We came across an interesting question on Harvard Business Review: What makes a brand successful in the digital age?
According to a study by SAP, Siegel+Gale, and Shift Thinking:
“Digital brands don’t just do things differently; they also think differently. Where traditional brands focus on positioning their brands in the minds of their customers, digital brands focus on positioning their brands in the lives of their customers.”
Source: Harvard Business Review
Additionally, digital brands engage customers as users more than as buyers, focusing on post-purchase renewal and advocacy rather than pre-purchase promotion and sales.
In a study of more than 5000 consumers, Harvard Business Review found that legacy or traditional brands (such as Gillette, Coca-Cola, and American Express) rated higher as “a brand that people look up to.” The Newcomer brands (such as Airbnb, Dollar Shave, and Venmo), however, all rated higher as brands that “make life easier.”
Interestingly, survey participants were more likely to hear about legacy brands via advertising and traditional media, while digital brands were more often discovered through social media and word of mouth.
Purchase Vs. Usage Brands
Another way to differentiate traditional vs digital brands is to think of traditional brands as purchase oriented, while digital brands are more usage oriented (although there are some legacy brands that have adopted a digital mentality). Brands with a usage mentality tend to think of customers less as one-time buyers and more as users or members with an ongoing relationship.
So how would you define your business? Are you more concerned with how many sales you’re making each day, or are you focusing on how you can add value to the lives of your customers so they want to return again and again? Do you focus on what happens before the transaction (such as researching, shopping, and buying the product) or what comes after the transaction, whether it be delivery, service, or education?
The benefits of shifting from a purchase mentality to a usage frame of mind are many, as Harvard Business Review discovered from a study they conducted:
- Survey respondents showed a significant willingness to be more loyal to usage brands.
- Survey respondents showed stronger advocacy for usage brands through spontaneous recommendations to others.
- Survey respondents showed a higher preference for usage brands over competitors, not just in making the purchase but in a willingness to pay a premium in price.
Generally speaking, customer service and loyalty play a lesser role than marketing campaigns and lead generation at purchase brands. By comparison, usage brands recognize and magnify customer service and loyalty as key drivers of growth and profitability.
While purchase brands attempt to differentiate brand perception to influence purchases, usage brands focus on how their products will make a customer’s life better.
Usage brands recognize that some of the most meaningful engagement happens outside the sales process. They pay close attention to whether their content is relevant and useful, and they evaluate whether people are actually using their product or not.
Furthermore, usage brands also consider whether people are spontaneously talking about their brand or product, and they are more concerned with obtaining a five-star rating on their online reviews than winning ranking wars, earning recognition or receiving awards.
If you’re a small business owner, no doubt you’ve wondered how to make your business stand out from the crowd, build a loyal following, and draw in new customers. Shifting your brand mentality from a purchase to a usage mindset is a vital component in building a successful brand image and profitable company, especially in the digital age we now live in.
Small Businesses should actively rethink how they measure brand equity. If you’re too focused on promotion and sales, you may find yourself falling behind in today’s competitive retail landscape.
As Harvard Business Review points out, the purchase is just the beginning of a long-term relationship. The economics of your business should be driven not by what buyers think about your brand, but what users experience with your product or service. It’s time to stop thinking of your customers and prospects as buyers and start viewing them as future users.
Also published on Medium.