Thursday, February 25, 2010

Feed the Beast, Starve the Brand. Just ask Toyota.

Domino's. I'm not talking about a Pizza chain. I'm talking about all the ones falling at Toyota.

It's gone from pristine image to recalls to hearings on Capital Hill to now being investigated by a grand jury and the SEC, and rapid evaporation of customer satisfaction at its dealership as people wait days - even weeks - to get their defective vehicles fixed.

Poor Toyota.

But this all could have been easily avoided if it would have followed one simple premise: Make brand decisions not bottom-line decisions.

When you make most or all of your business decisions based on boardrooms and the bottom-line, you are focused on the company. When you make your business decisions based on your brand promise, you are focused on the customer. In the immortal words of Wal-Mart founder Sam Walton, "the only person that can fire me is the customer." Are you listening Toyota?

By focusing on itself, failing to listen to initial customer complaints, sourcing inferior materials, neglecting to issue recalls sooner than later, covering up and trying to cover its tracks, all in an effort to save a buck, Toyota has cost itself dearly in the form of brand damage. I saw a figure that estimated it's loss of brand equity in the billions. That's a multi-billion dollar punch to the gut that is already hitting them in the wallet and could take years to recover. If ever.

When you choose bottom-line over brand, you also might as well hand over your playbook to your competitors because eventually you will lose. In fact, this could be the best thing that ever happened to GM and other American car companies. Whereas Toyota failed to knock out it's American brethren when they were being bailed out by the government, GM has been given another at bat. But I wouldn't just swing away at reliability and dependability. I'd hit 'em where it really hurts: Trust and transparency. If customers believe in you, there's a good chance they will believe in your products.

The Toyota meltdown tees up another opportunity for me to talk Southwest Airlines. It's business model is its brand model and vice-versa. That allows it always stay focused on the customer and continue to profitably soar.

Remember: when you feed the beast, you will starve the brand.

These are my Guts Feelings.

1 comment:

  1. Brilliance again, my friend. And I just plastered it all over Twitter. :D

    I enjoy reading your insights and don't think I'm done learning from you... :)

    Hope you're well!