“When Updrift and Downdrift happen, issues such as value, practicality, affordability, “fit,” and relevance rear their ugly heads and come into play- usually quickly.”
By Stefan Paul Jaworski
“He who builds his castle on sand will watch it sink before his own eyes.”
One of the most significant realities since the dawn of organized business has been the problem of attracting the wrong customer. For many decades there was little understanding and comprehension that “all customers” were not good for a company and its brand(s). Indeed, to even suggest that some customers should be avoided would be scorned upon and even treated with contempt; after all “customers were what kept a business going”. It was seen as insanity to suggest that “any” customer was not worth getting for a brand- never mind many.
As the ability to analyze business and operations dynamics, as well as purchasing psychology, has increased over the last decades, we have been able to discover the effects that customers have on many aspects of company and brand - both tangible and intangible. Via this information it has come to light that too many resources including labor, capital, emotive/stress, operational, and technological are negatively effected and even squandered by wrong customer acquirement- to the tune of billions of dollars per annum. In fact, for some companies and their brands, the negative consequences resulting from wrong customer acquirement actually become fatal resulting in turmoil and bankruptcy. Wrong customer acquisition can simply be debilitating for a brand.
A good example is that of the 2000 collapse of Pets.com, the pioneering and largest internet pet food supplier ever. The reason for the downfall of this much hyped firm that even had Super Bowl advertising? Pets.com simply attracted en masse the wrong client: price conscious internet shoppers known for their lack of brand loyalty, fickleness, trendiness, total dedication to hunting for a lower price, their intolerance for even acceptable product problems resulting in massive return levels, and their desire for change for change’s sake. In other words, Pets.com built a “high maintenance” customer base that would churn and burn on a dime, and that is what they did: complain, return merchandise, use once or twice and then leave. Literally, a customer base built on quick sand.
For me, one of the most damaging, yet intriguing, facets of wrong customer acquisition is that of attracting (intentionally or not) customers from the wrong segments- in other words, what I like to call Updrift and Downdrift. Updrift to me is the attracting of customers from a lower segment into a higher one- from say the mid market into the low premium, or the low premium to the premium. This attraction is often intentional as a brand desires to “have as many customers as possible from wherever”- the “no customer is a bad one” philosophy.
Indeed, as we have seen, an often bad philosophy. An excellent example is found in real estate, where both banks and agents want to see people buy “as much house as they can”. So, a young family initially looking at a $100 k home, now gets pulled up into a $180K one because the bank gladly gives them the mortgage and the agent says they should “go for it”. But the long term result is disaster- for the bank, the home builder, the realtor, and most of all the customer. The family cannot afford to furnish, pay taxes on, landscape, or maintain the home and loses it. The bank loses the entire loan value from bankruptcy, the builder gets another of its homes (now used and lower priced) back in the market competing with its newest ones, and the agent gets a few points shaved from their reputation. Everyone loses. The same has happened, and does happen, to brands everyday in every category from Updrift. Indeed, when Updrift and Downdrift happen, issues such as value, practicality, affordability, “fit”, and relevance rear their ugly heads and come into play- usually quickly. No brand can escape the fact that: the realities and emotional undercurrents underlying purchase that exist within all customers’ minds will eventually surface and come into play- for all brands. The further out of their natural segment a customer is pulled, the more likely that negative consequences resulting from such realities and emotional undercurrents will be severe.
A case in point is Gucci in the 1980’s and early 1990’s when the brand decided to make Gucci available for everyone via extended channel availability. Gucci could be found everywhere- from small, local shopping mall retailers to even big box discounters like Costco. The powerful initial “pull” generated from such a super elite brand now being available to the masses gave rise to a large Updrift phenomenon that has rarely been seen since- an entire market of middle class purchasers going up to the wrong segment, lifestyle, products, and brand all at once. Hence, for a while, we saw secretaries carrying $1,000 dollar Gucci handbags to work, the bar, and on the bus; we saw middle class housewives and even students “splurging” on trying to get some artificial class into their middle class lives. The novelty of “purchased” class, style, and eliteness for out of segment, non traditional Gucci customers was strong for a very brief period and especially successful for Gucci in sales terms. But then came the “adjustment”- the critical point in time where reality and realization set in for the “out of segment buyers”. Suddenly, the middle class customer found that having a Gucci branded product did not transform them into a “super elite” of class, style, and means and that a $1000 handbag made them no different than say a $50 dollar one. The perception of “value” regarding Gucci suddenly oriented back to reality for those used to judging products first for price and usefulness, then identity, as opposed to sheer status and style irrelevant of price. Middle class reality crept in.
No Brand Can Escape:
-The realities and emotional undercurrents underlying purchase that exist within all customers’ minds will eventually surface and come into play- for all brands.
-The further out of their natural segment a customer is pulled, the more likely that negative consequences resulting from such realities and emotional undercurrents will be severe.
And even for customers that did like and value Gucci products, repeat purchase was almost impossible at price points well beyond middle class incomes. For instance, when the customer got tired of their first Gucci purchase, or wanted to add more to their collection, their perusal of other product offerings and their extreme price points resulted in sticker shock and thus “purchase stall”. In fact, most initial purchases by the “Updrifted” customers were at the entry level of price point and hence they could go no farther in purchases, and thus relationship, with the brand. This phenomenon also stalled the evolution of the customer-brand relationship in terms of: continued learning about the Gucci brand, emotional bonds with the brand, lifestyle attachment with the brand, and brand loyalty. Customers that are locked out of purchasing a brand’s products do not grow with a brand in any way- and they leave.
Also, an extreme style brand like Gucci is usually not for the “masses” in terms of practicality and “fit”. Indeed, when presented with higher end fashions and goods, especially clothes designed for fashion models, many middle age, middle class mothers were simply alienated and “turned off” (reminded they were not part of the beautiful set). Thus, the customer brand relationship stalled at the first wrung- it could go no farther for the out of segment customer. A natural happening: “wrong customer, wrong lifestyle, wrong relationship… wrong brand”. Hence, the middle class bolted as fast as they arrived for Gucci and the result was disastrous: the brand financially came within inches of failing. But the biggest problem was the damage done to the brand’s identity and especially position. Gucci was no longer elite in many of the eyes of its original, traditional, in segment (super rich and beautiful) clients- it had sold out to the masses; it had become “common”. It took radical change from a new CEO in the form of a total re-branding effort and nearly a decade of time (and distance) to undo the damage- and work is still going on. As Gucci will agree, attracting the wrong customers/Updrift can be devastating.
Another example of self induced Updrift has been that of pen maker Mont Blanc. Initially a very high end brand catering to royalty, the famous and ultra rich, Mont Blanc has now extended downwards into the middle market to ironically try and “elevate” pen users into “fine writing instrument” purchasers. Just like Gucci, Tiffany, and fellow writing instrument makers Parker and Cross, Mont Blonc is finally realizing that intentionally elevating consumers into a non-appropriate category (Updrift) is a big mistake. Sold via a mish mash channel of shopping mall stores, key chain retailers, department stores, big box retailers like Sam’s Club and Costco, and nearly anybody else, Mont Blanc is not what it used to be- especially to its middle class (Updrifted) buyers.
As usual with prestige brands that experience Updrift, the novelty wears off and the non traditional customer reverts back to their normal emotional, practical, and value based methods of brand and product evaluation. Hence, what often happens to the junior executive, the homemaker, real estate agent, or office worker, is that the Mont Blanc pen loses its luster and simply becomes an impractical purchase they will not make again- sometimes even resulting in “buyer’s regret”. A plus $100 dollar pen (at the least) is simply not a practical or value based purchase for most middle class consumers- no matter what lifestyle, prestige, or value promises the brand makes.
The intentional Updrift of clientele for Mont Blanc was a very poor choice and has not been successful in the short term, and looks equally bad for the long term. In a late 2003 Merrill Lynch research report, Mont Blanc’s parent company Swiss-based Richemont reported large downswings in sales of about 15% for 2003, with a 42% loss in attributable profits, with continued losses for 2004 of not much better. Historical losses for the company for the last several years have also been large . The fact that the losses have been generally across the board for all of Richemont’s prestige brand holdings in every category logically points me to conclude that not only just a bad economy is at play- as not just U.S. sales are effected. But, that another factor is at work and the parent’s other luxury brands including Cartier, Van Cleef & Arpels, and Piaget all are suffering from Updrift. If this is indeed the case, this situation will only get worse as many more of these “temporary” customers leave these brand’s folds.
For the original/traditional target customer such as movie star, politician, business owner, or wealthy businessperson, Mont Blonc is a natural compliment to their lifestyle, a reminder of their status and lifestyle, and its purchase price is simply a formality at the most. This segment of traditional buyers, usually a small percentage of the market, is nonetheless large enough to sustain and carefully grow the Mont Blanc brand for decades- as well the “die hard” aficionados of any income level. But basing brand success on masses of Updrifted buyers is like building a home on sand: unstable, temporary at best, and a disaster waiting to happen. In essence, Updrift’s reality of wrong customer, wrong brand, wrong lifestyle, wrong segment, wrong core values, and wrong price, will prove costly for many more brands like Mont Blanc. We may be only seeing the beginning of the ramifications from the late 1990’s trend of brands not strategically attracting the right customer for the long term.
Basing brand success on masses of Updrifted buyers is like building a home on sand: unstable, temporary at best, and a disaster waiting to happen.
We may be only seeing the beginning of the ramifications from the late 1990’s trend of brands not strategically attracting the right customer for the long term.
Downdrift:
As devastating as Updrift can be, so equally can be the attracting of customers from more premium segments downward (“Downdrift”). The pull or push downward of clients from a higher segment is nothing unusual, and often occurs because of heavy discounting, targeted promoting to encourage trial, economic difficulties like recession, or “ghosting” (the disguising of a product via packaging, creative style/look, or positioning to appear more premium). The problem with Downdrift, like Updrift, is that the customer attracted to the lower segment brand usually: is not a natural customer to that segment; is temporary at best; does not have a similar/conducive/ complimenting lifestyle as the rest of the segment; has purchase behavior with other branded products that is “out of sync” with the lower segment in general (does not reinforce out of segment purchasing). All of these factors point to one certainty in the short and long term: irrelevance.
For instance, with Budweiser, its ubiquitous presence, macho image, “all-American proud” values, party/fun lifestyle, and lower price, often attract customers from domestic higher segment beers such as Michelob, various micro brews, etc. However, this is only temporarily (a handful of occasions per year maybe), as the complete Budweiser brand image, lifestyle, and core values are simply not conducive in total. Besides “rah-rah” America, fun, and macho, Bud is a “working man’s beer”- a beer of the simple life, Levis jeans and a t-shirt, sports, and the state fair. Efforts to market Bud as a “suit and tie” drink for sports yuppies (ala Jerry McGuire) simply has not been as successful as expected because the core values of Bud eventually rear their head and remind the Downdrifted buyer they are indeed out of segment. In other words, you can drape a Chevy in a BMW logo and paint job, but eventually the cosmetics wear off, and it becomes painfully evident it’s a Chevy. Bud is not the core values or lifestyle of Formula 1, Chanel Jeans, Patek Philleppe, Waterman pens, BMW, or beluga caviar. Budweiser is NASCAR, Levis or Dockers, Timex, Bic, Chevy and Ford, and hamburgers. Sooner or later the Downdrifted customer simply gets reminded by these many points of difference that they are indeed out of segment: wrong image, wrong price point, wrong lifestyle… wrong brand. And Budweiser loses another “temporary” customer, but gains another negative advertiser of its brand: “Bud? Didn’t like it! Yeah I drank it for a week, but it tasted like water, is the drink of hoosiers, has the sophistication of a trailer park, and it’s my grandpa’s beer!”
No wonder Anheuser-Busch is scrambling to find a way to remarket Budweiser over the next decade. Like Coke and Pepsi, and many other brands, a chunk of Bud’s customer base has been built on the sand-like foundation of “churn and burn”, out of segment customers via both Downdrift and Updrift- a scary base for any brand in the long term. Choosing your customer wisely with a strategic eye to the future, with strong segment and lifestyle focus, and geared towards the ultimate goals of individual customization (segments of one) and evolution are what are required to ensure a strong, loyal/dedicated, happy, and continued “relevant” customer client base for any brand. The results of not doing so includes:
• A large part of the client base that is mis-targeted, and thus temporary, and whose eventual unhappiness with the Brand (from irrelevance) will result in negative advocacy (“bad mouthing it”) before, during and after leaving.
• An inaccurate estimate of real market share at any time due to the client base being composed of “non traditional” and thus temporary clients. This affects strategic planning (marketing, financial, operations), accuracy of “current client” insight, and the overall ability to pro actively build the Brand.
• Constant Brand instability that occurs from having a part of the customer base that is “fluid” and “dynamic”, and thus temporary at any time. This reality effects brand thinking and decision making greatly.
• The generation of “negative influence” on brand identity, as well as internal and external clients, from having a regular turnover of dissatisfied, “out of segment” customers. This reality (often manifested by brand layoffs, production reduction, re-engineering, strategic burnout, etc.) effects image, position, brand worker morale, perception of the brand by the consumer, market, and society, and ultimately the brand-consumer relationship.
Choosing your customer wisely with a strategic eye to the future, with strong segment and lifestyle focus, and geared towards the ultimate goal of individual customization (segments of one) and evolution are what is required to ensure a strong, loyal/dedicated, happy, and continued “relevant” customer client base for any brand.
How to avoid Customer Updift and Downdrift.
First, from day one, decide on who your target audience is- and do so along a strategic basis and with discipline. Create a brand machine geared towards attracting, servicing, keeping, and evolving with this highly focused customer base. Within this brand machine implement processes that constantly gain brand-customer insight as to:
●relevancy.
●optimum brand-consumer relationship, optimum brand-market and brand-society relationship.
●nature of customer base (churn levels, level of Updrift and Downdrift) and trends within the base before they become serious issues.
●nature of current customer base thought regarding price and segment life style- to catch Updrift and Downdrift before they start.
Finally, have in place the decision making structure, programs, and key people resources that can quickly, effectively, and strategically utilize the brand insight generated and turn it into brand wisdom that keeps the brand- consumer relationship strong, focused, evolving, and free of the damaging aspects resulting from Updrift and Downdrift.
Stefan Paul Jaworski, Masters Degree Marketing, is Partner with Studio X Branding-Temporal Global Brand Consulting- a 20 year old, leading global/multinational Brand Marketing Consultancy. Clients have included Coca-Cola, Anheuser-Busch, Motorola, Panasonic, Kao Cosmetics, Panasonic, Hewlett Packard, Apple Computers, Bosch, Exxon, and Microsoft, as well as governments including New Zealand, The UK, China, and Malaysia. The firm is responsible for industry-leading articles, cases, white papers, and 11 of the Marketing world’s most respected brand strategy books.
www.studioxbranding.com
Footnotes: 1).iafrica.com. Richemont profits seen falling 42% Lynn Bolin Mon, 10 Nov 2003 2).iafrica.com. Richemont profits seen falling 42% Lynn Bolin Mon, 10 Nov 2003
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