your employees.
Your public.
It’s the notion that these people have about your company that really
matters.
Well, what UPS customers were saying about UPS and what we were saying wasn’t
fully matching up.
How do we know?
Well, in 2001, UPS spent several months carefully researching UPS brand perceptions
among both external and internal audiences.
We conducted in-depth interviews and focus-group sessions with a variety of
customers and employees in several regions of the world.
Here’s what we found:
Respondents said they thought of UPS as friendly, solid, hard-working and conscientious.
No surprise there - although it sounds a bit like the Boy Scouts!
Particularly, the problem was, these same people failed to see UPS as innovative.
Or forward-looking.
Or agile.
They were apparently unaware of all the changes that had been happening at
UPS.
You see, since the late '90s, there had been a lot of changes.
Back in 1998, we began a transformation of the company that was as radical
as any in our 97-year history.
Having successfully created our highly integrated international package network, we began expanding beyond small-package delivery and into the much larger market
of global logistics and supply-chain management.
For many years, we had been investing over US$1 billion dollars a year in information
technology.
It was time to fully leverage that investment in order to manage the movement of
both goods and information.
In 1999, we developed our company’s first Charter - which laid out in great detail our intentions
to make information management and supply-chain management core competencies
at UPS - and began using that mandate to focus our energies on the mission to "enable global commerce."
Later that year, UPS went public in what would become the largest IPO of the
20th century.
In the following two years, we made 25 acquisitions that rounded out our capabilities
in areas like customs brokerage, critical parts logistics, freight forwarding,
retailing and even financial services.
Now we could truly say that we could manage the three flows of commerce. The flow of goods,
information and funds - all on an international scale.
We began seeing ourselves as a key enabler of global commerce.
So you see, our business had changed dramatically on many fronts.
Our challenge then was communicating those changes without diminishing those core
values and cultural attributes that will never bend.
For instance, we’re still reliable, hard-working and service-oriented.
But UPS is also innovative, forward-looking, high-tech, and international -
more than just a package delivery company.
However, the message wasn’t quite getting through.
Our research showed us that the public still thought of us as the old UPS.
We were suffering from what you could call “Brand Lag.”
Our brand was just not keeping up with our new capabilities.
Customer perceptions had not kept up with the reality of the expanded portfolio.
So the UPS brand was strong, but it was also a little bit wrong.
That’s why we decided to relaunch the UPS brand and realign our company
around a new brand promise.
We needed to develop a brand that was both strong and representative of our
new capabilities.
One that could help us grow our core ground and air
business.
A brand that could protect our leading market share.
And a brand that would credibly extend perceptions of what UPS is all about in
the minds of our customers.
So we did first things first.
We started out by developing a clear brand promise.
Through our international expansion into logistics and acquisitions, we had
assembled the pieces of the puzzle.
Now it was time to put the pieces in place and give our customers the big picture.
Easier said than done.
Global logistics and supply-chain management are complex concepts that are
hard to describe in a concise way.
Imagine you’re a UPS executive standing by the guacamole dip at a party
and a neighbor asks you to describe what UPS does.
Two minutes into the explanation about integrating the flows of goods, information
and funds, your neighbor would be looking over your shoulder trying to lock eyes
with somebody more interesting.
So, how do you describe a company that touches virtually every facet of international
trade?
Well, it’s not easy.
But UPS came up with a two-word phrase to summarize our brand promise.
"Synchronized commerce."
Synchronized commerce suggests harmonious movement.
It conveys the idea of integration, coordination and precision in the movement
of goods, information and funds across the world. And research showed that it resonated well with our customers.
With the brand promise clarified, it was time to communicate this new promise
to our external audiences.
There were three key elements involved in the external brand relaunch.
• Advertising;
• A brand identity relaunch;
• And a customer relationship management, or CRM, initiative.
The Brown Campaign was our first major signal to our audiences that things had
changed at UPS.
In our customer research, we found that UPS was strongly identified with the
color brown.
No surprise: those brown trucks are everywhere.
In fact, research told us that UPS is one of a very few companies that could
actually own a color - like IBM blue or Coca-Cola red.
We discovered that the color brown could be used to connect the positive UPS
attributes people already held with the new story we had to tell.
Brown could be a bridge to associate new attributes like agile, worldly, business
savvy and forward-thinking.
Brown became a noun, as the Miami Herald described it.
The Brown Campaign was born.
It wasn’t just a color, however, that made the advertising campaign different.
The key was approaching this advertising campaign from the perspective of our
customers.
The starting point needed to be with their business challenges instead of our
products and features.
We wanted to tell a diverse set of customers ranging from home-based businesses
to multinational corporations about all the things the new UPS could do to make
their jobs easier.
And so the “What Can Brown Do For You Campaign?®” was launched in
early 2003.
Each television commercial was aimed at a different kind of customer, with
different kinds of needs.
Here’s a look at two commercials that launched the campaign.
The Brown Campaign, which is still running, has been a resounding success.
More than 9 in 10 respondents in each target segment indicated that the campaign
messages are relevant.
Nearly 7 in 10 say the advertising make them think
of UPS in a new way.
All in all, the campaign has the highest level of brand recall ever measured by our research
firm, NFO WorldGroup.
Hello, rebranding.
Following on the heels of the Brown campaign launch was another important external
element: a relaunch of our visual brand identity.
We wanted to communicate visually that things had changed at UPS.
For the first time in 42 years, we changed our brandmark.
We replaced our old parcel symbol with a simplified, dynamic shield.
The updated brandmark tries to bridge the look of the old UPS to the vastly expanded
capabilities of the new UPS.
We also unified our brandmark and visual identity across divisions.
You can imagine that 25 acquisitions in two years had created something of
a patchwork!
But this was no simple brandmark change.
In fact, we believe this is the largest brand identity relaunch in corporate
history.
And it’s not hard to figure out why.
We do business in 200 countries and territories.
We operate a fleet of more than 88,000 vehicles and nearly 600 airplanes.
They all have to be repainted and rebranded.
We have more than 360,000 employees who either wear UPS uniforms or use UPS
stationery.
These elements have to be rebranded.
There are more than 35,000 UPS drop boxes that have to be updated.
Packaging that needs to be replaced.
And 3,500 The UPS Stores™ in the U.S. alone that need to be transformed from
their old Mail Boxes Etc.® look.
This was a massive undertaking.
But I can tell you this: people know there’s something different about
UPS every time they see a UPS truck or pick up a next-day air package.
A third element of our external brand relaunch involved the implementation
of a strategic customer relationship management, or CRM initiative.
With this five-year initiative, we aim to go deeper and learn more about our
customers.
To identify which customers have the greatest need for which services.
To find out which customers are more profitable for us and offer more opportunity
for growth.
And then to direct our sales, marketing and customer-service efforts to these
customers.
BusinessWeek, in naming its top 50 corporate performers for 2004, said that
there was one thing that set top performers apart from others:
“…Many of this year’s stars have a deeper understanding
than rivals of what makes their customers tick.”
Well, to find out what makes our customers tick, UPS has to wade through the
huge flood of customer transaction information we gather every day.
And then we have to turn this data into actionable information that will help
us support our brand promise.
To that end, we’ve created a special, 1-terabyte data repository that
contains up-to-date transactional information about each customer.
We can use this information to support call-center customer-service agents,
customized direct-mail marketing offerings and informed, targeted sales calls.
Basically, we can use past information about customer behavior and past interactions
to direct our marketing and support efforts.
Halfway through this five-year CRM initiative, we’ve made good progress
on learning more about our customers.
For instance, we used to segment our customers solely on account size.
Now, we have a more sophisticated segmentation involving key industry segments.
We also look at customers on another dimension: value.
We assign valuations to various customer segments, based on attributes like how profitable it is to serve their account, how fast their business is growing,
opportunity for future growth and propensity to buy multiple UPS services.
The end result is that we know which customers to pursue and we can match the
right services to the right customers.
And that helps us better fulfill our brand promise.
Well, I’ve talked about the three-pronged plan to communicate our brand
to external audiences.
Advertising.
A new visual brand identity.
And a CRM initiative.
But that’s only half the story.
The second big part of our brand relaunch involves communicating the brand
to our internal audiences.
And aligning our company and our processes around the new brand promise.
Near the time of our relaunch, many of our own employees still saw us primarily as the
old UPS - as the domestic package delivery company.
After all, tens of thousands of them work on the front lines, driving trucks
and sorting and delivering packages.
They might not know that we have a UPS Capital division that can expedite cash
flow, or that we help deliver Ford vehicles to U.S. dealerships using rail and trucks.
Or that we repair laptops for Toshiba or redesign entire worldwide distribution
and transportation systems for biotechnology companies.
With a force of over 360,000 employees, we had a big job to so. So, when we relaunched our visual brand identity in early 2003, we took the opportunity to not only explain what we were doing in the arena of synchronized commerce,
but also why.
We held hundreds of simultaneous meetings, sent out newsletters and produced
videos:
All part of a coordinated kick-off campaign to explain how employees fit into
the brand promise.
It really helped that this was a top-down approach.
Our top executives, from the chairman on down, championed the brand relaunch.
They made it part of the company charter.
They made “one company, one vision, one brand” the central theme of our annual management conference, where top managers at UPS get together to chart how to turn strategy into execution.
I mention this to you as brand managers because this challenge of internal
alignment is an important element in brand development.
If people within our own four walls don’t feel associated with the brand promise and the direction of the company - you can bet customers
won’t.
You could call it the Living Brand.
In the book I mentioned earlier The Brand Gap.
Marty Neumeier gives a pretty good description of the Living Brand: “A
living brand is a collaborative performance, and every person in the company
is an actor. When a rep lands a customer, when an admin takes a phone call,
when a CFO issues a profit warning, when a product manager gives a demo, when
an accountant pays an invoice - each of these events adds depth and detail
to the script, just as surely as a new ad campaign or Web site does.”
Let me add something to what the author wrote:
The performance never ends.
UPS relaunched our brand nearly two years ago, but we must continue to deliver
on our brand promise.
So far, so good.
Recent research tells us that our synchronized commerce brand promise has accomplished
a lot in a short time.
C-level executives increasingly view UPS as a company that can help them with
their distribution and supply-chain operations.
People are finally starting to see us as a new UPS.
But we don’t plan to get complacent. And I'd recommend that you help ensure that your companies don't either.
So, I guess the lessons we’ve learned through this experience are really four-fold.
You’ve got to constantly monitor your stakeholders to see if brand perceptions
are matching realities.
If you’re trying to change perceptions and reinvigorate your brand, you’ve
got to take a holistic approach to external messaging - through your advertising,
corporate communications and customer relationship efforts.
You’ve got to make sure your people clearly understand where your company
is going and how they fit.
And finally, even strong brands can go wrong if you don’t treat them as valuable
assets and maintain them properly.
And in this hyper-competitive global marketplace, none of us can afford to
be wrong for long.
I appreciate your time and attention today and look forward to taking your
questions.
Thank you very much.
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