Part 3: Reputations > Brands

  • Many times, brand proponents make the implicit assumption that a brand in itself helps a establish a sustainable competitive advantage or a “moat” as Warren Buffet calls it. ?Buffet uses Coca Cola as an example where you can’t beat their brand is so strong. I disagree. They have massive distribution and distribution relationships. ?However, if someone offered their distributors a better deal that they could back up, why wouldn’t they switch?
  • I truly believe many people overestimate how loyal consumers are. Consumers are fickle. They will switch if you have a better offer, you can justify the switching costs, and you make it easy.
  • However, a credible reputation, a cousin of branding, is far more important than branding.
  • To me, a great reputation includes characteristics such as integrity, politeness, speed, leadership, quality, aggressiveness, fairness, knowledge, honesty, and reliability.

Even if you’re extremely well known through massive branding, consumers will select your competitors based on either indirect or direct reputations, which you can establish in mere seconds.

How do you establish a fantastic reputation? The following are some examples:

  1. Do what you say you will; be on time and early
  2. Go above and beyond
  3. Create fantastic communication
  4. Draft agreements with integrity; don’t screw people over
  5. Be more transparent
  6. Find a win-win and don’t be greedy. Think about the other person’s interests.

The Death of Brand Advertising

“Most People Lose Money When They Advertise.”

Where’s the empirical evidence? Brand advertisers. Ideally, I’d provide empirical evidence, but I’ll use the following shortcut instead:

I estimate more than 95% of ad campaigns lose money by beginners. For experienced marketers, over 50% of campaigns still lose money. It’s not even a 50/50 bet.

If you’re new to advertising, you will lose your shirt unless you do the following:

  1. Generate a strategy with measurable revenue per acquired lead
  2. Hire the best designers that understand direct response. Never hire a team of “creative” designers who focus primarily on aesthetics instead of sales process, although they are not mutually exclusive
  3. Make sure you have a solid sales process so you don’t have cash leakages (eg. unclear forms/hard to navigate)
  4. Create a scientifically significant test using a statistically significant sample using your desired confidence interval
  5. Analyze the test
  6. Keep tweaking the process until your revenues exceed costs
  7. Roll-out slowly.
  8. Monitor
  9. Roll-out more and so on…

It’s amazing that big companies like car manufacturers spend millions on testing vehicles and try to get “lucky” the first time with their ad campaigns, with little to no testing involved.

Respectfully, I don’t care how much money you’ve made, who you are or whether you’re Donald Trump, Warren Buffet, or Bill Gates. Branding advertising is a waste of time.

Lastly, I agree there are exceptions to all rules. Still, generally brand advertising is abused and not used cost effectively.