For years, brand strategy has followed business strategy. Goods and services were exchanged for money, and branding helped drive customer demand and loyalty. Historically, it was backstage work, occurring after the product had been designed and delivered in the marketplace.
With the rise of platform businesses, the “old way” of doing business is over. For a platform to be successful, the business and the brand strategies must be one and the same – inextricably linked.
What is a platform?
Simply defined, a platform is a virtual marketplace where producers and consumers can connect, interact and transact to create and exchange value. The platform doesn’t “own” the transactions – it enables them.
Platform value is created – and multiplied – as it gains consumers and producers. Great platforms generate network effects, where value expands exponentially for all participants as more people use the platform.
As a quick example, let’s look at lodging. A hotel is a traditional product. Airbnb is a platform. Airbnb never straightens the linens or delivers room service, yet it has secured more than 300 million stays since 2008.
Airbnb is a safe place for hosts and travelers to connect. Both parties feel supported by the platform: hosts are given the help they need to promote and grow their bookings, while travelers have instant and effective feedback mechanisms at their disposal to help make decisions and share experiences. User input from both sides is used to set expectations (through Instagram-worthy photos) and ensure a quality experience (through recent, honest reviews). Everyone wins, so long as Airbnb brings a consistent stream of quality options and value to both parties.
When a platform such as Airbnb consistently brings the right people together, energy is created. The platform becomes its own marketing engine, drawing in more people, more excitement and more possibility.
Core Characteristics of a Platform
- Provides the technology and infrastructure to connect different user groups (e.g., customers and suppliers)
- Attracts, connects, promotes and protects these different user groups
- Increases in value as more people use it (network effects)
- Provides governance and architecture to ensure safe, valuable interactions
Implications for Branding
First, we have to remember the platform’s role: to nurture the connection between supply and demand. A strong platform brand works to deepen relationships and increase collaboration within a controlled ecosystem; it’s not a standalone plan and can’t be untwined from the company’s underlying business strategy.
Secondly, platforms must have users. It sounds simple. But to achieve network effects, platforms need both strong demand and strong supply. Everyone must benefit from the relationship, which means all parties must understand (and deliver) on their unique role in the process.
In the age of digital transformation, brands need to become foundations; they are supporting structures for ecosystems of users to interact, connect and grow into a vibrant community.
Compared to traditional business models, platform brands must:
- Share power instead of aiming to control it
- Focus on retention and loyalty as much as acquisition
- Balance building communities with delivering personalized experiences
- Deliver distinct value propositions for each participant in the ecosystem
- Ensure the safety of participants by defining and governing acceptable behavior within the ecosystem
Some of these changes are major mindset shifts, while others are nuanced. Take the time to consider whether your business is platform-ready, then determine your role and positioning for each participant. It will yield handsome returns.
Platforms offer the potential to become bigger than any underlying technology or product you can plug into; they build and champion communities that generate more value with – and because of – the users involved.
Three questions can help you determine if it’s time to bust-up the traditional product roadmap and start a platform adventure:
Do you have assets or capabilities that could be multiplied through network effects?
Would your business and brand have more value if the relationship between your customers and suppliers was deeper?
Is there a natural, unfulfilled opportunity to bring these users and producers together in a way that would transform the way business is done in your industry?
If you answered yes, stay tuned for our next chapter to learn brand-building lessons from those who have successfully gone before.