Telecommunications company, Telstra, is in the middle of a “rebranding campaign” managed by one of the nation’s best-known chief marketing officers, Mark Buckman.
Buckman joined Telstra 18 months ago from the Commonwealth Bank, at a time when Telstra was in the middle of significant change under chief executive David Thodey’s leadership.
Buckman has made big changes to Telstra’s marketing activities, and he points to a number of measures in support of his case that the campaign is having a positive effect on consumer perceptions of the brand, according to a report in The Australian Financial Review.
Buckman’s detailed analysis of Telstra’s efforts offer insights for all leading companies about ways to measure return on investment in branding and marketing, although not all of them stand up to the scrutiny of the experts LeadingCompany spoke to today.
Branding or marketing?
Is Buckman really conducting a rebranding campaign? Not according to Mark Ritson, Melbourne Business School’s associate professor of marketing. “It is a repositioning, not a rebranding,” he says. “And strictly speaking, it is not even a repositioning.”
The company did not change its logo, but added a dramatic fan of bright colours around the logo, which are designed to create a greater “emotional connection” to the brand, Thodey said at the time of the relaunch, last September. It was created by the DDB Group’s specialist brand agency, Interbrand.
Independent brand advocate, Michel Hogan, is sceptical. “What everyone calls rebranding is remarketing, or repositioning. Sometimes it is ‘re-logoing’, or ‘re-taglining’. Even ‘realigning the brand’ doesn’t go deep enough for me.
“A brand is built up slowly over time through everything you do. A brand is the result of the promises made and promise kept.”
Telstra’s brand value has gone up by $300 million to $5 billion, Buckman says, quoting recent figures from a British company, Brand Finance. Simon Rowell, founder of Brand Intellect, explains: “What Telstra is doing with Brand Finance is trying to benchmark themselves. When you are one of a few very large companies you have to use international benchmarks.”
This is one of the most expensive measures of success: benchmarking consultants charge for their services, Rowell says.
Customers in, revenue up
While revenue growth is a straightforward number to measure, understanding what part of the growth is attributable to the re-branding effort is more complex. Rowell says: “You have to dissect down, look at what elements have changed. And other things come into play: communications and advertising is another part.
“And then there is customer experience and the back-end operations. For a rebranding to work, everything needs to work together. Branding is the cornerstone.”
Telstra has had a 1.2% increase in revenue in the six months to December. But is has had big increase in mobile customers -- 1.6 million -- in the past 12 months.
Buckman also looked at a change in the number of people who would “consider” Telstra for their next telecommunications product. This indicator moved from an average monthly figure of 46 or 48% to 60%.
Ritson says: “Telstra has a very advanced way of measuring, by taking benchmark positions at the beginning of its rebranding campaign on positive indicators such as trust, technology, good service, and negative ones such as being slow, or inefficient.” These measurements are taken with a representative sample group of customers, both business and retail customers.
However, Hogan says there is a significant flaw in this measure, and the approach. “Companies rarely look at customer retention. That is a far more indicative measure of whether we need to look at our brand. If customer retention is cratering, then you really have problems.
“The rule of thumb is that is takes six times as much money to get a new customer than to retain one. Imagine releasing that kind of cash to work on keeping our customers happy.”
The fundamental risk
Before starting a brand repositioning campaign, every leading company need to consider one big problem, Ritson says. “It never pays!”
“Whenever a brand as big as Telstra tries to reposition itself, it costs millions of dollars and will take more than a decade to achieve. The cost of trying is simply not worth it.
“A leopard cannot change its spots. It might want to change to a fetching shade of blue, but it is still a leopard and it will scratch your face off at some stage. And secondly, consumers have known the leopard for 40 years, and they will not be fooled.”
Hogan is not quite so pessimistic, but she does want to shift the notion of rebranding away from marketing to a more sustained change.
She insists that the rebranding starts with the staff and management asking the fundamental questions of themselves. “What do you stand for, what do you believe, and what do you do? Companies think we will position ourselves over here and then the organisation is trying to catch up, instead of being intertwined, like a DNA strand, where each is moving the other forward.”
Staff are the litmus test
Rowell makes the point that the “staff buy-in” is critical to a rebranding effort’s success. “It is absolutely vital for staff to have a sense of understanding and inclusion of the reason for the rebranding. It won’t succeed unless staff see the value and understand why it is happening,” says Rowell
A reduction in staff turnover is a sensitive measure of the success of a rebranding campaign, says Rowell. “A rebrand has the potential to make staff feel more connected. Staff retention levels can have a significant bottom-line impact, by cutting the cost of training and recruitment.”