Why Brands Fail

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(By Spike Santee) There is a big discussion here on RadioInk.com about why WLUP in Chicago failed as a radio station. The forum has been full of finger pointing and accusations of bad management, out of date programming, and the business of corporate radio. The “Loop,” like other stations, failed because of bad decision-making. Not one big bad decision, but hundreds, maybe thousands of bad decisions over the years. So, let’s skip the post mortem and learn how to make better decisions in the future. Let’s learn about plotting our future on the Sigmoid Curve.

All brands have a natural lifecycle. One way to explain and mathematically diagram the natural lifecycle of a brand is on the Sigmoid Curve, which includes:

1. Introduction
2. Growth
3. Maturity
4. Decline

History is filled with stories of how great empires, nations, or movements came into being, grew to a position of dominance, and then fell away. In day-to-day life, we see that businesses go through this as well.

The introduction phase is costly. It takes human and financial capital to begin a new idea. It’s never been done before. There are skeptics and detractors. The going can be tough.

If the brand makes it past the development phase and starts to catch on, it will enjoy a period of growth and profitability. Everyone is happy with the new idea. It is popular and profitable.

But then comes the maturity phase of the Sigmoid Curve. Success begins to slow. Revenue declines and profits start to shrink. Dissention develops among the brand managers. Some argue against change, insisting that the slowdown is temporary. Others argue for change, but the brand’s current revenue stream can’t fund the necessary investments.

Eventually the brand begins to decline, and the blame game takes over and drives the brand into demise.

The time to start thinking about your next Sigmoid Curve is during the period of growth, before maturity is on the horizon. The brand is profitable, people are excited, there are available resources to devote to the development of the next Sigmoid Curve. So why do so many brands find themselves is such peril of demise?

In his book, How the Mighty Fall, author Jim Collins identifies some of the prime reasons great companies can fail. One is hubris born of success. Hubris is defined as excessive pride or self-confidence.

“Why should we change? We’re number one!” some on your team may say. “What are you worrying about? Things are going great! Don’t fix it if it isn’t broken.”

Waiting until maturity will only put stress on available resources because the growth rate is slowing. It’s more difficult to allocate time and effort to a new Sigmoid Curve because everyone is trying to rescue the original brand.

Once the brand reaches the decline phase of the Sigmoid Curve, there is no more hope of resuscitating the brand. There are no resources, and the necessary attitude and energy are gone.

In the growth phase, everyone is happy. The plan seems to be working and starting to generate some profits; everybody is a hero. Now is the time in the natural lifecycle of the business to begin planning on creating the next cycle. It is time to think about reinventing the brand. It is time to start a new Sigmoid Curve.

Brands often launch new Sigmoid Curves only to see them fail. Launching the new Sigmoid Curve when the wind is at your back is the secret. Not as much is riding on the new Sigmoid Curve. The existing curve is doing just fine, for the time being. The brand has enough equity and resources to weather a failed effort to start a new Sigmoid Curve.

Is digital a new Sigmoid Curve for radio? I don’t think so, because digital is not the core business of your brand. Digital is just another access point to your brand. If the brand is suffering, all you are doing is offering digital access to a brand in decline.

What can you do if your brand is currently in decline? Don’t throw good money after bad. Get out a clean sheet of paper and start over. Major items to consider:

•Limit your commercial load.

•Teach your staff how to write emotionally engaging commercials.

•Exercise editorial control over commercials that don’t fit your format.

•Teach your programmers to be content producers and not DJs.

You are fortunate to be in terrestrial radio today. The audience size is larger than at any time in history. The listeners feel a personal connection with our medium. They trust their favorite radio station to keep them up-to-date. They listen to radio when they are having fun. They listen when they need a lift. They feel like the commercials on your radio station are more relevant to them than commercials they see or hear elsewhere. Documented return on investment is overwhelmingly the best of any medium.

Good Luck! Talk to you soon.

Spike Santee is the author of The Four Keys to Advertising Success and the president of SpikeSantee.com. Contact Spike at (785) 230-5350.

3 COMMENTS

  1. That’s a piece that radio people should be reading.
    Oh! Some are!
    Maybe, Spike, those major items for consideration are just too far out of reach.

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