Can a Company Ever Fully Recover From a Branding Error?

Your brand is your identity. Your brand is an emotional representation of your company and your products. Every product you sell, every word printed on your brochures reinforces or weakens your brand.

The days of taking customers for granted are long gone. Unlike the 1950’s when brands could make mistakes and customers would still continue to be loyal, today’s customers have short memories and customer loyalty always needs to be reinforced.

I would like to share a story of one of the worst branding mistakes I have ever witnessed. The name and industry of the company involved has been changed to protect the foolish and just plain dumb.

The name of this company is ABC. ABC is a family owned business with a 35-year history. Since day one, ABC built a strong reputation for quality products. ABC specializes in a small niche marketplace, thus they enjoyed little serious competition. According to newspaper interviews with the current management team, the company was always profitable but sales were flat for the past several years.

Ironically during the time when sales were flat, the company was in transition from the original owners to the son. He took over day-to-day operations several years ago.

During the first few years of running the business the son made slight modifications to the product line and price points. These changes didn’t do much to strengthen the business brand, profitability and or market position. Since the inception of the company most of its products were distributed and sold to gifts shops, flea market vendors, local stores and restaurants. They had no real distribution model in place.

A several years after taking the reigns of the family business the son recognized a new opportunity in the marketplace. He wisely capitalized upon the chance and rapidly expanded distribution into regional grocery stores. This move strengthened the original brand and sales increased from approximately $300,000 to $2,500,000 within a few short years.

Results: ABC enjoyed a commanding market position and was fast becoming the true leader in its niche.

Lesson Learned: Capitalize on opportunities as they present themselves.

After a few years of rising sales, the son decided to make the first of several brand destroying decisions.

The first misstep he made was to make the decision to stop selling to small stores and gifts shops. His definition of a small store was anything that wasn’t a chain store. These small stores were the very same people that had been loyal to the company for decades.

The son even sent a letter to his entire customer base stating his company was only going to sell to large chains and would no longer supply any small account. The rational behind this move was to reserve his production capacity to enable him to supply the large accounts without any interruption. This was even stated in the letter sent to his entire customer base.

Results: ABC lost tremendous credibility in the marketplace by deciding not to sell to the very people who had made it successful. During this time, several competitors recognized his errors and rushed into the marketplace. These new competitors are now supplying his original loyal customer base.

Lesson Learned: No matter how difficult it may be to supply your customers, never “fire” loyal accounts.

The second misstep he made was he completely changed the name of his company and brand. During this expansion, the owner of ABC became the master distributor for a product called XYZ. XYZ was a deceit product line, but was not very unique. Once the son became the master distributor for the XYZ product, he changed the name of its entire product line to the XYZ name. The hope was to capitalize on the potential growth of the XYZ brand name. In addition, the rapid increase is sales as due to the XYZ product and not his products.

Results: Since the name change from ABC to XYZ, over 35 years of customer loyalty and brand recognition was willfully tossed out the window. In addition, many of the customers that were used to buying the ABC product on the store shelves could no longer find the ABC brand. Instead, they now can only buy the XYZ brand instead. Not only did the ABC lose retail customers, they also lost several chain store accounts due to declining sales. One way to solve this problem would be to change the name back to the original ABC name.

Lesson Learned: No matter what, don’t rebrand your entire company unless you have tremendous negativity toward your brand. Remember how several of the leading accounting and financial service firms renamed their companies after the financial scandals of early 2000’s?

The third misstep was the new management team of ABC jettisoned the company mascot. Since the creation of the company the ABC mascot was a cuddly kitten. All of the original company marketing campaigns, slogans, taglines, etc. included the kitten. ABC even had a souvenir snow globe with the kitten inside.

Results: The son threw away 35 years of history and knowingly gave up what made the ABC company unique. It is too late to reintroduce the kitten into marketing campaigns since the direction of ABC has completely changed and the only place for the kitten is outside looking in.

Lesson Learned: Yes, it is very wise to review and update company slogans, taglines, mascots, etc. however, unless you have a very good reason, throwing away 35 years of company history is just plain dumb.

Although no company is perfect and we all make mistakes, ABC is a great case study on foolish and just dumb business decisions. Not surprising, company sales have slid in recent years and will probably continue to slide for the foreseeable future.

I would like to ask you “Can a Company Ever Fully Recover from a Branding Error?” I look forward to your comments and insight.