October 2, 2015 Ferguson Advertising

Up in smoke

Lemon. Da Da Da. Fahrvergnügen. Das Auto. Volkswagen has spent the better part of the past half-century carefully crafting its well-earned status as one of the world’s best – and most beloved – brands. It’s been a case study for years in successful affinity marketing and brand building. The company spent years developing and building true consumer affection for its brand – and, as a result, its products. And then, in an instant, it was gone.

A quick recap for those who may have missed the news or not fully followed what happened: It came to light within the past couple of weeks that VW had tweaked the in-car software on its diesel vehicles to essentially cheat on emissions tests – reducing the car’s CO2 output to acceptable levels when it was being tested while emitting up to 40 times that when not being tested (i.e., 99 percent of the car’s operational life).

This means a brand so beloved by so many – and so strong a proponent of its “clean” diesel technology – was responsible for up to 11 million cars worldwide spewing an almost unfathomable amount of additional particulates and other harmful emissions into the environment.

Ain’t no ad going to repair that kind of brand damage. And there ain’t no amount of goodwill that can overcome that kind of actual environmental damage.

So is this the end for VW? Even if it survives, it’s easy to see this damaging the brand for years – decades – to come. More importantly, there are a couple incredibly valuable lessons for all brands to take away from this fiasco:

  • Your brand has goodwill. Call it “emotional equity,” if you prefer, but the basic concept is the same – every positive interaction and experience you have with customers and other key audiences combine to build a positive perception of your brand.
  • That goodwill has actual, tangible value. Building goodwill equity in your brand is more than just about making people feel good about you. It impacts your bottom line. VW’s brand goodwill, for example, was estimated to be worth $23 billion to company value. The easy way to determine your own brand goodwill? Ask yourself: If we didn’t have anything – no buildings, no products, no people…what would our company be worth? What’s the value of your brand alone?
  • Never, ever take it for granted. If the VW example doesn’t open your eyes to this most important reminder, what will? Fifty years and billions of dollars in goodwill literally wiped out in a matter of days. If it can happen to a brand as iconic and revered as VW, it can certainly happen to yours. You’ve undoubtedly invested great time and resources in building and maintaining the positive goodwill your customers have with your brand. Understanding the real value it provides your business – and knowing that it can be gone with one wrong decision – helps motivate you to consistently keep a laser-like focus on protecting it through the quality of your products, your service, and your overall customer experience.

If there’s any good that comes of this Teutonic tale of tragedy, it’s hopefully that you’re reminded clearly of how important your customer goodwill is to your brand – and how quickly it can go kaput.

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