What makes a brand successful in the digital age? A joint study by SAP, Siegel+Gale, and Shift Thinking suggests that digital brands don’t just do things differently; they also think differently.
Where traditional brands focus on positioning their brands in the minds of their customers, digital brands focus on positioning their brands in the lives of their customers. Furthermore, they engage customers more as users than as buyers, shifting their investments from pre-purchase promotion and sales to post-purchase renewal and advocacy.
As part of our study, we conducted an online survey of more than 5,000 U.S. consumers and asked them about 50 different brands, both digital and traditional. We asked them about their perception, usage, preference, and advocacy for the brands. We also supplemented the survey with well-known brand rankings, Net Promoter Scores (NPS), and an analysis of their marketing expenditures and strategies.
We found distinct differences between legacy/traditional brands and newcomer/digital brands. For example, consider the following “brand twins”—pairs of legacy and newcomer brands that compete in the same industry. In every case, the legacy brand rated higher on the statement “Is a brand that people look up to.” But the newcomer brands all rated higher on the statement “Makes my life easier.”
- Airbnb vs. Hilton/Marriott
- Dollar Shave vs. Gilletteli
- Red Bull vs. Coca-Cola
- Venmo vs. American Express/Visa
- Tesla vs. BMW
Respondents were more likely to hear about legacy brands through advertising and traditional media, compared to digital brands which are more often discovered via social media and direct word of mouth. Survey respondents show more loyalty to usage brands. They had stronger advocacy in the form of spontaneous recommendations to others. And they showed a higher preference for usage brands over competitors, not just in making the purchase but in a willingness to pay a premium in price. On average, the usage brands were willing to pay a 7% premium, were 8% less likely to switch, and were more than twice as likely to make a spontaneous recommendation of the brand.
More broadly, the shift from purchase to usage suggests that we need to rethink how we measure brand equity. The key is to think about prospects not as buyers, but as future users.
Bonchek, M., & Bapat, V. (2018, February 7). The Most Successful Brands Focus on Users—Not Buyers. Harvard Business Review.