Back to Newsletters

The one element of your brand you can never compromise

10.23.15

It was more than 50 years ago that Volkswagen ran this print ad, its most famous ever.  

The one-word headline described a 1961 Beetle that would never make it to a dealer showroom.

The car had a single blemish – enough for VW’s engineers to reject the vehicle and inspire the infamous Lemon campaign. The copy mentions 189 checkpoints and a willingness to say “no” to cars that don’t cut it. 

VW’s bold campaign launched a creative revolution in advertising.

Soon, other brands began promoting their ‘personalities’ instead of just their product features. The Lemon campaign also introduced what became one of the most loved and respected brands of all time: one that stood for quality, honesty and reliability. 

In the years since, Volkswagen has spent billions promoting its brand – more than $3 billion since 2011 alone. VW’s goodwill valuation (the difference between hard assets like cash and equipment and the company’s market value) was pegged at $31 billion on its 2014 balance sheet.

While goodwill is an intangible, it also suggests the value of the brand: all the thoughts, beliefs and expectations that come to mind when we see the logo, hear the name, or experience the brand in any way.

Put another way, goodwill is a measure of TRUST. 

“The very future of the brand is in doubt”

In recent weeks, we’ve learned how Volkswagen broke the law and deceived its employees, dealers and customers by concealing obscene levels of emissions in its diesel models with software trickery that conveys phony data.

The crisis will shave $10 billion from VW’s brand value, according to Brand Finance. “The very future of the VW brand is in doubt,” it says.

Here’s why. 

Volkswagen poured so much time, energy and cash into promising quality, reliability and (of late) environmental friendliness that it now looks hypocritical. The emissions scandal represents the opposite of what VW promised.

You can argue that Volkswagen just squandered 55 years of TRUST – the one element of the brand that can never be compromised.

‘The Trust Bank’ 

Major brand screw-ups like Volkswagen’s are shocking, but also rare. Companies don’t get caught deceiving millions of customers very often.

The real problem for most companies is more mundane. These brands (including yours and mine) are eroded by small breakdowns in service, usually minor in nature. They’re situations where we don’t meet a customer’s expectations and let them down: poor follow-through, not returning e-mails or phone calls promptly, slip-ups in documentation, inane or overly rigid polices, or simply not doing what we said we would.

These problems typically aren’t big enough to cause customers to revolt, and they don’t make the news like VW. But they’re problems that customers remember. Every time a company lets its customers down it erodes trust in the brand. It’s a withdrawal from the ‘Trust Bank.’

Erode enough trust and, eventually, customers leave you behind.

The good news: the reverse is also true. We can build trust over time – adding to our Trust Bank – by delivering positive experiences to our customers.

  • FedEx builds trust by delivering my package before 10:30 tomorrow. Every time.
  • Hyde Park Equipment builds trust by servicing my lawn tractor quickly, reliably and never ripping me off.
  • Ken Arding builds trust by always keeping me and my business on the right side of Revenue Canada, while also pushing the envelope as far as he can on my behalf.  

Building trust is essential to growing and nourishing our brands.  

It should never be compromised.

Just remember what Warren Buffett says: “It takes 20 years to build a reputation… and five minutes to ruin it.” 

So ask yourself: 

  1. Are you building goodwill in your brand?
  2. What’s the status of your Trust Bank?
  3. How can you make more deposits to your account?

~Craig