INBOUND 2016: JP Kuehlwein "To Make Your Brand Priceless: Storytelling is Good But Myth is Magic"

All right, thank you. Good morning. Okay, I know it's been a long night. I've had two nights as well. Every time I wake up I'm hoping it was a bad dream or nightmare, but it wasn't. And we're going to talk about dreams today. So that's a good lead in. I'm going to talk about and truth as three elements that drive a brand to be perceived and experienced as priceless. At least price not being a primary consideration. Usually. I have a buddy with me up here on stage, Wolfgang Schaefer, he's the not so good looking guy there on the right hand side. But my sidekick is busy today. Together we've written a book on this. It's called Rethinking Prestige Branding. Rethinking because it's fairly new way really versus the classic one of thinking about premium brands. It's not only about luxury, it's about any kind of brand. And I hope I'm going to show this today. And I've worked at Procter and Gamble just to prove the point. So not really a group that is associated with luxury. And nevertheless we're interested in this subject. Now I'm doing consulting, but I worked for them for 24 years. Now you would wonder why would a mass marketer, a behemoth like Procter and Gamble be interested in premium branding? Because of this. I use a different example here, but you're all familiar with Budweiser. It's even called the King of Beers, as you can read on the label. But nowadays when I go into my store in New York City, nobody really wants to be caught with a Budweiser beer. They feel ashamed. And. And you rather go to that big shelf that has the Budweiser only somewhere on the bottom left or right. Because people want to be buying a craft beer. They want to be buying a beer that is more individual, that is local, that somehow seems to fit with their lifestyle and their personality. And that's what's going on in a lot of categories, if not all kinds of categories. So we were looking, Wolfgang and I, at these kind of brands, okay, at hundreds of them, literally. Now, yes, they're the classics. You might recognize the Chanel logo. But then there are others that you don't really associate with premium, let's say Red Bull. But if you consider that it created its own category called energy drinks and somehow was able to dissociate itself with soft drinks, it is charging a relative premium. And Coca Cola and Pepsi were very jealous, in fact, they probably still are at how these Guys have succeeded over the last 30 years to extract a premium that is really unheard of. Usually 3 to 4x, and in profit, 5 to 10x. What they can do with the Coca Cola or Mountain Dew or other substitutes for Red Bull. So what is it about these brands? We really value them beyond their price. As I said, Red Bull, you know, it's like what, $2.99 at the cheapest, maybe $4.99 or here, probably $7.99 at the kiosk. Okay. But we value them way beyond that. In fact, we don't really consider them a soft drink. You wouldn't say that. You know, Apple has a smartphone, it's an iPhone, it's kind of their own thing. And we esteem them way beyond their size. In fact, if you look back at that list, a lot of them are proud to be small. One of them is even called Mini and is proud of it. But what this particular set here has in common, and who knows, the brand on the bottom left here, Cirque du Soleil. Correct. What these particular ones have in common, for example, is that they're all billion dollar brands. In fact, most of them are multi billion dollar brands. Red Bull, $8 billion in sales, of which 4 billion are just one single stock keeping unit, which is bigger, by the way, than any stock keeping unit that Procter and Gamble or Unilever would have. So these small brands, these niche prestige brands can be very powerful and very big. They don't all have to, but they can. So we looked at a ton of them, we looked at successes and failures and we extracted what drives their success and we called them Uber brands. Uber brands to annoy people like the person who presented me. Because just like in Kuhlwein, there's an umlaut in here, which is the ue, but also because of a philosophical concept by Nietzsche, who's talking about the Ubermensch. Now the Ubermensch is kind of a superman. It's a person who is able to elevate and lift themselves beyond and above the kind of the daily grind and bring humanity forward in some shape, form or way, whether it's in science, in arts, you name it, in thought, in inventing something. And we think that's what these brands have in common with this concept. They try to be more than just a utilitarian object or a platform or a service or mutual fund. It doesn't matter. As you will see, they try to be more than that. And that's the first secret. So in the book we've got A ton of principles. I've got good news for you and for me. The good news for you is I won't go through all of them because you'll come out here at the end of the day and you'll be very tired. And the good news for me is that means you need to buy my book. Little pitch here. So I'm only going to talk about three kind of common themes that hopefully summarize most of it. The first one is that there's a must for mission and myth. The second one is that these modern brands in particular, compared to classic luxury en masse, play a very good fine balance between the concept of exclusivity, which is a classic, and inclusivity, which is a lot of what you all talk about and what a lot of modern brands talk about. But they strike a balance between the two. And lastly, there clearly is a need for truth, for authenticity, as some will call it. But we like to use fancier words, so we call it truth. So first, the need for mission. I'm going to go through that fairly quickly because I think you all feel why that is so relevant and people long for it so much nowadays because of this. In the 80s 90s, it was all about buying, buying consumption, keeping up with the Joneses. That has started after Post World War II, the economic miracle. And you defined yourself a lot for your consumption. But people felt like, can this be enough? And the economic crisis, particularly the last one, 2008, 2009, not the one to come, you know, reminded us of that. And so brands like Ben and Jerry's had a real resurgence because they existed for quite a while. Brands that good old Ben and Jerry, leftover hippies, you know, were created from the beginning with more in mind than making good ice cream, which undoubtedly they make. They wrote down about three months into their final venture, taking off at that gas station in Vermont, writing down that they want to sell ice cream while healing society. Doesn't that sound a lot bigger than ice cream? And so if we fast forward to just a few weeks ago, Ben and Jerry still proudly announced that Ben and Jerry's got arrested on Capitol Hill. And that was even before the elections. Okay, because they're fighting for more equal rights and for more equal and shared wealth in this nation. Now, why would a by now owned by Unilever brand put a scandal, a PR issue supposedly on their website? Well, because they've realized that being more than ice cream and having the social engagement is a core part of that brand. And so now there are other brands that Realize that and build the brand from the start. You all know toms. Who knows toms? Hands up, you're the target group. So here you go, one for one. Everyone has bought a very cheap, lousy shoe because it is about more than a cheap, lousy shoe. In fact, it can be lousy. You forgive it because you're buying into something. You're not buying something. Right? You're buying into something. So these brands are about ideals with a big L rather than just ideas, concepts, and so on. This is one of my favorites, Patagonia. I've written about it endlessly. We've written about it endlessly. I just interviewed the nephew of Yvonne Chouinar, the founder, on my podcast. And you know, these guys can go forever and ever about how they protect the environment that they want you to explore with their garments. And this is a long story, but it is expressed in the product and the product and the organization to an incredible depth. So just an example. On their website, they have all their products like everyone else, but on every product, they will give you what they call the good and the bad, sometimes the ugly. The bad is usually the carbon footprint that they generate with making that product. Despite their best efforts of using recycled pet bottles and toilet seats to make their fleece, okay, Using rainwater, organic cotton and all of it, they still say mostly it actually generates more in CO2 in weight than the product waste. That's how bad it is. And they will tell you. And sometimes they put up the ugly, which in the case of down garments, a long time there was the ugly because they realized, hey, maybe the feathers in our product are made from geese that were force fed to make foie gras. So for four years they said, if you're against foie gras like we are, we recommend you not buy our down product because we're not sure where our feathers come from. And they worked hard for four years to certify them 100% crude, cruelty free. So no surprise then that the little money they spend on classic media, because it's mostly social media, it's mostly inbound media, I needed to say that for this conference, the little dollars they spend, they spend on a huge ad in all national newspapers that said this, don't buy our stuff, don't buy this iconic jacket of ours. And they give a long explanation, which I just gave you earlier, and they said, you know, at that cost, in terms of carbon footprint, you want to first make sure you wear the one you have for a long time, because Patagonia stuff lasts For a long time. If really it's ripped or whatever, we'll repair it for free, including shipping for you, we'll recycle it for you if it's hopeless, and we'll send you a new one. And Some people did 30 year old garments and they got a replacement. And really, really, if you're just that kind of fashion person, at least let it sell for on ebay and we will refund shipping or whatever. We'll give you a minimum price. And they link it in with their website. There's the QR code. And you need to pledge that if you really buy a new garment, you will pledge to reuse or recycle. That's how deep this goes. And then they have films about building back dams and so on and so on. As I said, we could go endless. And you'll hear it in the podcast if you're interested to hear it directly because it's quite a different thing to hear it directly. Now, all of this leads to what in terms of business and paying back, it leads to this. A trucker hat that the replacement at Uniqlo, whatever, probably comes at 599, 999, 12.99, $15.99. Here it costs $29.99. They only made 20,000 of them. And of course they're sold out already. Why? Because just like with the Toms shoe, you're not buying a trucker hat. You're buying a signal that you stand for what Patagonia stands for, which in this case is damnation, which means dams are evil, they should be built back. And you support that because you're Outdoor Guy. And at that or girl at that level, you don't care. It costs $29. It could cost $49. It might even make you feel better because, you know, a lot of that goes to a good cause. So I think that gives you a good idea and how that inspires a mass marketer. Okay, so at P and G, we translate that to Pampers and we say Pampers is bigger than, you know, some stuff you put on the butt on the baby to, you know, not wake up mom. And you say it's all about healthy, happy baby. And when you go into developing markets and I launched Pampas in India, then it becomes bigger than that. You create actually clinics that for these moms are the first encounter with something like a pediatrician. And you give them basic health information about their kid temperature, does it have vaccinations, and so on and so on. And you make Pampers much Bigger than being a diaper to these women. In this case, actually in Pakistan, not in India, but a model we replicated there. When you translate that to developed world, you say you buy a pack of Pampers and we give one vaccine against neonatal tetanus that kills not only babies, but moms. Only in the developing world, because it has been eradicated in the developed world, and we want to make sure it gets eradicated everywhere. And we work together with unicef. So, again, when you buy that diaper, between that or having $2 off, you don't mind helping moms in Africa. Not to d. Okay, I'm dramatizing, but I think you get the point. So this is how, through mission and living that mission, you make it bigger. And some of you in the room say, ah, but I'm business to business, or I work on a digital platform. Does that really apply? I'm just writing a case study on Vanguard Investments, and I tell you, they're just as great and incredible as Ben and Jerry's. Probably better. They have a huge fan club, which is called, called the Bogleheads. Have written two books already, thousands of members who do advertising for them, and they don't even have an official relationship with them. So this can work on every level in every industry. The important thing is that you have principles and you really stay true to them. So I said mission and myth, because there's a second component which is all about storytelling. This is a beautiful brand. It's on my blog. It's on my podcast. Listen to it. The important point here is, look how his website starts. Literally, once upon a time on a little Danish island. Sounds like something you remember from your childhood. That's because storytelling, as I'm sure you've heard over and over, gives us soul, gives us something to talk about, is way more memorable. It is how we receive information, how we process it. And that's why, you know, we've really moved to storytelling. If you look at Patagonia, they have an incredibly popular mini site, it's called Wornwear, where people post stories about their favorite garments. Often it's not even Patagonia. It might be a pair of Levi's, et cetera. And they tell why these garments are special and how garments are special. The objective for Patagonia is to create a relationship that is about the garment and you rather than about fashion, in the hopes that you would hold onto that garment way longer than you would when you buy something just because it's in this summer and then throw it away in winter and create an incredible burden on the environment and society. So you have this website. I encourage you to Google any of these websites because they do inbound and they are truly masters of it. So we move from the old school rtb, which is reason to believe, to STB story to believe. And just to prove the point, even digital companies like Airbnb are doing this. Now, who has seen this ad? Okay, so we need to play it. Sorry, with sound. This is basically about not being a tourist. It's about living in your neighborhood. I guess I need to play it. So I thought everyone had seen it. Here we go. Don't go to Paris, don't tour Paris, and please don't do Paris. Okay, I'll start here because you all got it. They say we're not a digital platform that gives you cheap rooms. We're a platform that enables you to live in the place you visit. How much more valuable is that versus being the cheapest platform, versus, you know, helping people who don't have enough money to pay their rent? Okay, so here also, we're seeing in digital companies that they discovered you need to be more than just the service, the platform, the deliverable. Now then look at brands like La Mer. Now this will be interesting. Who knows about La Mer? Okay, interesting. You're all trending younger. Okay. Usual conferences, I have about half the room, which are all females raising their hand, but I was sure it's going to be less today. So La Mer is a product that basically stands for eternal youth. It has a very scientific ingredient, as you can read. It's called the miracle broth. It's trademarked. Okay. And the miracle broth harnesses the power of kelp of the sea in a plant. They fling it around against rocks, play Beethoven music because apparently Beethoven works the best flashlight on it to kind of imitate that stressed environment and then create miracle broth that they sell for about 2 to $2,500 for the large size, 2 ounce to keep you eternally young. So usually the guys laugh a little bit louder than the women because women start to buy it. Don't worry, girls. I have something for you as well. But what we see here is what we call an Uber story. This is a story that goes beyond reason, and I'm making it ridiculous by pulling it down. But believe me, this Estee Lauder brand makes a ton of money on this miracle broth. A ton of money. Okay? Because an Uber story is a story that brings us to something that we can't explain. And myths have been around forever. That's why you have Greek myths, the pharaohs and so on, because they explain things that we can't quite explain. What happens after life at the end of the Earth nowadays? The galaxy, the black hole, you name it. Why does a boy love his mother? And so on and so on. That's what myths talk about. And when you can tie your brand into a myth, it's very strong. Here's a boy myth, the hardest selling fragrance of the last Christmas season, Invictus. Obviously, this guy is endorsed by the gods, not just some politician. And there's a transfer of power. You can see he smashes his opponents with just a fling of a hand. And there's a payoff at the end. Now, again, I'm bringing this down to the rational level. We're all smiling here. $450 million in three months. There's something to the story. Now, some myths last longer than others. You see, he even gets a trophy and some extra after the trophy. I can play this above 18 or 21, I think it is in the US audience now. How does it work when it lasts a little bit longer? Mini. Mini was a mythical car in the uk. It was a car that the Beatles drove. And in the end, it was so much a I can do it underdog winner card that even royalty squeezed themselves into a Mini, as you can see there on the bottom, and had the Rolls Royce for the Mini, just to show I'm of the people. Now, why is that? Because Mini snubbed the French, okay, by winning Monte Carlo races a couple of times and basically said this to the French, okay, by having that little Mini win. Until the French disqualified the Mini for having too many lights and took away the title for them, which reinforced the image even more. And then there's the famous film the Italian Job, where the Mini even outsmarts the Italian mafia and gets away with their money. So Mini had this real British underdog, I come back image. But then it was dead. It was dead when BMW bought it. And instead of historicizing and bringing it back on a historical level, they brought it back as the underdog in a modern interpretation. And they challenged people. And in subliminal ways. You actually had the dog. And probably the us, which is their biggest market, didn't quite understand it. But subliminally, or rather subconsciously is the better word, you got it, that this is a little challenger brand, that if you step into it, you are stepping into a different feeling than when you go into your van, where you feel more like a soccer mom or a soccer dad. Here you Feel like a little challenger. And then they did a lot of viral stuff actually, to help with that, like a video where they challenged Porsche. They had helicopters fly around the Porsche headquarters and say, I challenge you for the race. Until they had a huge PR event all financed by Porsche to lose the race. And then everyone runs to the brand manager of Mini and said, what just happened? I guess you lost your stunt. They said, no, you don't understand. Mini is not about winning. It's about the chance challenge. Okay, so a modern way of bringing the Mini myth to life. And if you need a proof, it's bigger than Volvo, which used to be the car brand of the liberal. Including the trucks, it has 8% share in California, and it's making a ton of money. I'm German for a little car that shouldn't even be defined as a car. All right, so going deep is what brings you up. First principle, Second principle to balance inclusion and exclusion. Classic concept. You stand in line at Hermes, no secret. There's even books written about how to get a Birkin bag. We can do it. I have a book. I also have a secret book. Nobody can buy it. You can't get it. Even though apparently it shows up on ebay by now. It's a beautiful book. Nobody can get it. It's the concept of exclusivity. So people crave to have it, to have little secret chapters here in orange that are not in the original book, and so on and so on. And Net. A porter has translated this to the Internet, where only very important people. No, sorry, extremely important people. EIPs can shop while you're all waiting, but that's kind of a crude concept of exclusivity. There's more subtle ones, which are built on understanding the difference between a design target and. And a strategic target. A design target is the dream world, the myth that you want to reach. So let's do this game. Who is this? You're too many people. So let me do this. Leather or cloth? Beard or shaven? Smoker or non smoker? Black or red? Ever been in prison? Ideally several times. Right. So we know this person inside out. And in case you missed it, we can have sound on this. We believe in going our own way. Harley Davidson will tell you we believe in bucking the system that's built to smash individuals like bugs on a windshield and so on and so on. Okay, so we can show down this downstairs. All of us believe. Sticking it to the man. I'll give it to the guy upstairs that says, in the video I saw who is buying a customized new $35,000 holiday. We believe in freedom. The guy upstairs, that guy, the city slicker who puts on a wash off tattoo, you know, and honey, I'll be back in two hours around the corner, takes off the helmet, puts on the bandana, starts with smoking, you know, just to use a Tic Tac afterwards in a different way. Okay, so here we got a dream. You sign up for. You sign up for two hours, but you don't really belong to Twin Peaks in Texas. You just belong to it for two hours and then you strip it off and you're your stockbroker, your lawyer, or other person with a midlife crisis again during the week. That is longing and belonging, being part of being a Hell's angel, but also being a part because you know you're not really. And that's what's keeping the tension and makes this interesting and makes you want to be part of it. Luxury brands do this all the time. You want to be elitist, you need to know how to tie your shoe. That's how you're going to be recognized. You go some fancy parties where at the end they don't eat cream as a dessert, but put it on their shoes to shine it together in the moonshine. Because other things bleach the shoes and only, you know, no, you go on the Internet, offline, online, playing back and forth, the swan club. They go crazy. Videos that get how many hits? I don't know, half a million. About this party. And these brands know our desire to be part of it. We are not invited. But for just $1,250, apparently I have a pointer here. We can be part of Berluti, which usually costs thousands of dollars for shoes, for a tom like looking shoe. But it's only 1250 and it lets us be part of that club. Okay, So I hope you understand how this model works. I won't go into Red Bull, but if you think of it, same thing. People jump out of the sky. Their biggest single profession as user is not students. That's not a profession, is truck drivers. So they very much understand the longing to be a rocker, a breakdancer, a stratosphere jumper, and via the alpha bees, being in the medical profession, being a truck driver, being a student, being a stockbroker, which are the biggest actual buyer and who aspire and say, if it can give them wings, it's good enough for me. But you will never see an ad by Red Bull about stockbrokers or truck drivers. And even a mustard can do it look up Grey Poupon. You can be member of the society of good taste. But as they say, most don't cut the mustard. So bad luck for you. Even a mustard can elevate itself via that principle. Last principle, the need for truth. And I would say actually the most important because the trickiest, the most difficult to imitate the current frontier and the one that really separates the the real ones, like Patagonia from the ones who are still trying. And that is the need for truth and living the truth. Because it's good to pretend you're a wine and you're really a beer. And this is a photograph I took at the airport. And you get an extra 50 cent. That actually means tripling your profit margin, which is not bad, but it might be a fad because there might not be much more behind it. And it's fantastic. Obviously, as we know, it's a billion dollar business to create your own language. Skinny Venti, Frappuccino. Nobody knew the heck what that meant 10 years ago. Okay. And to be the third place. But it's really incredibly more powerful even and long lasting if you just live your mission and you are inseparable from it. So here's a blog post that I posted a couple of days ago on Freitag. It's a little Swiss bag brand. Who knows Freitag. Excellent. I think more of you will buy it after I tell this story. Freitag makes bags out of truck tarp, top left, cuts them, recycles them, washes them with rainwater and cuts them into individual bags. Each bag looks different because it comes from a different truck and a different part of the truck, as illustrated here on their website. Or not. I don't know why it's not playing. Anyway. All right. Media not found. These are the tarp butchers. This is in the banker city of Zurich. It's a high, broad, snobby city where they employ and make a point about employing immigrants and other people who wouldn't find a decent job. Particular blue color working job in the middle of the banking town. And I'm talking location wise, also in the middle of a banking town. And they make these. So I did my pilgrimage, of course, on bike, okay. To their flagship store, which is a stack of containers on the left. You can have a beautiful view from the top of the industrial landscape they're in. They're right next to the central train station. And here you see some of their bags since we couldn't see the video, they're each different and they have stop motion Video. Each bag is being photographed. You can turn it360 on their website, each line has stop motion videos. Unfortunately, media is not found where they make funny videos about their bags and how they are made. And they sell 60% of their stuff online. They've been around for over 25 years and they had double digit growth every year since then. But they want to control and manage their growth. They say nothing that's not organic. So in the US for example, they only have four stores. So what you do is you create a world according to yourself and you make sure that you really live that world. And that's big dollars. Because when Snapple was bought by General Mills, it went down by 1.4 million. Sorry. Within a couple of years of the acquisition. This is documented. Then private equity took it back, recognized that for example, Wendy. And honestly, talking about input from the users and consumers about the flavors was important. And they resold it after another two years for another 1.4 billion more. So 1.4 billion for creating the right kind of story and living it. So don't execute be. It is really the conclusion of that last and third and last option. So where do you start? You're all puzzled. It's easy. Call me subtle pitch. Okay. No, but look at yourself across these parameters and see what should you tackle and where are you? Okay, where are you on mission and myth? Do you even know why you are around beyond making money? Because no user is interested in you making money, in you growing and you ultimately being bought, being a unicorn or God knows what, Nobody's interested. What are you about beyond making money? Beyond growing beyond yourself? Okay. And how can you live that as an organization and who should live that and where is it going to be most present and how you're going to tell that story and if possible, start to make it mythical? Think of Elon Musk. It's much bigger than a car. Okay. How do you make this mission mythical and livid to create a truth that people can look behind the curtain? Because in the digital age, everyone is able to and quickly does and they feel even better about what they see rather than being shocked about the difference between your facade and what you truly are all about. So that's about all we have time for. I hope it was still a good overview. Thank you very much for coming.