The Counter Diversion journey has been fascinating to me. My partner and I have specialized in data management and data warehousing for decades, 6 years ago we invested in Counter Diversion with the goal of automating the task of identifying the source of product to the grey market. This task allows manufacturers to enforce all of their sales policies (MAP and Distribution) to protect their product values. Initially working with HOKA, the running shoe brand of Deckers Outdoor, our initial task was pretty straight forward and simple, tying data together to allow HOKA to address violations of their distribution agreements. HOKA's foresight and willingness to make difficult decisions (a little easier with data driven insights) has paid off in spades for the brand.
The knowledge we gained of the run specialty market through our work with HOKA was interesting, and as Counter Diversion grew, we gathered similar insights to other markets where we helped clients protect their product values. This work produced a template of overarching tendencies of the types of unauthorized sales that every brand will face, along with a clear path of how to address each.
When taking action against sellers and changing the marketplace dynamic, confidence is crucial and data-driven decision-making fuels effective brand protection strategies. By unraveling the 'who' and 'why' behind policy violations, brands gain access to valuable data that serve as a compass for navigating the intricate landscape of the digital marketplace. Analyzing patterns and trends in policy violations empowers brands to make informed decisions, adapting their strategies to the ever-changing dynamics of the market. This data-driven approach not only allows for the efficient allocation of resources, ensuring that efforts are focused on the most critical areas of concern. Over the years, what we've discovered is marketplace tracking and analysis fuels so much more in terms of brand intelligence. Healthy franchises, areas where return on ad spend can be maximized, and most recently a true financial picture of the overall marketplace and the risk presented to brands and their authorized distribution network from the grey market. Staying ahead of emerging threats becomes possible as brands proactively identify and address potential risks before they escalate. In essence, the benefits of data-driven decision-making in brand protection lie in its ability to enhance strategic adaptability, resource optimization, and proactive threat management, fostering a resilient and thriving brand, that is PROFITABLE.
In the six years since we got involved in brand protection, we've witnessed every possible situation that negatively impact brand health, a global pandemic created an onslaught of sellers looking for ways to make money on the growing marketplace sales channels. From consumers figuring out how to buy low and sell high, to authorized dealers trying to maintain sales volume in a changing retail world. Multiple offers for the same product on the same platform removed customer service was as a decision to purchase, and price became the deciding factor. This dynamic creates the race to the bottom that we so often hear about. We define brand equity as, the value a brand adds to a product or service beyond the functional benefits, often reflected in consumer loyalty and willingness to pay a premium. This can be calculated as the most units that can be sold through all sales outlets at a consistently high price across all outlets (high average sale prices with minimal low price outliers). Conversely, when many products from a brand are offered at a discount, we see a negative impact on brand equity, which is the challenge that marketplace sales channels present to brands in today's world.
When our clients are committed to using the information we are able to mine, in every instance they have strengthened their market position. Every company that we've worked with started at a different point, all with some unique structure to their distribution that influenced how their sales policies were written, which presented unique challenges on how they need to be enforced. What has been great for a data guy, is how the solution has progressed from categorizing and enabling the correct policies to be enforced, to uncovering issues that are deeply affecting profitability. Over the past six years I've noticed three things that everyone protecting brand health and brand equity should know.
A lot of people think a MAP (minimum advertised price) policy solves everything. MAP policies can only be enforced against known authorized accounts. A brands Terms and Conditions usually cover distribution guidelines and often have more teeth in them to protect a brands health. What is clear is the grey market cannot thrive when a clear and realistic retail price is set that works for all sales channels.
Brands have to be committed and coordinated and sellers don't. There are a lot of sellers out there that don't care about a brands health. The sheer numbers and creativity of grey market sellers creates chaos that requires process to solve.
Data doesn't lie. The problem that the founder of Counter Diversion set out to solve a decade ago was, how to create action from tracked data. The migration over the past six years of empowering policy enforcement to driving profitability has been amazing. We live in a world of data, use it to protect what is most important to your company, your brand health.
One of my favorite posts from December of 2022, titled "How do we think this ends," looks at the marketplace phenomenon, which is not going away, and has presented a myriad of challenges to our clients. Some have had to slow and stop declining brand health and look for strategic opportunities to turn the momentum in the opposite direction. But when brands are able to understand the market dynamics, it has resulted in better decisions, setting them up for sustained and profitable growth. At the core of this turn-around and stated in point number 1 above, is enforcing the sales policies that were originally set up to protect brand health and profitability. Beyond enforcing sales policies, it is critical to identify and address the grey market listings that often provoke authorized distribution as an untouchable source of product that is allowed to operate outside of the policies for which your authorized and sustainable distribution channels need to adhere.
What I can say with certainty is, safeguarding brand equity amidst the ever-changing tides of the marketplace is not just a business strategy; it's a necessity for long-term success. While external factors may fluctuate, a strong brand foundation remains resilient, driving trust and reliability for consumers. By prioritizing brand health, companies not only insulate themselves from immediate market turbulence (often created or compounded by marketplace sales channels) but also lay the groundwork for sustained profitability in the years ahead.
In a landscape where consumer loyalty can make or break a brand, maintaining a positive brand image becomes paramount. Consistent messaging, exceptional customer experiences, and ethical practices are not just virtues but essential components of brand equity preservation. Even in times of crisis or economic uncertainty, brands that prioritize their reputation and customer relationships with sound brand protection solutions are better equipped to weather the storm and emerge stronger on the other side. Investing in brand equity is an investment in future profitability. A robust brand not only commands premium pricing but also enjoys greater resilience to competitive pressures. It fosters loyalty, encourages repeat purchases, and amplifies word-of-mouth referrals, all of which contribute to sustained revenue streams over time.
Counter Diversion is a boutique SaaS company - we don't have marketing and we don't use high-pressure sales tactics. Our goal is to have solid, honest conversations about the issues at hand and then either recommend our service or another one that is a better fit for your needs. If you'd like to engage in that type of discussion, please schedule a free consultation.
