7 Challenger-Brand Hiring Practices

Last week, we looked at the way challenger brands differentiate themselves from competitors using their most important asset — their people. It turns out that focusing on building brand distinction by offering great service translates to bottom-line financial performance.

In far-reaching research for his book, “Firms of Endearment” Dr. Raj Sisodia discovered that companies holding excellent customer service as one of their core tenets returned an average of 1,111% over a 10-year period as compared with 122% for the S&P 500 over the same period.

“What’s most significant about this is that we didn’t set out to find companies that outperform the stock market,” Sisodia said in a 2009 presentation. Sisodia was looking for examples of companies driven by passion and purpose when he found the corresponding impressive financial performance, which also tied back to a relentless focus on the customer experience. The list of companies he identifies in the book as standouts include: Amazon, BMW, CarMax, Commerce Bank, Container Store, Costco, eBay, Harley-Davidson, Honda, IKEA, JetBlue, LL Bean, Patagonia, REI, Southwest Airlines, Starbucks, Trader Joe’s, UPS, Wegmans Food Markets, and Whole Foods.

According to Sisodia, companies wanting to ensure great customer experiences:

• Drive better employee retention by hiring people with a passion for their work.
• Give rank-and-file employees greater salaries and benefits than comparable companies, while paying relatively modest executive salaries.
• Cultivate a culture of openness from the top down.
• Devote time to training and developing employees.
• Empower employees at all levels to make on-the-spot decisions to ensure customer satisfaction.
• Create close relationships with customers.
• View corporate culture as a great business asset.

The truth is, until a company is delivering an optimal customer experience through excellent and consistent customer service, it isn’t well positioned to achieve maximum benefit from advertising or any other marketing activity.

Service perfection is not a realistic goal, of course, and even the most committed companies find it difficult to achieve and maintain high standards consistently. (Even Chick-fil-A tops out around an 87 in the annual American Customer Satisfaction Index.) Service excellence requires a shared commitment among leadership, sustained institutional attention, and deliberate practice over time. But it’s a critical starting point for the entire marketing planning process.

The best advertising leverages something inherently true and valuable about a brand and delivers it to current and new customers in a compelling way. Advertising invites people to experience the brand and makes an implicit promise to deliver what it’s selling. If that promise is broken by a surly, inattentive, or otherwise disengaged employee, more harm than good is done to the brand.

When the customer’s experience of the brand—his or her impression of what it’s like to do business with the company—fails to meet the expectation set by the advertising, it creates a disconnect. That disconnect is often irreparable and, in some circumstances, it has the power to create a passionately disaffected customer — otherwise known as a “brand terrorist.”

Great customer experiences have the opposite effect. An army of wildly satisfied customers can function as brand ambassadors and dramatically reduce the need to advertise in the traditional sense. Starbucks, Harley-Davidson, and Container Store are just a few of the companies that rely almost exclusively on positive customer experiences to do the bulk of their advertising for them.

And while Chick-fil-A is a heavy advertiser, the company’s high customer service level allows it to steer clear of promoting product discounts—a margin-erasing tactic that drives the rest of the industry. Instead, Chick-fil-A uses its advertising dollars to build and reinforce its already formidable brand, and to create further identity distinction in a category consumed by parity. As a result, its legions of loyal followers are the envy of the industry, as are the revenue and profits the brand generates per location.

Why marketing’s new power couple really is a game changer.

If it’s not obvious already, for challenger brands of all shapes and sizes, hiring the right people is the fuel that will drive your brand forward. Finding, training, and keeping people who are enthusiastic about delivering your brand experience is the point of leverage against larger rivals.

In a blog post from the Harvard Business Review website that I’ve kept for years, Fast Company co-founder Bill Taylor suggested that HR and marketing must conspire to create truly great brand experiences. “The new ‘power couple’ inside the best companies, I concluded, was an iron-clad partnership between marketing leadership and HR leadership,” Taylor said. “Your brand is your culture; your culture is your brand.”

The good news for challenger brands is that people are often a huge problem for market leaders. While size and scale are advantages for driving efficiency and market leverage, it works against the people side of the business where authentic emotional connections are required to drive strong corporate culture. Personal connections don’t scale very well, which is why the corporate cultures of the world’s largest organizations aren’t often held up as examples for the rest. A quick peek at any year’s “Fortune 100 Best Companies to Work For” list underscores the point.

A quick story about the difference the right (and wrong) people can make.

As we’ve noted more than a few times, The Container Store is legendary for its employee-focused culture and, as such, has been on Fortune’s coveted list many times. When founder Kip Tindell put the company up for sale in 2008, Best Buy was among more than 100 suitors that expressed serious interest. Best Buy leadership admired The Container Store’s culture and hoped to imbue its own with The Container Store’s special esprit de corps through acquisition. But Tindell knew better and wouldn’t entertain the offer. He understood that culture can’t be purchased. It has to be created and cultivated organically. This is something that leaders in smaller companies often do well, because they’re closer to the action. They’re in touch.

Challengers can use the advantage of smaller size to out-hire, out-train, and out-retain bigger rivals. The result can be a brand experience that’s impossible to duplicate regardless of resources. Finding, training, and keeping people who are enthusiastic about delivering your brand experience is the point of leverage against larger rivals.

MIKE SULLIVAN is President of LOOMIS, the country’s leading challenger brand advertising agency and a top Dallas advertising agency for digital, social, mobile and user experience. For more about challenger branding, advertising and marketing, leadership, culture and other inspirations that will drive your success, visit our blog BARK! The Voice of the Underdog and catch up on all of our posts.

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