What is more important: Brands or Customers???

To decide upon the question is one of the very important strategic issues. Whether the company should give more importance to their brands or their consumers. Lets, discuss: If the answer of yours to the question is Brands, then the company has to devote their attention to enhance their brands and  give more importance to concepts such as ‘brand equity’, ‘brand image’ and the like.

Unfortunately, that answer is wrong. The answer can only be customers. Your salary, profit, equipment and even budgets for advertising and PR come from customers. Without customers, there can be no profitability, and without profitability, there is no business. By contrast, brands can have little relationship to the success or profitability of companies.

So it is time to re-evaluate the conventional wisdom that characterizes so much brand babble today. Instead of "brand equity" and "brand architecture," companies must now focus on customer equity and customer architecture

Customer equity represents the lifetime value of customers. Customer architecture represents a structured methodology for identifying and delivering economic, experiential and emotional value to customers. Just as important, it is an invaluable tool for extracting value from customers, either through improved pricing or more cost-effective resource allocation.

Customer architecture is based on proven, well-defined strategies, goals, objectives and tactics. The strategy revolves around customer segmentation. Ideally, that segmentation is based on customer equity, but it can also be based on behavioural, geographic or even channel segments.

Goals fall into six maximization categories: campaign, profitability, resource, knowledge, operational and results. Once customers have been segmented in "gold," "silver," "bronze" or other categories, then the goal becomes differentiation.

Campaign maximization involves various tactics to improve acquisition branding. Most campaigns today measure success by how many leads, prospects or customers are generated, without any consideration to the potential profitability of those customers. Why would you want to acquire an unprofitable customer, or one who might defect at the first opportunity? Based on the segmentation strategy and differentiation goals, campaigns are generally structured and executed to attract prospects who share the same characteristics of existing profitable customers.

Profitability maximization is based on brand penetration, an umbrella term for customer, account and product penetration. Customer penetration represents share of total customer spending in your category, while account penetration is the number of persons or units at a customer who are purchasing from you. Product penetration represents the range of offerings purchased.

Resource maximization results from customer planning, a two-step process. The first step is forecasting customer profitability growth, based on existing brand penetration and customer input. The second phase is matching resources, which range from sales force time to trade show party invitations, to increase the profitability of existing customers. Obviously, golden, or high-potential customers, will get the lion's share of marketing and sales resources.

The constant need to know customer wants, needs and, most important, how they hold you accountable, drives knowledge maximization. Knowledge maximization results from Six Sigma's "VOTC" (voice of the customer), customer councils and visits, product and other collaboration, interactive communications, etc.

The goal of operational maximization is customer-centricity. Customer-centricity involves more than segmented customer service. It also involves leadership and change management, R&D/product development and pricing.

 Do customers ever think about or care about your brand architecture? Does your "brand architecture" make a measurable contribution to profitability? Do customers really care that you have, "organized and structured a brand portfolio by specifying brand roles and the nature of relationships between them and their markets. Not so much.

So all this means that you might as well play with Lego blocks as develop a "brand architecture," If you truly believe that customers represent the strategic foundation of your business, then invest in a customer architecture today. After all, without customers, even the most organized and structured "brand architecture" will collapse like a house of cards.

The customer economy has eroded the power of the mass media, and intense competition and limited resources make accountability crucial. Customers control relationships today, and they demand business on their terms. This means companies must move away from dated branding tactics and incorporate accountability, customer equity and operational excellence into branding strategies. Fusion Branding takes a fresh look at branding, focusing not on how it was done in the past but on how it will be done in the future.