Brand disaster stories, can having a purpose actually harm your brand?

A few weeks ago I attended a business development meeting and, to my pleasant surprise, a significant portion of the session was dedicated to the critical importance for businesses to focus on their brand positioning before trying to sell their product/ service to anyone. Obviously, as a brand strategist and strong advocate of the pivotal role of branding as key to business success, I could not have agreed more.

And that’s when one of the participants bluntly shared his view on branding: ‘I work with an insurance company that is all about their purpose, mission etc, but obviously that’s just bull**it, because they are an insurance company, what is this nonsense about having a purpose? That’s not what sells policies!’

Having started my journey in branding within an insurance company and having experienced first-hand how actually having a strong purpose and sticking to the company’s value does sell policies, I simply couldn’t let this comment pass. So, at the break, I approached the participant to talk about his view. That’s when I realised that he was 100% right. All the money that this insurance company is investing in its brand purpose, values etc, is nonsense! But not for the reason you might think.

It is not because insurance, or any type of business for the matter, shouldn’t have a strong brand; it’s because branding is not just about saying that you have a purpose, it’s about actually living and breathing your brand and ensuring a 360 brand experience. Specifically, that insurance company says that they do have a brand purpose but their products, client service, and the every-day interaction with customers do not support their supposed purpose.

You can shout your mission as a company as loud as you wish, but if your employees, your customers, and the community at large don’t experience it, you are seriously wasting your money. Not only that, but promising something that you don’t deliver, is worse than not promising it in the first place.

Here are a few brands that had to learn that the hard way:

The Chipotle debacle

The American fast food chain Chipotle has always been committed to making food with integrity, serving fresh food that is sourced locally. But that becomes a problem when hundreds of your customers from all over the US get infected with the same bacteria and you can’t even determine what part of the recipe was the cause. That’s exactly what happened in 2016 to Chipotle, when, despite their brand promise, they ended up outsourcing to a supply chain and contaminating over 500 people with E.coli. The result? Uproar on social media that brought to a fall of 40% of their stock. Not only was there contamination, but the company suffered reputational damage as they failed to live up to their promise (not to mention the 100 out-of-court settlements with the victims of the contamination).

HSBC, not so local after all

Do you remember HSBC’s old brand promise? ‘The world’s local bank’. This motto was launched in 2002 but in 2011 the Bank had to recall it. The reason? Officially it was because the Bank had to cut operations in several countries following the 2008 financial crisis, so they couldn’t claim to be everywhere in the world. But that is not all. By choosing the term ‘local’ HSBC positioned itself as that trusted bank that knows and values local customers, in the same way smaller local banks do, in addition to offering the weight of an international brand. However, when you think that HSBC has had a below average customer score since 2013, it’s easy to see that the bank is missing that local touch that would have brought the brand promise to life.

Volkswagen and the ‘diesel dupe’

After hugely promoting their ‘low emission cars’ in the states, the German car manufacture was found guilty of intentionally cheating the system to make it look like their cars were less polluting than they were actually were. The result for the brand was seismic, with significantly damages in market share, sales and brand reputation. As a result, VW had to move away from their ‘Das Auto’ branding because, as Reuters explains “[it] was pretentious—it suggested that Volkswagen alone defined the modern car”. This is a very important lesson that brands need to learn: In an age in which more and more brands correctly look for meaning beyond purely financial gain, it is critical to be true and to ensure that your commitment is genuine, relevant, and that all segments of your company are determined to bring it to life.

Giulia Iannucci is a brand strategist and digital marketing consultant with over 16 years of experience gained across the EU, Australia, Asia and the UK. Founder of her own business, KnowThyBrand, Giulia helps her clients position their brand as the cornerstone of their company, and guide them in creating professional and compelling digital marketing campaigns.