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The Danger of Brand Erosion and Your Business

Just like slowly removing vegetation and deforestation can lead to land erosion over a slow period, companies can pluck away at their customer and employee experience over time and ultimately erode their brand. Small companies and large companies can suffer from undiagnosed brand erosion.

What is Brand Erosion?

In our Hot Dog Marketing University Lunch n’ Learn about brand strategy, I talk about a company’s brand as all of the features and facets that make the company unique, recognizable and memorable with feeling. Just like meeting a new person at a party, their face doesn’t mean anything until you talk with them, learn about their history, their likes and dislikes, hear them talk, etc . . . Companies are the same. Logos means nothing without the stories and unique differentiators to give that logo a memorable feeling. It is, at the end of the day, your company’s most valuable asset.

“Your brand is the single most important investment you can make in your business.”

Steve Forbes

Brand erosion is the act of corroding your brand image with your customers and employees over time. It can happen quickly or slowly though a number of poor decisions from leadership, and it often starts with no understanding what is making your brand successful in the first place and ends with plummeting market share.

Brand Erosion Through Controversy

Uber is an easy and recent example of a company with incredible brand equity that had to rebuild its brand image after a series of scandals collided together, leading to a decline in consumer confidence. Uber launched in 2009 and is now in 400 cities across 65 countries. Its brand equity is so significant that Uber is its own verb. It is the classic example of a brand that caused a complete disruption that was adopted quickly and enthusiastically by customers.

From 2017-2019, Uber found itself in the news constantly. The company was dealing with legal and regulatory issues at the city and state level, and nonstop stories of a toxic work culture and leader. All of it leading to customers to download competitive ride-sharing apps or use other transportation options. What was once considered cutting-edge, awe-inspiring, and life-changing technology that helped decrease drunk driving incidents nationwide turned into a brand that customers didn’t want to associate with, especially women who did not appreciate the stories of sexual harassment that were being shared by employees.

During this period, before COVID, Uber lost significant value and saw sharp declines in sales.

Brand Erosion Through a Slow Death

Poor publicity and scandals are obvious ways a brand erodes over time, but more subtle choices over time can lead to plummeting revenues and poor customer experience.

Take Starbucks for example. The company had unprecedented growth for decades. Starbucks, for many, is where we learned our go-to drink order, and our loyalty lay with the barista who made it the best. Flash forward to 2024, and Starbucks reported disappointing same-store sales for the first time since COVID. This led to a 12% decrease in market value for the company.

This recent Harvard Business Review article points out, Starbucks began to suffer from brand erosion years ago. A slow brand death that seems so obvious since former Starbucks CEO pointed it out in his open letter earlier this year where he stated that senior leaders need to “spend more time with those who wear a green apron,” and go back to “being experiential, not transactional.”

As the HBR article has so beautifully pointed out, small decisions over the company’s time made Starbucks less special, more commoditized, and suffering in the face competition.

They innovated early on with an app that handled loyalty and payments, creating a rich data-filled ecosystem that should have enhanced customer experience. Instead, the company chose to focus on dollars not orders with that data, making their customers less human in return. The more convenient they made their experience, the less appealing and special it became. In addition, instead of hanging out and working at Starbucks, their new locations are smaller and come with uncomfortable seating.

The scariest part of the Starbucks story is how most of the brand-eroding decisions the company’s made in recent years looked like good ideas because it increased revenue. Efficiency, technology, and more drive-throughs led to more sales initially, but it is exactly those decisions that have turned Starbucks into a commodity and not a brand anyone feels loyal to.

Preventing Brand Erosion in Your Business

Starbucks is a story of brand erosion on a massive scale, but it is the perfect example of how any business can, over time, erode its brand image while it grows. There are hundreds of small decisions made by business leaders every day to manage expenses, recruit and retain talent, and grow sales. Every decision can contribute, or corrode, a company’s brand.

Knowing how to prevent this and grow in a brand-positive way starts by understanding the company’s brand. Business leaders should NOT do this alone. It is almost impossible to truly understand what makes a company special without the help of market research and, even better, a third-party expert. Small businesses should consider this exercise when they’ve hit a new phase of growth. Think of it as bottling up what’s made the company special so you can repeat it in the future.

What brand fundamentals should a company focus on? Don’t just define a brand purpose, mission, vision and core values and call it a day. A company should define its key differentiators and why different segments care and the experience they expect through market persona development. This will help prevent poor decisions in the future and help with future market research.

For example, one differentiator Starbucks has always touted has been the quality of the product. What was missing from understanding this differentiator is what made the experience memorable for the coffee-drinkers who really care about the product. Coffee drinkers who care about where and how the coffee is made also want to talk to knowledgeable baristas about the coffee, have a personalized experience, and savor the drink. Your average drive-through, convenience coffee drinker doesn’t care about the product nearly as much. Had Starbucks kept focus on its coffee connoisseur persona while making its growth decisions, it possibly could have retained a better experience and loyalty while growing to also service the needs of the convenience-lover coffee drinker differently.

Growing companies should take a beat and document their brand fundamentals and key personas so they can manage their brand properly through all stages of growth. Now is the perfect time to do it before taking the leap into new technology and AI-driven processes and experiences. We’re bound to see tons of brand erosion in the coming years as companies prioritize efficiency over experience. Don’t let it happen to your business.

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