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My podcast partner, Ryan Hamilton, has written a book without me. His co-author, Annie Wilson, Ph.D., a senior lecturer of marketing at the Wharton School at the University of Pennsylvania, is undoubtedly an upgrade. We had them both on the podcast to discuss the book coming out next June. I thought I would share what we discussed here with you, too.
The Growth Dilemma is about the idea that as you grow by customer acquisition, it changes your brand. So, when you invite people with different preferences, personalities, values, and images, they bring all of those features of themselves to the brand. The dilemma of growth is how you can grow without limits or leading to conflict between customer groups.
Managing customer relationships is important to growth, and many brands miss this. Many disastrous things can happen to brands when their customer segments conflict.
Unfortunately, brands often close their eyes to the risks of conflict when trying to attract a new segment. Brands don’t consider the consequences of other customers getting upset about the new segment, whether because they’re not like them, have different values, or use it differently. They also don’t realize how this new segment can alienate current customers.
The Four Types of Conflict
Imagine you are planning a family vacation for you and your teenage children. You’re going to the beach and determining what to do with that time. You could do that; you’re a parent. You understand your kids. You know what that age group wants.
Let’s say your parents decide they want to go, too. Grandparents have different wants and needs, which might affect your planning. You’re dealing with three segments of this family: Teenagers, you and your spouse, and your parents. Now, planning your vacation is much trickier.
The same thing happens when you’re acquiring customers. You grow by adding new customers to your customer base. At some point, some of those customer segments will want different things.
So, how do you manage all of that under a single brand? Various types of conflict require different solutions. Let’s take a closer look at the four types of conflict, as identified by my cohost and his co-author.
Conflict #1: Functional Conflict
The first type between customer segments is functional conflict. It is the idea that how one segment uses or behaves using a brand’s offerings creates conflict with or interferes with another segment’s ability to use them.
Functional conflict is becoming more common with omnichannel distribution and marketing. For example, mobile orders often collide with those who order in the store.
You see this type of conflict everywhere. You see it happen in restaurants where dine-in orders conflict with carry-out. I’ve often sat in a restaurant waiting for my food. I can see that the kitchen is busy, and orders are going out, but they are not coming to the tables. It’s all going out the door. I have wondered if I should order it to go to get my food faster. Then, I could walk over and eat it at the table.
Starbucks solved this problem of functional conflict early before mobile ordering became such a phenomenon. Some customers came in to order coffee and read or work at one of the tables inside the store, and some were commuting and just wanted coffee to go. Starbucks recognized the different functional goals and created different store formats. So, you had takeaways or drive-through stores and then lounges meant for lingering while having a cup of coffee and doing some work.
Functional conflict may be the most common type of conflict. It also tends to be the least emotional form of conflict.
Conflict #2: Brand Image
The second type of conflict is Brand Image. The idea is that firms don’t get to decide their brand image. They make suggestions, and then the brand image is negotiated between the company and the customers. In other words, customers form their opinions about a brand’s meaning.
Also, part of the brand image is who is buying the brand. Suppose you see certain people wearing a clothing brand, driving a car, or talking on a mobile phone brand. That image registers and associates with people’s perceptions of those groups. Brands are memory structures, and all of that information gets stored in the memory structure associated with that brand.
Brand image conflict happens when a new group of customers starts using a brand in a way that stretches its meaning. For customers who are already happy with what that brand means now, stretching it in a new direction can cause conflict. Customers might think, “I don’t want the brand to be associated with that group of customers because they change what it means to me, and I like how it is now.”
We tend to look at brand metrics in aggregate or focus on that one segment we want to attract. We don’t think about what the segments believe about each other and their presence in the brand.
For example, finance and tech employees began wearing Patagonia vests in large numbers, so much so that television shows and meme accounts mention the Chads and Brads going to their Wall Street or their Silicon Valley jobs in their Patagonia vests. This new group’s adoption of their attire started to grate on Patagonia’s environmental sustainability brand.
The company was to blame; Patagonia was creating corporate-branded fleeces. So, these companies ordered them in bulk and then gave them to their employees or clients. Everybody had these Patagonia fleeces. It caused conflict for passionate environmentalists and other groups, the foundation of Patagonia’s fans.
Patagonia solved it by stopping the corporate embroidered fleece sales. Later, they brought that program back with different constraints. Patagonia evaluates each company, decides who gets them, and ensures the fleece can be recycled and go through their Worn Wear program. Patagonia sets a great example of solving Image Conflict clearly and directly.
It is important to note that this conflict could originate in something the brand has done, a segment they set out to attract, or the customers themselves. A group of customers starts using the brand in large numbers or associating themselves with it, which is where the conflict originates.
Conflict #3: Identity Conflict
Identity conflict is rooted in the identity-signaling value of a brand. Let’s say I use a brand to signal my identification with a certain group. Then, someone from a different group I am not part of and don’t like uses the brand, inhibiting my ability to use it as an identity signal. Now, we have an Identity Conflict.
The Brand Image Conflict relates closely to Identity Conflict; these conflicts often happen simultaneously. However, one type of conflict is rooted in grappling over the brand’s meaning and more about setting boundaries around yourself and the other groups that use it.
In other words, one group of customers doesn’t want to be associated with this other group. They think, “I am not that type of person.” It’s not necessarily because they hate that group, but they don’t see themselves as part of it, which can create conflict.
Facebook is a good example of this. Many younger generations don’t want to use the platform because their parents and their parents’ parents do. Younger people don’t all hate those people; they just don’t want to be on their parents’ and grandparents’ social platforms. Facebook is chopped.
To be clear, Wilson and Hamilton don’t argue at any point in the book that you need to be forever true and loyal to your existing customer base despite any other opportunities. Sometimes, it makes sense not to serve your current customers as well so you can pursue an opportunity with another customer segment because the tradeoffs are worthwhile. For example, sometimes, the new growth segment is worth more money or perpetuates a different brand image an organization wants to project. In that case, the company is fine alienating and losing those existing customers.
The problem occurs when the company attracts a less profitable audience that moves on quickly or will not be as loyal. Then, the company alienated its existing customers and lost new customers, translating into a long-term loss rather than a gain.
Conflict #4: Ideological Conflict
The last of the four types of conflict is ideological conflict, where multiple segments have fundamentally different values, beliefs, and orientations and become aversive. The various segments don’t want to be associated with others.
This conflict is increasing in frequency because we live in polarized times. It is also potentially volatile and dangerous for brands because people’s reactions to ideological conflicts can be extreme.
Ideological conflicts hit the news cycle more forcefully than other forms of conflict. You might see different forms of conflict in the news, but they marinate over time until they become a problem. Ideological conflict tends to happen fast and furious.
For example, Bud Light partnered with an online influencer, Dylan Mulvaney. That association caused a rift in their established customer base. By a rift, I mean the sales dropped 30%.
New Balance, a shoe manufacturer in the US, supported a Trump policy that made it more expensive for other shoe companies to import into the US in 2016. However, some extremist groups, Neo-Nazis, took that support to mean that the shoes could be a signal amongst them that identifies fellow members.
New Balance didn’t want this association. They made a statement against the organization and maneuvered away from the ideological conflict. Now, the New Balance brand is quite popular with many groups, who are far less extreme and contentious.
So, What Should You Do with This Information?
We wanted to break down these four conflict types so they could identify what they were dealing with in their organization. However, a general solution exists to deal with all of them.
If there is a conflict or risk of it between segments, do everything you can to separate those groups, whether physically in a storefront or psychologically, through expanding your product line. For example, a physical barrier could be like Starbucks’ version of its retail offerings, focusing on carry-out or lounge settings. Psychologically, sub-brands can create a distance between these segments in your product line.
However, it is important to note that it is not the time for nuance when you encounter conflict. Throw the kitchen sink at this problem and use as many tools as possible to separate these segments to cool the temperature slightly.
Also, be sure to recognize the potential sources of conflict to have a clearer insight into where it could crop up. These conflicts are most problematic when they are unexpected because that’s when brands falter or flinch and don’t know what to do with them. Then, it brews for so long that it becomes a real problem.
Conflict is a possible consequence of brand growth. So, does that mean you should pursue growth for your organization? Of course, it doesn’t. However, being aware of potential conflict and acting early can significantly affect the outcome. So, be sure to monitor and react quickly.
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Colin has conducted numerous educational workshops, on how to improve your Customer Experience, to inspire and motivate your team. He prides himself on making this fun, humorous, and practical. Speak to Colin and find out more. Click here!