Starbucks has a Cult Following

Starbucks has a Cult FollowingWe have been espousing the many benefits of developing a Cult following for brands. These include increased customer loyalty, premium pricing, and brand evangelism. Now, as Michael Brush has pointed out in his MSN Money article, the benefits of cult marketing can extend to the stock market as well. He cites Apple, Harley Davidson, Starbucks, Under Armour, Sirius XM, and Lululemon as examples of cult brands that have been extremely successful in the stock market. Here is the link to his article:

Bud light Cult Marketing

Bud light Cult MarketingA Duesenberg was just like any other luxury car … correct? And if you like Anchor Steam Ale, well, you’d be just as happy to pop open a Bud Light, yes? And a Mac user might switch to a PC on a whim, is that not so? … Guess again! Obviously, the answer in all three cases is a resounding “no!” But what is it about some products or people that gives them a “cult following?” And what can companies learn from this cult branding phenomenon when it comes to marketing their products?

Not just any product attracts a cult following. It isn’t enough to be of high quality, or even to be very distinctive. The cult product does more than provide a service. For one thing, it promotes an image. Your use of a cult product tells people something about you. Therefore, cult brands tend to be higher involvement or more personal products, not everyday consumer items.

It also makes you feel a part of a select group – a member of a tribe that believes passionately in something. In some cases, these kindred souls even band together as though they were members of an exclusive club, with their own rituals, jargon, and dress. Think the Marines or Harley Davidson bikers.

In short, what sets cult products apart is that they lend the customer an identity and a strong sense of belonging. It is human nature to want to belong, and people like to associate with people who have similar interests. Therefore, the cult brands act as the bonding agent that draws people together.

What does this mean for corporate America? There are some decisive advantages for the brand that has a cult following. There’s the obvious benefit of a fanatically loyal customer base, but it doesn’t stop there. Consumers that are part of a cult following are not nearly as price-sensitive as other types of customers. Since the brand has no real competition, price wars are out of the question — customers will pay full price for their brand without hesitation and are often the “early adopters.” Furthermore, they will provide free word-of-mouth advertising for the producer by encouraging others to “join the club.” This is the type of customer that companies dream about.

According to Doug McIntyre, President of the Columbus, Ohio brand marketing firm Cult Marketing, most marketing dollars in America are used to replace the 20-25% customer attrition that most brands suffer every year. Fickle, disloyal customers wind up costing as much in marketing expenses as they contribute to profits — a net-zero gain for the company. In a recent study, only 18% of national advertisers believed they were receiving a positive return-on-investment on their TV advertising dollars! By contrast, cult consumers will stick with their brand, year after year. That is why McIntyre advocates flipping the traditional marketing model in what he calls “Reverse Branding” – brand marketing from the inside out.

With so much to gain, why aren’t all companies striving to develop cult followings? In some cases, companies have not fully realized the rewards of such an approach. Or, unlike cult brands, they try to be all things to all people – they are unwilling, or perhaps afraid, to stake out a niche. “Cults always have a very specific and defined point of view,” points out McIntyre, “and if you don’t agree with it, that’s OK with them.”

In other cases, companies want to develop cult brands, but can’t figure out how. It’s just not that easy to develop a product that people fall in love with. Effective cult branding is more than just generating hype – the product itself, and the image it projects, must have a special appeal that draws people in. Likewise, the cult following must be genuine and thrive at a grass-roots level. In fact, the more a product appears to be the slick output of a corporate brand marketing machine, the less likely that a cult will develop.

So, for a business, both the advantages and challenges of cult status are great. Some believe that cult products can be developed effectively, but not by traditional marketing methods or a business-as-usual approach. “What you need to do is start with what we call a ‘deep dive,’” says McIntyre. “You need to understand the total experience from the customer’s perspective. What’s the emotional impact? How does it fit in with their lives? We use ethnography and other research techniques for this. Then it’s a matter of looking at the complete package – the product, the retail experience, the website, the advertising, the way representatives look and act – everything that enhances or detracts from creating a cult experience.”

After developing a deep understanding of a company’s cult customers, the next step is to develop ideas based on the marketing techniques employed by cults and cult brands. Continues McIntyre, “We have identified 13 Laws of Cult Branding. These are the characteristics of cults and cult brands, and how they market themselves. We use these 13 Laws as our toolbox for ideas. It’s amazing how many powerful ideas you can generate from these 13 points.”

People showing Cult following

People showing Cult followingWhen Cult Marketing launched in 2004, we often presented our concept to a prospective client who thought we were speaking in a foreign language. Our ideas about branding and marketing did not mesh with the concepts that years of precedents and convention had ingrained in their minds. A completely holistic approach to the brand experience based on a deep knowledge of the consumer? Our ideas were considered to be “absurd,” our methods and goals “impractical.”

Here’s how it would go:

Client: “We have an advertising agency of record that handles our branding and marketing needs.”
Cult: “So your ad agency completely understands your consumers, develops brand insights, and manages your internet, in-store marketing, direct, customer intimacy, store design, viral, sales, special events, sponsorships, product placements, and PR strategies along with all the other brand touchpoints?”
Client: “Hell no, we have different agencies and different internal decision-makers for each of those areas.”
Cult: “So your agency of record (AOR) defined the brand and manages all those firms to ensure brand consistency?”
Client: “No way. One firm can’t do all that.”
Cult: “Then who owns the total brand experience?”
Client: “I guess our CEO is ultimately responsible for that.”
Cult: “Oh, so he works with all the firms to make sure everything is on track?”
Client: “He/she doesn’t have time for that. He/she mostly deals with financial decisions, acquisitions, Wall Street and stuff like that.”

Well times have changed haven’t they? The fact is the traditional agency model has completely fallen apart. If an agency does not propose an integrated branding and marketing model in today’s day and age, what chance would they have to get a gig? And who is the AOR anymore? Is it the media agency, advertising agency (now often separate), the digital agency, the retail design group or a brand consultancy?

At Cult Marketing, we start with the concept that your best customers own and drive all great brands. We are talking about the people who are already excited and fired up about your brand (hence the name Cult). The people are valuable because they provide insight into what aspects of your current branding are desirable and are creating a positive impact on your target audience – essentially, free market research. The 80/20 rule is still as solid as when it was identified. The point is, you might as well understand this cult customer subculture and their relationship with your brand. Once you do, you can go out and attempt to clone the behavior. Before you know it, your small cult of followers and brand warriors is growing. Make sense? We think so.