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IN THIS ISSUE

JUNE 2006

A Letter from CEO Michael Dunn
Case Study: Consistent Customer Experience Key to Radisson Rebranding
Don't Let Medium Overshadow Message in Reaching Customers
Aaker on Innovation
Recommended Reading
News and Events

A Letter from CEO Michael Dunn

Procter & Gamble's A.G. Lafley calls it a simple truth, and he's right: “The consumer is boss.” Yet despite its simplicity, it's a message with incredible power. Adopting it as a mantra has created an awe-inspiring reinvigoration of the consumer packaged goods giant over the last six years.

P&G is helping lead a huge revolution among businesses around the importance of delivering on the customer experience. As Lafley said last year at the P&G Alumni Reunion, there are two critical “moments of truth” in the process: “The first is when people choose to buy our brands in the store…the second…is when (they) use our products at home, and are either delighted or disappointed.”

Like many others, P&G is using innovation as a platform for delivering the ideal customer experience. But the reality is that it's more than just innovation: It's about truly understanding customers' needs and expectations of the brand and finding ways to consistently deliver at every touchpoint.

Customer experience is the focus of this quarter's newsletter, and it starts with a case study on the subject titled, Consistent Customer Experience Key to Radisson Rebranding. In Don't Let Medium Overshadow Message in Reaching Customers, we explore some of the pitfalls that occur when marketers become overly-enamored with some of today's new channels, sometimes forsaking the fundamentals. Finally, our own David Aaker weighs in on innovation and its true impact on a brand.

Thanks for your continued interest in Prophet and our thinking. As always, we welcome your feedback.

Warmest Regards,

Michael Dunn
President & CEO
m_dunn@prophet.com

Building Great Brands and Businesses

Case Study: Consistent Customer Experience Key to Radisson Rebranding

Not so long ago, Radisson, the chief brand in Carlson Hotels' stable of 430 global properties, was battling a decline in reputation - and revenues. Despite having strong awareness and market share, inconsistent service across hotels and a lackluster brand hampered franchise growth.

Radisson brought in Prophet to conduct extensive research with both business and leisure travelers, which revealed the crucial need for increased freedom of choice and control over the hotel experience. Above all? Customers prized a good night's sleep.

In response, Prophet helped Radisson develop a new strategy for its brand that underscored what delivery of the customer experience really means and how it is achieved at every touchpoint. This thrust was supported operationally with the installation of new options and features that travelers rated highly during our research. This included the new expedited online check-in process called “Express Yourself”, and the addition of Sleep Number® beds by Select Comfort in all rooms.

To build support and secure buy-in, all Carlson Hotels employees and franchisees were trained to understand the link between the brand strategy and business performance, and understand their roles in delivering against the brand promise.

To further support this new alignment of brand and business strategies, Radisson launched the multi-million dollar “Stay Your Own Way” campaign.

The result of this work was a record-breaking year for Carlson Hotels, which saw a 10% increase in revenues and 18% increase in profits. Radisson's revenue per available room increased 5.6 points and quality assurance scores shot up eight points.

Click here for a rich-media version of the case study (Flash required).

Don't Let Medium Overshadow Message in Reaching Customers

Last year, Audi piqued the public's imagination with the “Art of the Heist” mystery campaign involving its new 2006 A3 model. The campaign revolved around an alternative reality game (ARG), which drew over 500,000 people into the search for the stolen vehicle via the use of more than a half dozen different mediums over three months.

This is just one example of how technology is helping to transform marketing. The trick is to understand how to harness this powerful tool so it drives business forward and makes good use of marketing dollars.

Consumers expect to be marketed to in a way that informs and entertains them (and not necessarily in that order). They also have come to expect marketing to be personal and individual. That's why the old adage of “know your customer” has never been more important. While the Audi campaign was wildly successful and generated more than 10,000 leads to Audi dealers, including nearly 4,000 test drives, Sharp Electronics' ARG, “The Legend of the Sacred Urns,” intended to promote its Aquos liquid crystal television, fell short.

Though the Sharp site managed to rack up 1 million visitors over the life of the campaign, it relied too heavily on technical bells and whistles (all game play took place on an Internet Bulletin Board) and cryptic television commercials, versus staying relevant to the customer. Post-campaign coverage revealed that 75% of the target audience was turned off by the campaign's complexity; it was a campaign that only the “techno-geeks” got.

New tools are no reason to abandon the most fundamental rules of good marketing. Technology now enables business to gather information – and consequently a deeper understanding of what matters most to customers. It's when insight and tools are combined properly to deliver a compelling customer experience that technology can enable brands – and business to flourish.

Adapted from Senior Partner Scott Davis' Sidestep the Medium-As-Message Trap, Point, April 2006.

Aaker on Innovation

The April 24 BusinessWeek cover story named the 25 most innovative companies as determined by a survey of over 1,000 executives. The article's content generated an unfortunate implication that a reputation for innovativeness was a result of current strategies, processes, culture, and product flow of the business and, further, that such a reputation would result in financial success.

The reality is far different.

Perceived innovativeness is driven by many factors, some going far in the past. Apple, the No. 1 firm in the survey, is still drawing on the legacy of the first Apple computer introduced nearly 30 years ago. And consider the enormous inertia in brand equity: During the last decade, Sony has missed the major category innovations such as flat screen TVs, mobile phones, PDAs, and the iPod. Yet it still is ranked in the top 15.

A related factor is that these firms have put resources and skills into brand building. Samsung, No. 12 on the list, has benefited from a design focus, speedy product cycles, and rigorous innovation metrics. However, the brand strength and innovation image would never have happened without the decision in the late 1990s to sponsor some prestigious sporting events, including the Olympics, and to alter the distribution channel.

A third factor is the ability to brand innovations, allowing the image of newness to have long legs. 3M hit a home run with Post-It notes over 20 years ago, a pervasive symbol of innovativeness.

The BusinessWeek article posited with supporting charts showing that firms perceived to be innovative are more financially successful. However, the reverse causal flow might be more plausible. Bob Jacobson, a University of Washington professor and I, showed that Fortune's Most Admired Companies reflect stock market success (rather than the reverse) and the same phenomenon is likely happening to perceived innovation. Financial success leads to perceived innovativeness by creating a brand halo effect and by signaling category leadership.

This article by Prophet Vice Chairman David Aaker borrows from his article “Peeling Back the Layers on Innovation,” which appeared in BrandWeek on May 1, 2006.

News and Events

News

Prophet recently launched our new and improved web site! Check it out for yourself at www.prophet.com, or by clicking the logo at the top of this newsletter. Our site doesn't just have new look — we've designed it to be better organized and easier to find the insights and information you're looking for.

Financial services giant UBS keeps scaling new heights. As it continues to drive out its global brand strategy, the payoff is in its performance. That was most recently recognized by its leap to the ninth spot from last year's 41st in The European BusinessWeek 50 – a ranking of leaders in earnings growth and other measures. We're proud to be playing a role in both UBS' brand strategy and execution.

Upcoming Events

Partner Michael Petromilli discusses Prophet's work with the Radisson in a presentation at the Advanced Learning Institute's National Forum on Internal Branding. The forum is set for August 8 through 10 at the Doubletree Guest Suites in Chicago. Click now to register.

“Creating a Unique Retail Experience Through Customer Touchpoints” is the topic of a presentation by Partner Steve Chang at the In-Store Marketing Expo, set for September 27 and 28 at the McCormick Place in Chicago. For details click here.