Challenger Thinking Changes Your Business

Back in 2009, I participated in a challenger branding workshop held at the Silicon Valley headquarters of YAHOO! that would fundamentally change the way I thought about what our advertising agency was all about. Over the course of the two-day experience, it became crystal clear to me that thinking and behaving like a challenger brand wasn’t only relevant to every entrepreneurially minded CEO in the room. It could be transformative for all of our businesses.

The credit for that shift in mindset goes entirely to the London-based challenger brand consultancy Eat Big Fish and, in particular to EBF partner Mark Barden who conducted that particular workshop. As an advertising professional, I’d previously thought of challenger brands as brands defined simply by a specific kind of advertising claim based on their subordinated marketplace position. As marketing students, we all learned about the challenger position struck by Avis when the company famously turned its secondary status to advantage, claiming “Avis is only number two in rent a cars, so we try harder.” Of course, the Pepsi Challenge took the idea one step further inviting consumers to taste the difference for themselves, which I happily did in grocery stores as a kid. Indeed, I did find the sweeter taste of Pepsi more appealing than Coke and, thanks to a little cola sampling genius, our household flipped to the second-place brand.

Challenger branding is masterfully described in EBF founder Adam Morgan’s seminal book on the topic aptly titled, “Eating the Big Fish: How Challenger Brands Can Compete Against Brand Leaders.” Challenger brands can’t spend their way to success with big ad campaigns like category leaders. Instead, they start with business strategy and identify opportunities for disruption that make the marketer’s job far easier than it otherwise would be. That’s because challenger strategies are born of unique differences fueled by an organic power that attracts an audience.

True challengers don’t follow convention. Instead, they expose the weakness of category norms with alternatives that often appear obvious with the perfect vision of hindsight. Challengers zig while others zag, and generally wreak havoc on competitors by showing up in a way that’s anything but expected. Challengers take consumers and competitors alike by surprise, which in turn provokes something every marketer desperately wants and needs — a response. Love them or hate them, challengers will not be ignored.

Creating difference in a sea of sameness.

At that same challenger workshop in Silicon Valley, I happened to meet the founder and CEO of a regional retail chain of mattress stores who was puzzling over a problem many marketers face. He wanted to know how he could create real brand distinction and drive more retail traffic in his highly commoditized category. The Great Recession was just beginning to gain its head of steam and wallets were tightening fast. Little did we know how bad things were going to get.

A few months after meeting at the workshop, I got a call from the CEO asking if we’d like to handle his advertising account. His mattress chain was still struggling with traffic, and sales had gone from slow to sluggish across his 30 locations. By now the economy was in full seizure. Retailers across all categories were shifting into survival mode and the CEO was very near panic. With sales trending fast in the wrong direction, the idea of differentiating his brand and driving store traffic had escalated from important to urgent. He needed an idea to turn up the volume and he needed it quickly.

The concepts Mark Barden shared at the challenger workshop were fresh on my mind as our ad agency tackled the CEO’s problem. It’s tempting to focus on advertising messaging and media levels when sales are weak, but we knew this wasn’t simply an advertising problem. Besides, the CEO had no more money to spend on media and his messaging was on par with the rest of the category. Mattresses are always on sale, after all.

We knew the brand had to do something to disrupt the market, and it needed to be rooted in a real point of difference. But not just any difference. It had to be a difference that customers would find important and engaging, especially given the context of a faltering economy and stingy spending on discretionary products like mattresses. As part of our research, we sent agency team members on field trips posing as mattress shoppers. They shopped our client and they shopped his competitors, and they came back with an insight. The answer to our new client’s dilemma lay hidden in operations and his company’s extraordinary commitment to sales process and training.

The mattress CEO was relentless about doing right by customers and this made him very particular about hiring and training. The company’s extensive sales training far exceeded that of competitors and the result was a superior customer experience. His salespeople behaved more like knowledgeable consultants than the typical high-pressured hucksters who give the retail mattress category its well-deserved bad rap.

Because the chain’s sales practices were famously low-pressure and consultative in nature, customers routinely purchased the right mattress for their needs. The CEO surmised that his company’s superior approach to sales was the reason their average ticket exceeded the industry’s. But he never gave much thought to the company’s far lower than average product return rate, which was also a byproduct of sales methods that prioritized customer satisfaction over a fast buck.

In fact, the number of returns for our client’s mattress chain were inconsequential compared to the balance of the category and especially low by comparison with the category leader, which was well known for their hard-closing conquest approach to sales. This was a significant but hidden challenger advantage, and our client hadn’t leveraged it at all.

On the contrary, his chain had been following the category norm for mattress returns, which was a particular pain point for customers. The category’s standard 30-day return policies are intentionally and notoriously draconian because, as anyone who’s ever shopped for a mattress knows, high-pressure mattress sales practices result in extreme levels of post-purchase dissatisfaction. Making it easy for customers to return the product would devastate operations and sales for most chains in the mattress category.

The way the category was zigging in this respect presented the perfect opportunity for our new client to zag. So, our agency made a bold recommendation straight out of the challenger branding playbook. We told the CEO to overhaul his return policy and make it not only easier for customers to return products they were unhappy with, but to give them one full year to sleep on their decision.

A month later, we rolled out an advertising campaign promoting the mattress category’s first and only no-questions-asked, one-year money-back guarantee. It was a revolutionary challenger move that turned category convention on its ear and in so doing caused sales to spike 30 percent the very first month.

That quick success was followed by months on end of year-over-year double-digit increases that climbed as high as 50 percent. My favorite part of this challenger success story was the attempt by category killer Mattress Firm to match our client’s one-year offer only to quickly yank it back after being swamped with returns. Mattress Firm hadn’t operationalized the consultative sales approach like our client had, so the poor result for them was inevitable.

Using company culture to create brand advantage.

This fact underscores an important lesson the folks at Eat Big Fish take great pains to drive home. Challengers have to be willing and able to do something competitors can’t or simply won’t to create clear and relevant distinction for their brand. The magic wasn’t in our client’s one-year guarantee. It was in the many hours of training each of the company’s sales associates had to go through before hitting their showroom floors. It was this focus on selling the right way that made such an audacious guarantee possible at all. Our client had operationalized a sales process that wasn’t easy to detect by competitors and no easier to replicate by any who had.

Intentional or otherwise, the CEO’s focus on sales had created a true brand advantage for his company, and that advantage made the job of advertising easy. Even the best advertising is no substitute for meaningful brand distinction anchored to a real consumer insight. Challengers that understand this and are willing to do what it takes to create a genuine distinction are awfully hard to beat.

But there was a second important lesson buried in our client’s success that’s become even more evident to me in the years since we hit that first challenger home run. Our mattress client’s sales process was supported and reinforced by something far more powerful than top-down mandates and training alone.

As such, it functioned as a reliable guide for the behavior and performance of all the company’s employees, and not just the salespeople. From all sides, the company’s culture served as a virtual feedback loop that held everyone to a higher standard of customer care, which turned out to be uncommon for the mattress category. It was this commitment that created the opportunity to offer customers a significant benefit that no competitor could match. Another more obvious lesson that might be drawn is that great service pays. But the much bigger lesson is that for companies counting on the performance of people, culture is inextricably linked to brand performance in ways that aren’t always obvious at first glance.

This is the central idea we’ll be exploring in our book due out early next year.

Company culture serves as the most fundamental challenger brand advantage there is. When companies get their cultures and their brands working in synchronicity, powerful things begin to take shape and only some of those things have anything to do with advertising and marketing, at least explicitly.

From recruiting the right talent to attracting more customers, the harmony created when a company’s culture and brand are in synch can produce the kind of magnetic draw that makes a challenger brand tough to beat.

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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