There was a time when Brands were like trusted family members.
They lived in our homes, partnered in our lives, and were a fully intimate part of our daily routines. They sat on our breakfast tables, guarded our bathrooms, drove us to school and work, and protected us from illness.
We trusted these Brands to deliver on their promises. And as the old saying used to go on Madison Avenue, nothing kills a bad product faster than good advertising.
While earning trust has long been fundamental to a Brand’s role, and remains a fundamental component of brand building, it’s becoming harder and harder to earn trust with today’s consumers.
I have written many times about Y&R’s proprietary Brand Study BAV, Brand Asset Valuator. To refresh your memory (or if you are new to my Ramble), BAV is the leading and largest global database of consumer perceptions of brands. BAV data has allowed us to construct a model of how brands are built, what makes them decline, and how we can position them to sustain their strength.
BAV shows us that Trust is a key driver of how people feel about a Brand and their consideration for both initial and continued engagement. But, in the last 15 years, Brand Trust has slipped precipitously from 44% in 2001 to a low of 18% still trusting in their brand in 2017.
In the past, Brands like Procter and Gamble and General Mills enjoyed our unconditional confidence and faith. Today while some of the ‘old guard’ still engender faith, there is a full new guard of Brands out there, like Amazon and Netflix, who were nowhere on the map back then…but have topped the charts in no time.
The truth is, Brands were forced to adjusted to rising costs and demanding investors, and quarterly earnings took precedence over fulfilled consumers. Packaging changed, ingredients shifted, and service standards were lowered. Trust? It followed. What you were buying was not what you once bought.
Yet here is the conundrum: Even as Wall Street became more unforgiving to the bottom-line, and activist investors obsessed over quarterly performance, Purposeful Brands (as in, Brands going beyond their own profit margins for social good) stayed strong. To succeed in today’s world, Purposeful Branding has become a buzz phrase, and a new focus of many of these same shrewd investors.
One of the most talked about statements on the importance of purpose was recently made by Founding CEO Laurence D. Fink of BlackRock in a corporate note shared with Aaron Ross Sorkin of the New York Times. Fink wrote:
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
“It may be a watershed moment on Wall Street, one that raises all sorts of questions about the very nature of capitalism.”
Sorkin then spoke to Jeffrey Sonnenfeld, a senior associate dean at Yale School of Management, who said:
“It will be a lightning rod for sure for major institutions investing other people’s money. It is huge for an institutional investor to take this position across its portfolio.‘‘ He said he’s seen, “nothing like it.”
And at the annual World Economic Forum in Davos, not only was this a talked-about statement, but it was a topic of much discussion across industries and countries alike. This culminated in some amazing statements of purpose…no pun intended.
PepsiCo’s Indra Nooyi, Renault-Nissan-Mitsubishi’s Carlos Ghosn, and Theresa Whitmarsh of the Washington State Investment Board all weighed in for The Telegraph:
“When you start focusing on the long term and you really want to transform the company, investors are typically impatient. And they’re highly critical.” Mrs. Nooyi said. “If you are doing something truly strategic, it evokes criticism. They kept telling me, ‘Why are you Mother Teresa?’”
Mr Ghosn agreed. “Young companies don’t have to worry about short-term results, but if we had negative quarterly results, we would be crucified,” he said.
Mrs Nooyi said: “Finance and accounting has trumped strategy excessively. The whole world is ratio and accounting driven.” Shareholders “blindly look at numbers”. She added: “A bunch of number-crunchers put out a spreadsheet and think that is strategy.”
Mr Ghosn added: “Every day we see CEOs fired because shares didn’t move in the last year. Short tenure is a big problem.” However, he predicted that Fink’s letter will “spark change in the financial community”.
Theresa Whitmarsh, of the Washington State Investment Board, one of America’s biggest institutional investors, claimed “companies with a myopic focus on short-term earnings are sowing the seeds of their own destruction”. Long-term investment would boost returns, she said.
Yet back in the 1970s, when Brand Trust was high and seemingly endless, world famous economist Milton Freidman said:
“If our institutions and the attitudes of the public make it in their self-interest to cloak their actions in this way, I cannot summon much indignation to denounce them. At the same time, I can express admiration for those individual proprietors or owners of closely held corporations or stockholders of more broadly held corporations who disdain such tactics as approaching fraud.”
Fraud! That’s what he would call the drive for purpose today. And yet, it does seem to be what consumers crave.
But today, I think Milton might rethink his position. You see, Trust was once a one-dimensional measurement. And when Brands started abusing that one-dimension, Trust dropped. Add to that the Fake News, health scares, and Equifax-like issues, and that stone just keeps dropping.
Defined by BAV, Trust is much more nuanced. We define the dimensions as comprising the following:
Purposeful, a component of the overall Trust category, is itself the sum of:
- Socially Responsible
Plus, Purpose is gaining momentum. The impact that purpose has on Differentiation has grown by 19% since 2007, and Purpose has 42% greater impact on trust among Millennials.
Needless to say, there is a Millennial spin here, with the conventional wisdom being that they will only buy products from Purposeful companies…however that may be defined in their minds.
So where are we now? Paul Polman, the Unilever CEO who once wanted to be a priest, has waged a public campaign for CEOs and shareholders to improve people’s lives by providing employment and sustainable manufacturing. His belief is that, by eroding poverty, wealth creates consumers…which, of course, creates more value for all.
But then there’s my favorite example, United Airlines, who dragged bloodied passengers off of planes and had one of their most profitable years ever. Price and convenience seem to have trumped purpose and trust.
So where does all this leave us?
Bottom line: There is sufficient evidence to show that Trust—and Purpose, in all its complexities—still drive value. My sense is that when it’s real, Brand Purpose works. And although we get taken in by Fake News and such, faking Brand Purpose is quickly discerned, and the backlash can be disastrous.
So Trust built on Purpose can move business. The only question is: Are you ready to take the leap of faith that Paul Polman did, or are you of the Milton Freedman school?
“Never believe that a few caring people can’t change the world. For, indeed, that’s all who ever have.” – Margaret Mead
So never believe that a few caring companies can’t change the world…the question is which way do you want the world to change?
What do you think?