In a world where public trust in businesses and other institutions is rapidly declining, family-owned companies are in a unique position to communicate and capitalise on their brands and values. Alexandra Newlove reports
While traditional economic theory relies on the idea of the rational consumer, anyone who runs a business knows in reality, the way customers make decisions is a far from a stone-cold cost-benefit analysis. With research and shocks of populism suggesting a crisis of trust in business and other institutions, companies need to work harder than ever to maintain their relationships with customers, clients, and the public—and family businesses may be able to satisfy the growing need for authenticity, solid values, and an enticing back story.
A phrase coined by US marketing expert Simon Sinek in his rethink-inducing TED Talk, “the why” posits we like doing business with companies which share our values—and this aspect is arguably more important than the product or service itself.
“People do not buy what you do, they buy why you do it,” Sinek says.
As an example, many people realise Apple products are expensive compared to other-brand devices with similar features. Yet many of these people are still carrying iPhones in their pockets. Sinek says this is because of Apple’s unique way of focusing their branding and marketing around what they believe in—innovation, vision, creativity—rather than “our product works well”.
A disciple of “the why”, UK brand value expert Lisa Killbourn says this idea is ever-more important in an increasingly competitive global economy.
“You are always going to have competitors who will make products or provide services very similar to yours,” Killbourn, who runs Independent Eye Strategy, says.
“It is much easier to differentiate yourself through your values and principles. This is a particularly rich area for family businesses, which do tend to have a story.”
The psychology behind “the why” boils down to the human need for meaningful relationships, Killbourn says. We want relationships with people—and businesses—which reflect who we think we are.
“With some big corporates they focus around macho values like leadership, or change,” Killbourn says.
“Whereas family businesses will lean towards stewardship, loyalty, respect, and courage—those really attractive and interesting personal qualities that will have driven the original founder. The kind of values that are far more appealing to customers.”
Family businesses, Killbourn says, are well-placed to capitalise on consumers desperately seeking authentic connections.
“Authenticity is so important because we are all looking for something human and personal, as we feel alienated by the lack of human scale in business now… With [family business] it has got your name on the door. It is your grandfather’s company and you have a commitment to the business. You will not get in a company where they buy in a managing director every few years.”
The search for authenticity
Based in the rolling hills and grassy plains of Somerset, England, Thatchers Cider knows its customers are looking for this human connection. Its messaging centres on the family which creates the product and their story, with the cider itself almost a supporting act in their marketing.
Martin Thatcher, pictured left, managing director and fourth-generation cider maker, says his family’s values of heritage, sustainability, craftsmanship, and passion for quality are “a constant throughout our sales and marketing initiatives”.
“We have a great story to tell… Within the alcoholic drinks industry, heritage and authenticity is a key driver of consumer demand, so we are right at the heart of what is current.”
On the company’s social media, staff post photos of the sun rising over orchards, answer customer questions and send updates from community events. The Thatcher family feature front and centre in the brand’s television commercials, and various relatives smile on different pages of the website.
Individual ciders feature family members: Founder William Thatcher stares out from the bottle of Thatchers Vintage along with Martin’s father John Thatcher, and the Stan’s craft range is modelled off a second-generation family member with a particular passion for traditional cider.
Thatcher says an embedded passion for the past helps fuel the business’s innovation, with a focus on staff development, state-of-the-art facilities, and sustainability driving the 113-year-old business forward.
Killbourn says family businesses do tend to have a grasp of their own history not present or celebrated in other firms.
“Getting back to those original passions, motivations, and entrepreneurial spirit that started the business is exactly the kind of story people enjoy hearing, engage with, and remember.”
Some sectors may find it easier to tap into these stories, but “for any sector, focusing on why we do what we do, and what drives us [is important],” Killbourn says.
“Whether you are in a ‘warm cuddly’ sector where it is all about artisan craft, or a more industrialised sector—everyone should challenge themselves to harness that family trust factor.”
Crisis of trust
A messy political climate, growing distrust of governments, the media, and big business spells opportunity for family-controlled companies.
The 2017 Edelman Trust Barometer showed the general population’s trust in four key institutions—business, government, non-governmental organisations, and media—declined broadly, a phenomenon not reported since Edelman began the study in 2012.
When the 2014 research examined family-owned companies, it found globally, 71% trusted family-owned businesses, compared to the 61% which trusted big business generally.
Yet Asia-Pacific was the only region where the family trust factor was reversed: 62% trusted family companies compared to the 74% which trusted public companies. It was reported consumers perceived too much connection between powerful families and the ruling government, leading to the concentration of wealth.
Reg Athwal—founder of RTS Global Partners, a family business advisory firm in South Asia, Africa and the Middle East—says this closeness with government is a sustainability strategy, but suggested paying more attention to philanthropy would help create more positive public feeling towards Asian family businesses.
“A good case study is the Chandaria family with businesses in 50-plus countries and led by Dr Manu Chandaria (chairman of Comcraft Group),” Athwal says.
“He has built the family brand based on giving back via his foundation… This builds the brand in a positive way and ultimately flows back with more wealth creation. As the saying goes ‘the more you give back, the more you receive back’.”
Draw on your history
When your family has been in business for more than 300 years, you are spoilt for choice when it comes to the tales you incorporate into your brand identity. And so it is for London-based wine merchant Berry Bros. & Rudd.
The man tasked with harnessing the history and communicating it is eighth-generation creative director Geordie Willis.
There is a church-like magic inside the merchant’s wobbly wooden-floored St James’s Street headquarters, the same site where the business was founded in 1698 by a woman ancestor whose surname (Bourne) is one of the few things known about her.
In some ways, it is a matter of letting the “if these walls could talk” factor speak for itself. Not to mention the fact the thousands of wines which line the cellars and the new Pall Mall store each have their own unique tale.
“We are very lucky, because we have got such a wealth of stories we have to decide which we want to be telling, rather than creating them,” Willis says.
“That is fortuitous, not every company is blessed with that—300 years gives you a lot to work with.”
Willis’s storytelling and branding nous was cultivated during years working in magazines before he rejoined the family business. He says when it comes to communicating history, integrity is key regardless of whether you are a few years—or a few centuries—old.
“Any time we have thought of doing something that has felt at all ‘invented’ it has felt intuitively wrong,” Willis says.
The creative director has driven a chic rebrand of Berry Bros. & Rudd—which toasted revenue of more than $222 million last year—stylishly maintaining the prestige of the double royal-warrant holding business, while making it accessible via channels like Instagram to younger up-and-coming wine enthusiasts. The company’s state-of-the-art store stocks wine ranging from £10 to £10,000, and every customer is given that royal treatment.
“There are themes that run through everything,” Willis says.
“Relationships is one. Innovation is another. It is odd to talk about with a 300-year-old business, but the only reason we have been around that long is that we have been constantly changing.”
This is a theme Killbourn picks up on too, and she says while a rich history can be a wonderful gift, it can also be a weight too heavy for some family businesses to bear.
PwC’s 2016 Family Business Survey suggested family businesses become more risk averse and less prone to innovation as they age, helping explain why so many disappear by the third generation. Younger family members, as well as non-family senior managers in particular, reported their companies struggled to change, and found innovation daunting.
“They get complacent about being a good size and being stable and profitable,” Killbourn says.
“But of course when you demote the importance of innovation, this will impact growth. Managers get more conservative and get into the mind set of ‘I’ll have done a good job if I just don’t muck it up’. Things stagnate and the marketing message reverts to ‘We’ve been around a long time’.”
Killbourn says longevity in and of itself can be a “so what” for customers. Businesses need to go further and show how their past informs future innovation.
If you stop evolving, you become less relevant as the consumer world is evolving all the time. Rose Schreiber, of London’s Hawthorn Advisors, said family businesses focused on looking back sometimes missed opportunities brought about by a changing media landscape.
“There are many family businesses rich in stories and experience but have too rigidly stuck with traditional forms of engagement—like print media—and missed out on harnessing new mediums which can allow incredible access to industry experts and brand ambassadors, as well as opening up your brand to new customers.”
A different approach
But while Thatchers makes personalities of its founding family and Berry Bros & Rudd capitalises on the wine industry’s fetish for traditionalism, Germany’s Prym Group proves it’s possible to capitalize on family values, being a proud family business without placing members front and centre and making it a marketing strategy for the brand.
The Prym family controls of the group via its shareholding board, but is no longer involved in operations of the company, which turns over more than $400 million a year with its three divisions, being a leading global supplier for creative sewing products, fashion accessories as well as for surface technologies.
The Prym Group, founded in 1530, is the oldest industrial family business in Germany, and among the oldest in the world. „All the values that these 500 years of family business history imply are present in the family today” fifteenth generation family member Catharina Prym says.
In 2008, the Pryms were under pressure to sell their shares. Instead they capitalized on their values internally by coming together, exercising good governance and putting business interests long before the family. Prym says this process demonstrated family values such as loyalty and courage from an ownership perspective, a fact that certainly echoed in the equity market. She says compared to that, the values the business promotes to its customers – like corporate, social and environmental responsibility – “are rather typical, good corporate standards”,
“Our value of ‘rigourous family discipline for the greater good’ and the loyalty and courage that are the foundation for this approach, are not something that’s marketed as such, though it is a family value that has enhanced the business significantly.”
And while the group capitalises on history in terms of its market knowledge, its tradition of innovation, trustworthiness and long-term relationships, it is also important for the Prym Group to be seen as cutting-edge.
“That can be different for brands where the product is more associated with tradition,” Prym says.
“But for [Prym] it’s about being at the top of product and service innovation in the market, developing the technology of the future… There is a recognition of our name that goes back centuries… Other than that, it’s the quality of our products today that makes us able to compete.”
This correlates to Lisa Killbourn’s statements on longevity and Geordie Willis comments on constant change.
“You can capitalise on your history, but you’re creating business and making money tomorrow, not yesterday. So it doesn’t help to promote ‘hey, we were great yesterday’ if there’s someone who’s quicker, more innovative and better than you are.. You need to go to market with why you are the best for tomorrow.”