Brand Truth and Consequence: A Cautionary Tale

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The events of September 11 need no introduction, and their impact on marketers has been well documented. Many businesses responded with remarkable speed to pull or alter advertising of questionable taste. Not all organizations exercised such good judgment, however. Ironically, it was a non-profit agency that responded most ineptly. Even more ironic, the guilty party was the American Red Cross, the very organization at the forefront of aiding the World Trade towers’ victims.

The Red Cross is the brand name in disaster relief worldwide. Not surprisingly, the American Red Cross immediately committed itself to helping the 9-11 victims. Disaster mobilized the American public’s goodwill and donors rushed to fill Red Cross coffers. It seemed the charity’s overwhelming success at raising funds – more than $500 million – would be its defining moment.

The Red Cross brand worked – perhaps too well in this case. Donors thought they knew the Red Cross. They presumed to know how the Red Cross operates and how it would handle their donations. They assumed their money would be channeled exclusively to 9-11 victims and their families. Some weeks later the media discovered that more than one-third of the donations – some $200 million – had been set aside for future relief operations, rather than for the current crisis. Many donors, feeling misled, reacted angrily.

In response to the uproar, the American Red Cross president resigned, the organization promised all donations would be dedicated to September 11-related relief work and, to further appease angry donors, the Red Cross offered to refund donations on demand.

Some saw the failure to immediately channel all funds to victims as a case of deception. I think it reflects a simple, but fundamental, misunderstanding between donors and charities. Most charities, whether the Red Cross, a university, or a hospital, prefer traditional giving: donated funds are put into a general pot and doled out, by the charity, as needed. The resources of most charitable operations are thinly-stretched, so traditional giving allows them to operate effectively and predictably. By contrast, charities are less favourably disposed to directed giving, which ties donated funds to a particular program. Directed giving complicates the management of charities because it fragments the efforts of fundraisers and removes their control over the distribution of funds. But because donors increasingly want to control how their money is used, traditional giving and directed giving usually operate in tandem.

There was nothing wrong with handling the September 11 donations like any other donation and putting them in the general pot. The American Red Cross deals with myriad crises in any given year and does not operate on a crisis-by-crisis basis; it needs reserve funds in case other national emergencies, including further terrorist attacks, arise. But it wasn’t up to emotionally-wrought donors to make these distinctions. It was up to Red Cross management – business professionals – to know their “customers.” Asking the right questions when donations were accepted would have revealed that donors expected their gifts be tied exclusively to 9-11 victims; the Red Cross could then have respected donors’ wishes. Or they could have used the opportunity to persuade donors to untie their donations. Or they could have used their ads to clearly define the organization’s involvement in relief work. Instead they let the Red Cross symbol do the talking for them, and clearly it was misunderstood.

At one level, this is a simple communication problem. More specifically, it is about understanding what the brand means and being able to translate that meaning into effective action. A brand tells people what an organization, a product, or a service will do, and whom it will help. Consensus about these goals is very powerful. A superior, well-managed organization is marked by its ability to accurately communicate all of its brand messages – everything from identity to mission to operational tactics to history. When employees understand and believe in the brand’s meaning, they can use that insight to adapt their actions to whatever critical situation might emerge. But making sure consensus exists so employees can correctly deliver on the brand’s promise requires training.

Any employee must train, just as pilots, doctors, firefighters, or soldiers do, so they can respond quickly and effectively to unexpected situations. Better training about brand management would have equipped Red Cross employees to deal with this critical situation; it would have guided their ability to manage the expectations of this large number of emotionally-charged donors; it would have strengthened the value of the Red Cross brand instead of undermining it.

In the aftermath of September 11, marketing guru Jack Trout predicted “we’ll see marketing strategies get back to the fundamentals.” One fundamental is that customers and employees alike must understand what the brand means. The main lesson from this unfortunate Red Cross saga is that achieving consensus is a vital requirement in successfully managing a brand as an asset.

While I’m on the topic of brand meaning, the Wall Street Journal reported on hospitals using upscale retail stores to boost revenues (“Hospitals Lure Retail Stores to Address Concerns,” November 7, 2001). The article’s main thrust is clear: hospitals need more money to fulfill their mission so they’re thinking creatively about how to bring money into a hospital. Right. But the article also suggests better retail promotes wellness as an attribute of a hospital’s brand. Wrong.

Good retail stores do enhance hospitals aesthetically and financially. Aesthetically, good shopping and palatable food improves the hospital environment by making patients and their visitors feel better about being in an otherwise grim place. It also creates a pleasant environment for people to work, thus it helps with employee retention. And most importantly, by keeping visitor or employee purchasing in the hospital instead of at stores across the street, this new spending enhances revenues that can be channeled into research and patient care. Hospitals should be promoting better retail operations to raise money.

Retail cannot, however, improve the hospital’s image in an enduring way. The coffee shop may sell low-fat muffins, the restaurant may serve healthy low-cal dishes, the bookstore may have a wide selection of books on disease prevention – these are fine, but what would you expect, a smoke shop? By providing quality retail, hospitals only live up to expectations. The bigger question is, what does a hospital have to do to surpass expectations?

A shopping experience simply doesn’t promote an organization’s deep connection to wellness: it leaves patients no wiser about what a hospital stand for, or where its expertise lies; it does nothing to differentiate the hospital’s core health care products and services. If a hospital wants to promote its identity as a wellness centre, it must look for another model. Knowledge – not good shopping – is the dominant attribute of a hospital’s brand.

Substantively improving a hospital’s image should focus on transforming the hospital’s key strength – its intellectual capital – into accessible communication tools that get knowledge to people who are interested in health care: from books and magazines to public seminars and workshops to websites and televisions shows. Most hospitals could learn from the Mayo Clinic whose knowledge marketing approach has cemented a public image that clearly evokes associations of confidence and innovation – and which, not so incidentally, supports its fundraising goals and the retention of talented employees. The Mayo Clinic may also offer a worthwhile shopping experience, but its patients and visitors know the real attraction is its intellectual capital. They are, no doubt, happy that the Mayo Clinic differentiates itself with its expertise, not the quality of its coffee.
(Originally posted in Knowledge Marketing Watch, November-December 2001)

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