Move from Commodity to Brand

The “bed wars” are officially over. The New York Times says so. You can walk the streets more safely at night knowing that the battle of the bedspreads has come to a halt.

Most travelers have noticed something since 1999. Perhaps you have noticed the Heavenly Bed by Westin or the Marriott’s 300-thread-count sheets or Hilton Hotels’ recent $1 billion effort to brand signature beds and accessories. Did you stop to ponder why? Why were hotel chains investing in upgrading their bedding? And why were hotels selling bedding and accessories, anyway?

Urban legend has it that the bed wars were conjured up by hotel marketing departments eager to distinguish themselves from their competitors. By some standards,
the hotel industry sells a commodity: A room is a product that many people purchase by price alone. How do you transform a product or a service from being a commodity? How do you move from commodity to brand?

One way is to stop selling by price alone. The buzz these days is about brand. A brand is a promise of an experience. The bed wars were a marketing technique to move hotel rooms from commodity to brand—to make a hotel stay an “experience.” When you stay at a Westin, you are promised the experience of a Heavenly Bed.

From commodity to brand is a journey every 21st century company needs to make. Branding is the future of marketing. It is something that you do with a customer. Selling is something you do to a customer. How can you engage your customer? How can you make the process interactive?

Branding is about them, not you. It’s about how what you do makes their life better. Powerful brands make powerful promises to the people they care about. It’s not about how good your product is or how long you have been in business. It’s about how your product or your experience will help customers do something that they want or need to do.

Consider these marketing lessons learned from the bed wars:

1. How can you conjure up a strategy to differentiate yourself or your company from your competition? In today’s world, those who differentiate win. How can you conjure up a strategy so that you and your client win?

2. How can you give more value? It’s rarely about price; it’s about the value that you deliver for the price. When the value—a night’s sleep—went up, so did the price.

3. How can you make your product or service an experience? The jewelry store with the to-die-for coffee machine, the dentist who offers hand massages while in the chair?

4. How can you take control of your market? The decision to be a brand is a decision to take control. What is your brand promise?

5. How can you consistently deliver on your promise?

The bed wars are over, but your branding war may be just beginning. What will your winning strategy look like? What is your brand promise?

Leslie G. Ungar (leslie@electricimpulse.com) is president of Electric Impulse, Inc.


The Brand-Perpetuation Connection

An agency’s goodwill dramatically impacts its enterprise value—i.e., the value that comes from its reputation or brand in a community and from recurring revenues streams from high-quality customer relationships.

When an agency principal decides to sell his agency, it is important to consider how his absence may affect the agency’s value once the transition is complete. The agency can enhance its attractiveness to a potential buyer by doing things to preserve its value after the seller is gone. This reality should be a strong incentive for agencies to embrace the Trusted Choice® brand and the Pledge of Performance as it provides an objective and meaningful framework to brand the agency apart from the principals and to help ensure brand continuity.

As consumers continue to recognize the value of Trusted Choice® agencies, the impact of the brand on agency valuations should only increase. The increased consumer awareness of the choice and customization that an independent agent can bring can only benefit the agency and, in turn, improve agency value.

The 2006 Agency Universe Study finds that the average age of agency principals continues to increase. The likelihood that a significant number of agencies will be bought and sold in the next few years continues to grow. The succession planning process starts with an understanding of agency value. Branding, as a driver of value, is not an overnight endeavor. Joining Trusted Choice® is an inexpensive, proven way for an agency to initiate the branding process sooner rather than later.

As lenders to the independent agency community, we review numerous business and succession plans. Agencies that show a commitment to customer service, understand their brand in the community and employ best practices in agency management usually reflect superior financial results. These agencies tend to be competitively positioned and are likely to receive higher valuations by potential acquirers. As a branding strategy, Trusted Choice® is a simple way to achieve quality brand awareness.

Dave Tralka (dtralka@insurbanc.com) is president and CEO of InsurBanc.