Top 25 Brand Leaders

As stewards of respected brands, these CEOs know it takes more than just marketing.

November 1 2004 by Chief Executive


The chief marketing officer at Dell, Mike George, and top officials from the company’s advertising agency, BBDO, had worked hard on a new advertising campaign for the Texas-based maker of technology products. They thought they had a great tag line, “Dare to question,” and submitted the plan to Chairman Michael Dell and Chief Executive Officer Kevin Rollins.

At many companies, the top brass probably would have simply signed off. But Dell and Rollins nixed the proposed campaign, and sent the frustrated marketing team back to their white boards to rethink the whole approach. The two leaders wanted a message that responded to the frustration many personal computer users feel in getting their machines to perform properly. The team came up with a new approach: “You know better. Dell knows how.” That won quick approval and the ad campaign began in May.

For that kind of direct, personal involvement in branding, Dell and Rollins share the No. 1 spot in a survey of brand leadership among 450 CEOs and CMOs. (See list, below.) The study to determine which CEOs are best at managing their companies’ brands was conducted by Chief Executive in conjunction with the brand consultancy firm Lippincott Mercer, based in New York. Other CEOs who received high marks for brand leadership include some of America’s best-known managers, many of them with technology roots, such as Steve Jobs of Apple Computer, Jeff Bezos of Amazon.com, Eric Schmidt of Google and Carly Fiorina of Hewlett-Packard. Well-known brands that have long been household names also made the Top 25, including Coca-Cola, Walt Disney Company, General Electric and McDonald’s.

Many CEOs today are finding they must oversee brand management. Emerging from a period of scandal and recession, CEOs want to rev up top-line growth, and therefore getting the branding message right is critically important. And much as CEOs feel they were burned by free-spending chief information officers during the late 1990s, so, too, are they determined to make sure their marketing departments are spending hundreds of millions of dollars with a hard eye on results. Other factors are that media choices have become ever more diverse with the arrival of the Internet and other digital media. Increased competition among brands is also driving the trend of deeper CEO involvement. Increasingly, good brand management is seen as an integral part of overall management.
At many companies, the chief marketing officer now reports directly to the CEO, and the CEO is regarded as the steward of the brand. “We are seeing the resurgence of marketing’s role and recognition that someone at the C-suite needs to be actively involved,” says Eric Almquist, senior partner at Lippincott Mercer. “Someone has to manage the brand on a daily basis and more and more, that’s the CEO.”

Good brand management is increasingly good for the bottom line, too. “It can have a significant impact on shareholder value,” notes Earl Taylor, chief marketing officer at the Marketing Science Institute in Cambridge, Mass. He points to the recent Martha Stewart case and its negative impact on the value of shares at Martha Stewart Living Omnimedia as an example of how potent this relationship can be. “In the past, branding and advertising did their thing, but that didn’t affect how the business was managed or how cars, for instance, were built,” Taylor says. “But that’s now changed.”

The point is that the concept of branding has evolved to represent far more than just advertising or marketing. Today, management of the brand extends to customer service, packaging and even innovation, all well beyond the purview of an advertising department. Tellingly, the Chief Executive/Lippincott Mercer survey asked respondents to judge CEOs as brand leaders on nine criteria: customer experience, brand image management, brand investment, brand value, foresight and innovation, measuring and monitoring, design, marketplace vitality and organizational structure. (See “The Making of a Brand Leader,” chart below). Those surveyed were also asked to rank the most important characteristics of a successful brand leader.

Of the nine criteria, customer experience was ranked as the most crucial in distinguishing a CEO as a brand leader. In the past, good branding meant a well-designed logo, a clever ad campaign or a large ad budget with glitzy commercials during broadcasts of the Olympics and the Super Bowl€¦quot;or even a company founder who starred in his company’s ads like Lee Iacocca did. But no more. Customer experience is now treated as part of the “DNA of the brand,” says Almquist, who adds that customer service requires a large investment and an organizational structure that supports it.

The roots of Dell’s new campaign date to last fall, when Dell and Rollins held a series of two- to three-hour brainstorming sessions with CMO George, who is also president of Dell’s consumer business, and agency officials. The discussions started out by concentrating on the need for a new marketing campaign to replace a two-year-old TV and online campaign featuring two clients, Dave and Steven, showing how to get more fun and productivity from a whole range of Dell products.

Top 25 Brand CEOs
Company
CEO
1.
Dell
Michael Dell, Kevin Rollins
2.
Starbucks
Orin Smith
3.
Apple Computer
Steve Jobs
4.
Nike
Phil Knight
5.
Amazon.com
Jeff Bezos
6.
eBay
Meg Whitman
7.
Southwest Airlines
Jim Parker
8.
FedEx
Fred Smith
9.
Virgin
Richard Branson
10.
Coca-Cola
Neville Isdell
11.
Target
Robert Ulrich
12.
American Express
Ken Chenault
13.
BMW
Helmut Panke
14.
Wal-Mart
Lee Scott
15.
Anheuser Busch
Patrick Stokes
16.
Google
Eric Schmidt
17.
Walt Disney
Michael Eisner
18.
Microsoft
Steve Ballmer
19.
JetBlue Airways
David Neeleman
20.
UPS
Mike Eskew
21.
General Electric
Jeff Immelt
22.
McDonald’s
Charlie Bell
23.
Hewlett-Packard
Carly Fiorina
24.
Marriott
Bill Mariott Jr.
25.
Procter & Gamble
A.G. Lafley

A Note on Methodology

The results of the Chief Executive/ Lippincott Mercer Top 25 Brand Leaders survey were based on a quantitative survey of CEOs and marketing executives.

  1. To begin, Lippincott Mercer developed a list of nine potential characteristics of the CEO as brand leader.

  2. Then they developed a “short list” of 77 candidates from companies worldwide based on the recognition each had earned on some relevant dimension.

  3. Those dimensions included having a reputation as a “most admired company,” as a company with high brand value or as a company with strong leadership.

  4. Lippincott Mercer designed a Web-based survey, completed by roughly 450 corporate and marketing executives.

Tapping Consumer Emotions
By late fall, the marketing team “locked down on a rough concept for a new campaign,” says George, who reports to Rollins on marketing responsibilities and oversees the relationship with the ad agency. “We thought the campaign with the tag line €˜Dare to question’ was great,” and presented the storyboards to Dell and Robbins.

But the two leaders didn’t think it was so great and demanded a redo that would pinpoint what they had been hearing from consumers€¦quot;increasing frustration with technology products with nowhere to go for solutions. “This ability to tap into consumers’ emotions is something they are extremely good at,” says George, referring to Dell and Rollins. While he says he was initially “frustrated” with the feedback from the corner office, George adds that the team began the “painful process” of trying again. It wasn’t long before the group had the new campaign theme line.

During the process, Dell and Rollins also stepped in with suggestions on which specific product features should be mentioned in the ads. For wireless notebooks, they suggested that the ads emphasize not only the product’s mobility but also a unique feature of Dell products€¦quot;a security device, which, due to Dell’s direct sales channel to customers, would help the company track down a stolen notebook if it were connected to the Internet.

But, of course, the company knows that promoting its brand is more than just a new ad campaign. In some senses, the company’s entire business model is built around the consumer. “The core of what we do stems from our direct model with no intermediaries,” says George. “We can easily see what products our customers have and can diagnose problems at an early stage,” he says, noting that if a part malfunctions, Dell can “pro-actively give an early warning” to other consumers with the same product. “And sometimes we can tell the component maker about it even before they know it.” In the case of an emergency, such as the 2003 East Coast blackout, he says Dell has been able to quickly identify affected customers and ship emergency equipment to their sites.

Service reps in Dell’s 24-7 help centers are expected to “own the relationship” with customers, improving service levels while reducing the time on hold. Instead of transferring a caller when they don’t know the answer, these so-called “resolution specialists” seek advice from internal experts and coordinate the answers.

Dell also sends out notices to customers when a warranty is expiring and asks if the customer wants to extend it or, better yet, buy a new product. “We would rather give good customer service and better pricing and value than have a large ad budget,” says George. “Our media spending is about 10 percent of our competitors’ and we have a small budget by design.”

Another high-ranking finisher in the survey€¦quot;FedEx CEO Fred Smith€¦quot;is a big believer in branding. “One of the things that we recognized about 10 or 12 years ago was that probably of all of the assets on our balance sheet, none was more important than the brand, even though it wasn’t capitalized at all,” says Smith.

As an example of the importance he places on brand management, Smith, who is Chief Executive‘s 2004 CEO of the Year, says that when FedEx began to expand its services beyond air express delivery into ground and freight trucking, it had to figure out whether to keep existing brand names such as Roadway, which the company had acquired in 1998, or rebrand them with the FedEx name. With the help of an extensive internal study, called Project Arise, he pinpointed consumers’ desire to do business with familiar brands associated with quality. That suggested there was a reason to change the brand names to FedEx. “Consumers didn’t want Tab,” he says, using Coca-Cola’s sugar-free cola as an analogy of the brand extension decision that FedEx faced. “They wanted Coca-Cola without sugar.” Hence, the advent of Diet Coke and the demise of Tab.

Smith decided that all his company’s new services should be put under the FedEx banner, but he waited two-and-a-half years before he rebranded Roadway trucks with the FedEx name. He proceeded slowly because he and his team assumed that once the higher-profile FedEx name appeared, there would be a spike in demand for services. They wanted to make sure that his division, called FedEx Ground, would be ready to offer the reliability of service that FedEx was known for. If not, the mother brand might have been damaged.

Customer Experience is Key

It worked. FedEx “started taking market share from UPS” in ground delivery, Smith says. “And the business has been growing at three or four times the market growth rate ever since. The FedEx brand is what changed a lot of customers’ minds.”

Smith established a firm link between brand and the customer experience, which is what it takes to be successful today. Offering customers a positive experience needs to be woven into a company’s culture through investments and organizational structure, says Bernd Schmitt, professor of international business at Columbia University in New York.

Good customer care is clearly a hallmark of the branding strategy at JetBlue, led by CEO David Neeleman. “We’ve done surveys that show 60 percent of new-time fliers to JetBlue come to us by word of mouth,” says Neeleman, who founded the fast-growing airline four years ago. “From the time you pick up the phone to make reservations to the time you collect your baggage, a lot can go wrong,” he says. “So we make sure we do our best, like trying never to have long lines or cancel a flight, or if we do because of a natural catastrophe, then crediting the passengers back for a round-trip flight.”

Neeleman personally roams the aisles during a round-trip flight once every week. He uses the time to shake hands with passengers, serve drinks and snacks, and get feedback on JetBlue’s service. “I literally talk to hundreds of customers,” says the CEO, who ranked 19th on the brand leadership survey.

It’s not just talk. In the rare instance that the airline needs to cancel a flight (it cancelled only one out of 30,000 last summer), passengers get a round-trip voucher for a future flight. JetBlue also closely monitors the flow of passengers to prevent bottlenecks at airport check-in desks. With phone reservations and information requests, JetBlue strives to respond within 30 seconds, says Neeleman, meaning the airline loses only 3 percent of incoming callers. “Customer service is an absolute obsession with me,” says Neeleman. “We want people to feel different about JetBlue.” They do, in part because the airline offers services others don’t, like wider-than-normal leather seats, satellite TV with up to 40 offerings and cool snacks rather than hot meals served from a cumbersome cart in the aisles.

The formula is working. Neeleman notes that the airline’s surveys show that 98.7 percent of its customers would recommend JetBlue to a friend. Extra care is also taken with staff selection.

“We hire people who want to do the job,” he says, adding that most employees participate in a monthly training session on customer service.

Getting the whole organization to “buy in” to a brand identity is another reason why only the CEO can ultimately be the brand steward. “A big thing in branding is the philosophy of the brand as it is expressed by employees,” argues Columbia’s Schmitt.

For all these reasons, there is great ferment in the relationship between CEOs and CMOs. Many marketers have backgrounds in advertising or public relations, but relatively few of them have been deeply involved in lines of business. So they don’t see the whole enterprise in the same way that a chief executive does. CEOs also are pressing for more tangible methods to measure the effectiveness of their marketing and advertising budgets. All of which means that marketing, advertising and other functions traditionally associated with the concept of brand are being more deeply integrated into how companies operate rather than standing apart. And that’s definitely good for business.