Brand – The Secret to Success in Commoditized Categories

We are finding some far-sighted leaders who are successfully applying the power of brand thinking to their own products and services. They1re proving already that their sectors were never unbrandable, but merely happened to be unbranded. Until now.

” When you start applying branding best practices to a business that’s already so price-driven, you can get real differentiation and a much better engaged margin. ”

Mike Mccarron

Currently in Mergers and Acquisitions for Wheels Group, Mike is a trucking entrepreneur and industry leader with more than 30 years of experience helping customers solve their transportation and distribution challenges. He employs a partnership mentality with carriers, probability sales model and highly systemized approach to the bottom line which led to his rapid growth and prominence in the Canadian transportation space.

I didn’t know what the word brand was when I started my business.

Today I think that brand simply puts you in a position to drive better results. If you are focused and if your people are focused, you’re going to make fewer mistakes, you’re going to have less employee turnover, and though I’m always speaking to private corporations, I think in the end it drives shareholder value. When push comes to shove, when you’re a quality business and a strong brand it will show in your balance sheet and it’s going to change the end game for you.
Our brand was all about differentiating ourselves through operational excellence. We were using closed-loop, ISO-certified processes and systems to become the best broker to do business with. Our competitors were set up to pay their carriers in 60-90 days; we put in processes to define our costs and identify all extra charges immediately, so our day shipments got delivered and our bills sent out about 30 days faster – which meant we are able to pay our carriers 30 to 60 days faster than our competitors could. We became so strong at operations that mistakes were hardly ever being made, and we were able to partner with carriers and make promises to customers, employees, and suppliers. So what happened is that we first created operating excellence, and that allowed us to be the go-to broker for carriers. They gave us preferential treatment that we could pass along to our clients in the form of better on-time service, and that enabled us to offer our delivery-guarantee-or-free promise that attracted new (and kept existing) clients. Our brand represented that key point of difference in the market and internally it kept us focused on offering industry-leading service.

It’s also a matter of attending to emotions. I learned that the same emotions I might feel when standing in line at Shoppers Drug Mart – like the frustration of not being acknowledged – is the same emotion my customer feels when we don’t answer the phone. The same buying emotions drive sales for B2B companies as they do for B2C companies. So we developed a lot of lessons to teach our people – in our business the customer too easily becomes the computer screen. But when we let them down in our promises, they feel the same as anyone would.

I think that when people hear the word “commodity” they tend to shy away from brand as a concept. In fact I think the opposite: this is where the opportunity exists, because when you start applying branding best practices to a business that’s already so price-driven, you can get real differentiation and a much better engaged margin. In fact, now that I’m looking at other companies to purchase, I realize – and at the time I had no idea because all entrepreneurs will tell you that everything is great – that our margins are three times higher than the rest of our industry: 24-25% versus 8-9%. It’s really opened my eyes to just how much impact our approach has had.

Trucking is very much a family business. For the first time now we have third and fourth generation truckers whose kids don’t want to assume the businesses. I think what’s going to happen is that people will start looking at ways to get out of the industry and they will realize just how limited the exit options are … I think brand is one thing that people are going to look at as a way to create differentiation. Transportation company shares typically sell at multiples of only 2.5 to 6.0. Branding can improve these.

Advice For Branded Business Leaders:

Keep it simple. I think that brand can seem esoteric in what we would call non-¬branded businesses; it’s just very hard for people to understand what language you are talking. I really believe that for a company to be successful, the people who are collecting the money, for example, have to understand how that adds value – that by collecting the money earlier, this will allow the company to pay its partners, and everyone else, more reliably.

Brand is not a tagline. I think that a big part of business is understanding what’s already making it successful. To me, if a business is doing poorly then you have to reinvent it – and it’s often too late. The best time to change is when you’re doing well and I believe that a big part of it is finding what’s working. Even if you don’t know what those things are, people are doing business with you for a reason, so start there.

Don’t allow sales to drive the bus. There are a lot of conferences where you can hear sales executives saying to marketing “hey, create a brand for us”. Sales tends to take the path of least resistance, in most cases, in terms of what’s going to drive your customers. Brand is bigger than that.