When companies and brands unrealistically extend themselves, is it any wonder why consumers abandon them?
By Dwight Fletcher, CEO Spearfish
The mass conglomerates of the 1980’s business world are largely a distant memory, but we would do well to remember the lessons learned through this corporate rush to enlarge, because we see a similar misstep far too often.
We have all met or read about people and companies who claim expertise across such a broad spectrum of competencies that we begin to wonder, “Can they really pull that off?” The answer is a resounding “No!” The reasons are actually quite simple.
Each company or brand has, or should have, a small set of core competencies, a focused list of areas in which they excel, particularly when compared to their competitors. This list should be rather small (we recommend 2-3) and be easily stated and understandable by consumers who are in the business of engaging with these companies and brands and, ultimately, purchasing their offerings.
OK, all is well at this point. But here is where trouble often creeps in.
All too often, when asked what their companies do best, ambitious and aggressive (and well intended) C-Level executives offer up a litany of competencies for consideration in which they honestly feel their firms excel. It is not unusual for these to extend well beyond the competency limits for which consumers legitimately give them credit. In consumer language, it is the same scenario when one friend tells another, “I don’t see you that way.” As an example, when a restaurant adds menu items that don’t really belong on their menu but do it strictly because they have watched these items deliver profits at other chains, this “not belonging” can confuse customers and begin to erode the brand’s positive image in their minds, albeit in small ways at first. But, in the end, continuing to add these types of items is like death by a thousand cuts, ultimately leading to a brand that loses familiarity, that no one really knows anymore.
Likewise, when companies are considering adding services, they should always start with what they do best, then question whether the new service up for debate is within “striking distance” of their core services or if it represents a service that lies far outside them. We call those closer-in offerings believable competencies, because it is only what the consumer believes that matters. These are smart to consider, and with wise integration can add new life to the company and help it compete with renewed confidence. And, importantly, consumers recognize it – and believe it. They are quick to understand that these believable competencies are well within the wheelhouse of the brand, what the brand does well, what it can pull off.
Other offerings are similarly recognized as outlying offerings, and consumers quickly assess them, get confused, and begin to question the company’s strategic mindset and direction. Oftentimes, they begin to look to other brands and, if the next company they consider can deliver the services the first company was known for, this next company can effectively replace all of the first company’s business with their own offerings. So, what began as a toe in the water with some exciting new offerings can lead to consumer disillusionment and loss of customers.
In the end, it is always best to take a tough-minded inventory of your core competencies and an even tougher evaluation of the products or services you are considering adding before taking any permanent action.
Unintended consequences often await those who fail to heed this advice.
Whereas closer-in believable competencies are welcomed into the fold, when companies introduce outlying offerings that stray too far from their core competencies they risk customer backlash and brand erosion.