Are bad brand licensing agreements souring your brand image?


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How many of you read the owner’s manual before trying out your new hedge-trimmer/Blu-Ray player/ceiling fan/blender? How many of you have ever read an owner’s manual? I have files full of pristine manuals just in case I need them one day. I’m pretty sure somewhere in those files is an owner’s manual for a double tape-deck, purchased back when they were state-of-the-art. When we want service, product repair, replacement parts, or need to ask questions about the functionality of a product, we don’t go digging through paper; we go to the Web. But what happens if the brand name on the product is not the company who manufactures and supports the product? Quite often this happens:

“I bought a COMPANY ABC product. It had the COMPANY ABC name on it. I called COMPANY ABC only to find out that it is not a COMPANY ABC product and they don’t service it. What the &*%@ are they trying to pull?

It’s not uncommon for companies to license their coveted brand name to other organizations. Apple sells iPod docking stations, but they do not manufacture them. Crest makes toothpaste and toothbrushes, not teeth whitening strips, but you would never know it. Honeywell is known for aircraft engines, but for a brief period back in 2008, you could have purchased a flat-panel TV proudly sporting the Honeywell name. All of these are examples of licensing agreements. The appeal of brand licensing to the brand owners is a big fat check. The appeal to the licensing partner is all of the benefits of a well-known, well-respected brand with a loyal following. But somewhere in the middle, an individual charged with managing the customer experience is suffering from severe headache. There is a very “dark side” to brand licensing.

1. The long-term impact to brand reputation. When consumers buy a product with your (brand) name on it, they have expectations about how the product will perform, how long it will last, how easy it will be to buy parts / accessories and how they will be treated if the product falls below their expectations. Perhaps the consumer in question purchased your product because of your brand’s reputation. Can you really be sure that your partners are treating your customers the same way you would? If the answer is ‘no’ then that big fat check could be costing you dearly in future market-share. To quantify and mitigate this risk, consider requiring all brand licensees to adopt your customer experience management process, whether it involves internal quality monitoring, third-party quality monitoring, case auditing, customer experience surveys or all of the above.

2. The day-to-day service implications. If a customer calls your call center for support with a licensed product, what is that experience going to feel like? In the example above, the call center made a decision to be completely transparent about the relationship inherent in these calls. The customer left the interaction feeling misled and will need to invest even more time to get his/her needs met. The agent likely felt frustrated with the exchange as well. A warm transfer to a “product specialist” (sitting in the licensing partner’s call center) would have been a far better experience for the customer, the agent and the brand!

The greatest risk to any brand is loss of market-share, and decreased brand reputation is one of the fastest ways to get there. Brand licensing can be a very effective way to capture revenue while expanding a brand’s customer-base, but both the short- and long-term implications to the customer must be managed with an eye for consistency in brand experience.

Republished with author's permission from original post.

Carmit DiAndrea
Carmit DiAndrea is the Vice President of Research and Client Services for Customer Relationship Metrics. Prior to joining Metrics, Carmit served as the Vice President of Behavior Analytics at TPG Telemanagement, a leading provider of quality management services for Fortune 500 companies. While at TPG she assisted clients in measuring behaviors, and provided management services to assist in affecting change based on newly created intelligence.


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