Yet, despite all the effort, many transformations fail to deliver the expected results and an adequate return on investment. As many as 70 percent of complex, large-scale change programs do not achieve their goals. There are several reasons for this. But one of the most important, and overlooked, is this: companies too often forget to include any plan to redefine their brand as part of the broader transformational change program.
Failing to put sufficient focus on the brand transformation can jeopardize the whole transformation program. A brand is the critical tool for signaling that a transformation has taken place and soliciting the consumer’s permission to enter a new space. Clearly, without their endorsement — as expressed through purchases — companies cannot hope to be successful.
To help business leaders address this challenge, we have developed a new approach that puts brand at the heart of their transformation program and draws on the latest thinking from cognitive psychology and behavioral economics. One company that has been successfully implementing this approach is Lincoln, a subsidiary of Ford Motor Company.
Uncovering Deep-Rooted Customer Perceptions
Founded in 1917, Lincoln Motor Company ranks among the world’s most iconic luxury automobile brands. Already in persistent decline as investment in new products lagged and new competitors gained strength, its fortunes took a turn for the worse in the wake of the financial crisis of 2008. Ford ordered a major transformation — quality issues were addressed, product design innovations were introduced, and the service experience was enhanced. But, for all its progress, Lincoln did not see the hoped-for uplift in sales. This forced a radical rethink. The firm’s senior executives commissioned market research. From this, they learned that because of deep-rooted preconceptions about the brand and the fact that old Lincolns still outnumbered new models on the road, consumers had not changed their biases about the company. These findings caused Lincoln’s leaders to change direction and put the brand at the heart of its transformation.
In doing so, they took a first, important step. The second step was to leverage insights from cognitive psychologists and behavioral economists to unstick and change consumers’ perceptions of the brand.
Use Approaches from Psychology and Behavioral Economics to Unstick Your Customers’ Perceptions
What influences whether a consumer purchases a new product from a different company? The answer is complex, and as Lincoln found when it consulted experts, is impacted by two key insights: one, that consumers exhibit both “confirmation bias” (where they look for data that supports their preconceptions) and “disconfirmation bias” (where they ignore data that doesn’t fit their preconceptions); and two, that consumers don’t notice (and therefore don’t reward) slow, incremental change. Armed with this knowledge, Lincoln’s senior executives were able to take swift remedial action.
Let’s look at each of them, in turn.
(i) Consumers Exhibit Confirmation and Disconfirmation Bias
It is well-established that people seek information that confirms what they already believe. Taking this lesson, Lincoln commissioned a wide-ranging brand perception survey in order to find out what consumers regarded as the core features of the brand’s DNA. The words that came back were not only positive — such as “comfortable,” “big,” “luxury” and “classy” — but also negative — such as “old” and “expensive.”
Having collected these consumer views, Lincoln then developed a new brand definition that clearly springs from but is nevertheless perceptibly different to the old definition and telegraphs the significance of the transformation in a clear and transparent way. So, for example, “comfortable” and “big” became “sanctuary”, while “luxury” and “classy” became “beauty”. They were also able to repurpose some negative perceptions like ‘livery’ into more modern, positive areas like ‘mobility’. Putting all of this together, the company’s marketers came up with a single all-encompassing idea for expressing what the brand represents in the current world: “effortless mobility.”
(ii) Consumers Don’t Notice (and Therefore Don’t Reward) Slow, Incremental Change
The second insight Lincoln learned from behavioral psychologists was that people do not notice incremental change, and so the only way to get them to change their view and form a ‘new’ first impression is to signal a significant, abrupt change. In effect, the firm needed to “shock” consumers into taking a fresh look at the brand.
It has done this in several ways.
To begin with, Lincoln launched a celebrity endorsement campaign, hiring Hollywood actor Matthew McConaughey and tennis champion Serena Williams to star in some advertisements. This was a way of sending a clear message that Lincoln was no longer to be considered “an old man’s car.” Instead, it should be seen as the perfect vehicle for consumers who are progressive, smart and young.
Then, having grabbed the consumer’s attention, Lincoln developed some unconventional services designed to emphasize its credentials for effortless mobility. For example, it was the first automobile company to offer a nationwide “pick-up and delivery” service in the U.S., delivering on one of their customer’s most important needs to save time.
Also, it gave the traditional dealership a makeover, realizing that consumers no longer just want to buy a car — they want to buy an experience. The first Lincoln Experience Center opened in Fashion Island, a luxury open-air shopping center in Newport Beach, California. Within a year, sales in the Los Angeles area had jumped by 29 percent.
The brand transformation has contributed to the lifting of Lincoln’s global performance, including an 8.3% jump in sales in 2019 and ranking in the top five of the 2020 and 2021 JD Power APEAL study. In addition, Lincoln recently announced plans to introduce at least five new battery-powered vehicles through 2026.
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If You Want to Look Brand New — Don’t Forget to Transform Your Brand
Corporate transformations start with the consumer — with the recognition that the consumer’s needs and expectations are changing and, therefore, the company has to change in order to meet them. Companies must certainly evolve their strategies, products and organizations to keep pace with the changing environment, but they must also transform their brands. Thinking holistically about the changes required and putting brand at the center increases the odds that a company’s transformation will be successful.
About the Authors
Ned Calder
is a Partner at Innosight and a co-leader of the Industrials & Technology practice. ncalder@innosight.com
Kristen Colella is a Partner at Innosight and co-leader of the Consumer. kcolella@innosight.com
