Executives ask one question on an almost weekly basis: "How can I differentiate my company in the marketplace?" My reply to every president, chief executive officer, or vice-president of marketing is always the same: "Why do you want to be different?" We are swimming in an overabundance of products and services. "Different" is no longer a differentiator. What is? Creating an authentic relationship with your customers.
Authenticity in business is a distinctly 21st century concept made relevant by a confluence of factors. The public's trust of businesses and institutions is in steep decline. Consumers' media savvy has pulled back the wizard's curtain on insincere marketing ploys that are only surface-sexy. Reality TV and online personae and avatars have redefined our sense of reality, bringing the question of what is real into mainstream dialogue. And advances in manufacturing and technology have made available a proliferation of product and service offerings from around the globe, overwhelming consumers with options. The Internet has also empowered those consumers to create an unprecedented peer network that critiques companies and allows users to find exactly the product they want.
Consumers seek meaning and a brand they can trust. They are busy at work on Web 2.0 platforms creating ways to cut through the noise in search of products and services that resonate with integrity and transparency; in a word, authenticity. That quest for authenticity is a call to action for any company intending to be relevant in the 21st century.
Step Back and Consider Your Brand
As the marketplace has shifted, so too must design. A single, beautifully designed product is nothing more than a beautiful object without the focused intent of a company that has taken the time to understand three things: the deep-seated desires of its customers, its own DNA, and the sweet spot where the two overlap.
What is the right approach for innovation chiefs to take? First, take a step back before introducing just another product. Decide who is your true tribe and what makes the most sense for those customers and your company at a particular time. Push the pause button, dig deeper, and reconsider what it would take to make your customers truly love who you are as a brand.
Back in 2001, Umpqua, a regional bank in Oregon founded to provide loggers and farmers a banking alternative, approached Ziba, my design company, to help redefine the banking experience. Instead of getting to work designing right away, we had to discover what banking meant to Umpqua's customers. What were their attitudes about banking in general? How did community banks like Umpqua, with its 65 branches, fit into that picture? How did large commercial banks fit into that same picture? With the convenience of online banking and ATMs, what would motivate customers to go into a bank in the first place?
Customers Crave Personal Service
Next, Umpqua had to understand its own culture. What did Umpqua believe in? What was it good at? What did it stand for? What could it stand for?
After researching these questions thoroughly, Umpqua found its customers were craving intimacy. They were tired of the impersonal service they received from regular banks and suspicious of financial institutions in general. While other banks were competing with a convenience strategy centered around the Internet and ATMs, Umpqua identified an opportunity to provide customers with a "slow banking" experience that was both inspirational and encouraging. This translated into comfort and personal service—a hotel/retail metaphor with a modern-craftsman aesthetic.
The result was a flagship store in Portland's Pearl District that delivered an unprecedented banking experience tailored to the specific needs of Umpqua's customers and the unique expression of Umpqua's DNA. It also happened to make Umpqua a lot of money. The first week the store was open in April, 2003, it generated $1 million in deposits.
Nine months into the first year, the new store had a record $50 million in deposits. Since then, Umpqua has rolled out stores based on this template in other cities in Oregon, and created a smaller version for smaller neighborhoods.
Starbucks Recovers from Disaster
Customers will forgive brands with which they feel an authentic bond. Starbucks (SBUX) is the story du jour of a company whose strategy went from grassroots to gimmicky somewhere between the original handful of stores in 1982 and the more than 15,000 in 43 countries today. By its own admission, the company lost sight of who it was and what their customers wanted.
However, CEO 's process of recovery from this potential brand disaster is what makes this story so compelling. Schultz chose the path of integrity: He publicly admitted Starbucks' role in its own decline and invited others to participate in the company's recovery. Transparency is a requirement for companies striving for authenticity. And, from his public admissions all the way to the launch of the social networking site mystarbucksidea.com—which invites customers to submit store improvement ideas—Schultz has embraced this concept in spades.
Now, instead of the media focusing on the dilution of the brand, the press and the blogosphere report on how Starbucks rediscovered its DNA. While the future remains to be seen, my bet is on it recovering gracefully.
The Art of the Authentic Relationship
The women's clothing store Anthropologie is another modern, authentic success story—with a twist. Anthropologie's retail environment is an artful rendition of a French market that creates a mood of discovery and whimsy. While the merchandise is a unique mix of found objects from around the globe, the store is as close to a genuine French flea market as is the French bread sold at Safeway (SWY). However, customers have been known to spend over an hour in a store and close to $80 a visit.
Anthropologie has made an art of the authentic relationship. The company's customer is not a roughly sketched demographic. Nor does it expect to sell to everyone with a one-size-fits-all approach. Anthropologie has dug deep into the subtleties and nuances of the psychographic profile of a specific type of thirtysomething married woman. Anthropologie outlets are an extension of her adventurous, bohemian-chic self that doesn't get much play when she's juggling a career and kids. Connections like these accounted for growth of 18% in the fourth quarter of 2007 in an overall disappointing quarter for the women's apparel sector. Not bad for a company that doesn't advertise.
Let Your Customers Be Themselves
This is what it means to forge an authentic relationship with your customers. It's not the kind of relationship that lasts for only one season or that comes on suddenly because your product is cheaper or more beautiful than another's. It's the kind of relationship that emerges because you offer something that caters to an essential desire and makes your customers feel they can be themselves. It's the kind of relationship that allows for mistakes and creates a bond of loyalty. And having established an authentic bond doesn't mean you can rest on your laurels. People change, trends change, and you must always be willing to reinvent yourself as both your company and your customers evolve.
If you follow this approach, your true tribe will love and reward you for it, then spread the word on Yelp.com, Epinions, Twitter, Digg, Amazon.com (AMZN), and so on. It is hard work. It takes courage and a willingness to give up trying to be everything to everybody. But in this day and age, your tribe demands it—and your business depends on it.