When your brand says no

Editor’s note: Martin Thoma is an author, speaker and blogger on how to live your brand. Opinions, commentary and other essays posted in this space are wholly the view of the author(s). They may not represent the opinion of the owners of Talk Business & Politics.
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Most conversation, strategy and planning about brands has to do with what they are and how they are different. But brands are for saying no as well as yes. In fact, you might argue that it’s in the difficult decisions of what not to do that the brand’s edges become crystal clear.

This can be a difficult enterprise. Strong brands make strong fences — barricading out the competition, differentiating your organization, defining your company, product or service. But brands by nature must also fence one in. “You can’t be all things to all people,” the old saw goes.

Same for brands.

Can you imagine an organization and a brand that’s passionately devoted to human health and wellness yet also sells millions of dollars of known carcinogens every year? Of course you can. Walgreen’s, Rite-Aid, virtually every corner drug store in the U.S. fits that definition. Except CVS Caremark, which made a very conscious and costly decision in 2014 to eliminate the sale of all tobacco products from its stores — a $2 billion per year revenue producer. Granted, the company has $123 billion in annual sales. But that’s still two billion with a “b” that Caremark swore off.

The move is in line with its business evolution and brand — that of becoming more focused on healthcare services and delivery and less dependent purely on retail. As it developed mini-clinics and similar services it recognized that flogging tobacco was simply inconsistent with its position in the market and its future as a healthcare company.

Next, will CVS stop selling sugar-laden soft drinks and other foods that are contributing to the nation’s epidemic obesity? Such questions underscore that living your brand can create challenging ethical and business decisions.

The Walt Disney Company encountered this dilemma decades ago when it began diversifying and buying up other film and media companies. A company and brand that was defined and loved for “wholesome family entertainment” was suddenly shopping R-rated sex and violence. Disney was making business decisions irrespective of its brand equity – or in spite of it. Decades on, the brand still encompasses these very disparate energies – the Magic Kingdom, the beauty of childhood, the princess stories – in the same house of brands as R-rated action films full of blood and guts and the spotty programming of network TV.

In the early days of Southwest Airlines, founder and CEO Herb Kelleher was listening to his executive team argue that the company was getting creamed in customer surveys and the media for its chintzy peanut snacks. After all, Southwest was competing with legacy carriers who were still accustomed to providing a full complimentary meal with every fare. The executives wanted to upgrade from peanuts to a Snickers bar.

“Do you have any idea how much a Snickers bar weighs?” Kelleher thundered. “Do you have any idea how much fuel it’s going to cost to haul millions of Snickers bars millions of miles around the country? Do you have any idea what that’s going to do to our fares?”

The answer to the Snickers switch wasn’t simply “no,” but “hell, no.” More fuel costs would equal higher fares. Higher fares were antithetical to the airline’s business model and its brand.

Another famous Kelleher story underscores the point. On reading a letter from a passenger bitterly complaining about the flight attendant’s lighthearted passenger safety announcement, a matter at which she took such great offense she promised never to fly Southwest again if it were not changed, Kelleher penned a three-word response: “We’ll miss you.”

Apple’s Steve Jobs was noted for saying no to many more business ideas, product ideas and line extensions than he ever said yes to. If it did not align with the company’s core ideology of simplicity, elegance and the potential to change the world, it was a “no.”

One of Thoma Thoma’s clients  a small-town community bank — is clear that it will not be the lowest priced bank in its market. It won’t have the lowest loan rates and it won’t pay the highest checking and CD rates. It knows that price competition is a race to the bottom. It knows to be true to its core of being more meaningful, more involved, more committed to its communities; it cannot be the Walmart of banking. So it won’t compete on price and is clear with customers that it is not a “we’ll match any competitor’s price” bank. But it does compete on accessibility, problem solving, expertise and culture. It’s winning too. It’s attracting all-star talent, building an irresistible culture and growing assets by nearly 25 percent in just this one year.

Thoma says no to “creative shootouts.” That’s an advertising industry term describing a common practice of clients acquiring agency services by mounting a “pitch” in which each agency is invited to do its best thinking, provide its best research and produce a speculative creative campaign for the prospect. The prospective client then picks the campaign it prefers and the agency that did it to win the business. A similar approach is sometimes seen in architectural services and in “design competitions” for high profile public commissions.

Our view is that our brand is defined by a hard-won expertise and our product is grounded in a rigorous research and development process. Therefore give away our intellectual property in a gamble for new business. We simply don’t participate in creative shootouts – doing so would make a mockery of our position and destroy any credibility established with our employees and our existing clients. It’s not easy; it sometimes means taking a pass on business with which we know we could excel.

If you’re a law firm, what cases will you not accept? If you’re an ad agency, what accounts will you not represent? If you’re a manufacturer, what line extensions will you say no to? If you’re a restaurant operator, what foods will you not serve? What does your brand say “no” to?