Marketing often gains a reputation for cherishing style over substance. Its detractors accuse it of shouting about product benefits, or, in the absence of these, a nebulous lifestyle positioning, regardless of the quality of the customer experience. But in reality, plenty of brands over the years have found the opposite strategy to be more effective: don't shout too loudly, then delight consumers when the product experience exceeds their expectations.
The strategy of under-promising and over-delivering is one that seems to be gaining ground. Two recent studies suggest it is key to delivering profitable growth, though both underline how many brands continue to disappoint.
The 2007 Promise Index, created by brand agency Promise, ranks brands according to their 'promise gap' - that is, the difference between the image consumers have of them and the actual experience. Brands with positive promise gaps exceed their customers' expectations, while those with negative promise gaps let customers down. Understandably, there is a direct correlation between the promise gap and financial performance. The average growth rate for brands with negative gaps was 2.8% in the past year, while the average growth rate for brands with positive gaps was 10.5%.
Yet while two-thirds (66%) of the 150 brands surveyed for this year's index have positive promise gaps, just 15% have ones that Promise describes as 'statistically significant' - in other words, gaps sufficiently above zero to have an effect on business performance. 'This means that 85% of brands are leaving high returns on the table for those who are successful at delighting customers,' points out Promise director Clare Fuller. The best way of delighting those customers, she adds, is to redirect advertising spend toward improving the customer experience.
Some brands, including BMW, John Lewis, Apple and Tesco, managed a positive gap despite a strong image score. Others, such as ING Direct, Skype and Travelodge, suffer from a poor image, but delight customers who use them. Fuller argues they have the balance right. 'The best-performing brands are those that focus more on customer-centred innovation and less on big advertising campaigns,' she says.
The survey findings are borne out by Weber Shandwick, which has just unveiled research showing that surprising and delighting customers is the chief factor in creating brand advocacy. The 'European Advocacy Study' - conducted jointly by Weber Shandwick and Paul Marsden, research director for Brand Genetics and a former consultant at Enterprise LSE, the commercial arm of the London School of Economics - surveyed 4000 consumers in four countries. According to the report, in turn, brand advocacy is five times more effective than advertising in prompting purchase.
The research identified that a 10% increase in 'positive surprise' leads to a 16-point increase in net promoter score (NPS) - a metric derived from survey responses to a 'how likely are you to recommend?' question. Studies by global management consultancy firm Bain & Company indicate
that a 12-point rise in NPS tends to lead to a double-digit increase in sales. 'Our findings indicate that surprising and delighting customers is a key driver of brand growth,' concludes Richard Moss, executive vice-president, European brand programmes at Weber Shandwick.
With one-third of brand users acquired through brand advocacy, according to the study, Moss agrees that many brands would benefit from redirecting their advertising spend toward the kind of initiative that generates advocacy. But he adds that they also need to work out how to convert passive advocates to active ones.
'One of the most compelling findings of this study is the advocacy potential that already exists among a brand's customers,' he says. 'On average, four out of every 10 users of the brands we surveyed classify themselves as advocates of that brand. But only half of these - two in 10 - would actively promote the brand to others. As such, it seems likely that many brands in Europe have an advocacy gap, and marketers need to use their brand-building skills to develop plans to stimulate this group so that they promote the brand.'
This stimulation includes providing passive advocates with compelling stories about the brand and a platform to talk about them. 'For example, Toyota gives purchasers of its Prius model a business card carrying key facts about the brand. Others, including Harley-Davidson and Xbox, create communities to allow positive advocates to spread the word easily.'
Moss believes that brand advocacy, as opposed to advertising, should be the key focus of marketing and communications departments, something that he admits turns traditional marketing on its head. 'From the very start the brand team needs to think about delivering beyond expectations at all consumer or customer touchpoints,' he says. 'They then need to think very hard about the messages and stories they want their advocates to communicate. Finally, they need to explore every possible avenue for activating their advocates, including community groups, co-creation and getting staff behind the brand stories.'
This suggests that advertising, while remaining important in raising and sustaining awareness of brands, should play a smaller role than it does, boosting the importance of public relations, according to Moss. This may be a predictable view from someone working in PR, but Marsden is even more vociferous about the dangers of the traditional mass-market approach to advertising.
'Scattergun advertising - the kind that still focuses on buying eyeballs - can actually undermine advocacy, because advocates respond best to being given selected pieces of information that they can pass on,' he says. 'The best strategy is to target hubs of social influence and category enthusiasts, get them talking and let advocacy do its job. The ad becomes the conversational catalyst and then the message spreads through the target market like a virus.'
Marsden admits that some marketers are getting better at targeting the right people at the right time with the right messages. PepsiCo's planned launch of its premium drink Pepsi Raw is a good example. The cola will initially launch in pubs and bars to target influential young affluent consumers, in the hope that its appeal will spread rapidly through word-of-mouth, allowing the company to roll it out in supermarkets subsequently. 'Seeding your brand in fertile ground is a sound strategy, and it carries the additional benefits of association with a particular user image,' says Marsden.
However, focusing on advocacy requires a major cultural shift, because the seeding approach often takes longer to bear fruit than mainstream advertising, and most companies are judged on the basis of quarterly or half-year sales. 'About 90% of products are withdrawn post-launch because they don't hit sales targets, but seeding campaigns could take two or three years to come to fruition,' adds Marsden.
The other message emerging from these surveys is that innovation is critical - a truism supported by the Promise Index, where the brands that made the biggest improvements to their position this year, compared with the last survey in 2005, were ones that have consistently innovated around customer needs.
Honda, which shot up the rankings to fifth position from 31st in 2005, is a case in point. In 2006, it launched the first motorbike with an airbag, and recently introduced an online forum where members of the public can give feedback and ideas to the marque's engineers.
'We listen to customers a lot and take customer relations very seriously, feeding the information they give us right back into research and development,' says Tom Gardner, head of marketing at Honda UK. 'We have worked very hard with our dealer network to ensure that they deliver an outstanding customer experience, and we benchmark ourselves against top players outside the industry.'
But Honda's iconic 'Power of dreams' advertising has also played a crucial supporting role in its success. 'The "image-up" strategy we adopted a few years ago has been a key way to communicate the lengths we go to in order to exceed customers' expectations,' adds Gardner. 'The great ads are a side-effect of us needing to tell the Honda story, and in a way that resonates with the public and differentiates us in one of the most competitive industries in business.'
An outstanding performer in the equally competitive financial services market is ING Direct, whose promise gap of 2.09 is well above the market average of 0.34 and even further ahead of some of the big 'legacy' brands, such as HSBC, Halifax and Visa, which have negative promise gaps. ING Direct's customer proposition since it launched in 2003 has been founded on cutting through the complexity in the market with a simple offering and exemplary customer service.
Conversely, HSBC, which slipped down the rankings from 68 in 2005 to 108 this year, has less room for manoeuvre.
Despite investing £600m in global advertising over the past year to reinforce its positioning as 'the world's local bank', it has a negative image gap of -0.02. Promise argues that HSBC's disappointing customer experience is reflected in its financial results, citing the 4.53% revenue growth rate of its retail banking arm, 1.57 percentage points below the 6.1% average growth rate for banks in its sample.
Fuller claims that such legacy brands pay the highest price for developing negative promise gaps, as they can often take years to close. 'This is partly because they tend to be slow at imp-roving the customer experience and partly because consumer expectations of such brands remain high, even after they have been disappointed, and the negative word-of-mouth they spread is very damaging,' she says.
By contrast, smaller brands are at an advantage, helping to explain the strong performance of companies such as Skype and Pret A Manger in the index. Fuller believes there are three principal reasons for their success. First, they are less wedded to a particular way of doing things, meaning they can constantly refresh their customer proposition, remain relevant and innovate. Second, consumers judge them less harshly than some of their bigger competitors, so are more forgiving of mistakes. And third, they feed customers' increasing demand for authenticity.
Online brands dominate the top rankings in the travel market as they do in financial services, and ebookers commands pole position by virtue of its high experience score and below-average image score. Ciaran Lally, managing director ebookers UK & Ireland, points to the company's investment in a new technology platform that has allowed it to make considerable improvements to its customers' online experience. The overhaul followed customer research pointing to ease of use, straightforwardness and honesty as customers' top three priorities. These have been instilled in the call centres too, says Lally. 'The empathy and lack of jargon that we expect our call-handlers to demonstrate means that average handling time is high, but we have seen a dramatic improvement in the quality of calls.'
Keen to get the customer proposition right before it began shouting about it, ebookers relaunched the brand in Sept-ember - after the Promise research was conducted - helped by a print, radio, online and outdoor advertising campaign featuring the strapline 'Smart bookers are ebookers'. More tactical executions will follow, and Lally expects the image of the brand will continue to rise as a result.
Another brand suffering from a poor image, despite good experience scores, is Kia, which tops the automotive table. That is set to change as a result of both a higher media spend and a focus on quality rather than price, claims managing director Paul Philpott, who joined the UK business nine months ago from Toyota GB, where he was commercial director.
Philpott faces the opposite challenge to most marketing directors, who need to work on ensuring the customer experience lives up to the brand reputation. He believes many companies' promise gaps are the result of working in functional silos. 'A strong customer experience makes an increasingly important contribution to a brand. But if boards are dominated by sales people, you tend to get short-term gain at the
expense of long-term brand building,' he says. 'Marketing needs a strong voice at the board table or it will find itself working in isolation, with the rest of the company not delivering on the brand promise and the customer seeing through it quickly.'
Of course, many of these strategies are far harder to implement than a high-profile ad campaign. But there is now a growing body of evidence supporting the postulation that marketers must make customer experience their priority. Faster communications, greater transparency and the rising propensity of consumers to buy on word-of-mouth recommendation make it more important to deliver a good experience. Or, more succinctly, as Patrick Barwise, emeritus professor of management and marketing at London Business School, puts it: 'Markets will punish you faster if you don't keep your promises.'
The Promise Index, which is conducted in conjunction with Dr Alain Samson at the London School of Economics, is generated through polling 1000 consumers on their image and experience perception of 150 leading brands. Brands are scored out of 10 on both measures, then the scores are indexed and compared to calculate the 'promise gap'.