Last Friday’s post was about Trust, namely trust and corporate blogs. I continue with the theme of trust, this time within the context of word of mouth (WOM) marketing and brand building
You can call Bernie Madoff a lot of things. I look at him smirking on TV, seemingly bemused by all the attention, and feel like clobbering him. He really screwed a lot of people, and I agree with everyone who says he should be drawn and quartered in a public square, instead of banished to his bedroom in his mansion without dinner under house arrest.
Yet as a marketer I can’t help but appreciate that the debacle is also a reminder of the power of word of mouth marketing and the enduring strength of brands.
Bernie Madoff was rich and controlled tons of money but in terms of the image he was a little guy – his name was not a household one. He did not do overt marketing or Super Bowl ads.
Instead, he marketed through his immediate and extended social networks. Because he took people out on his boat, which was ironically named Bull, and spread the word through his country club network and amidst NY and Palm Beach, Florida society.
He cultivated an aura of exclusivity, using classic buzz-building techniques that leverage snob appeal and get people to line up for access to a scarce commodity. He built a mystique, knowing that saying less sometimes does more.
The strength of the brand was such that no one questioned what in retrospect now seems pretty obvious.
Everyone knows that the market frustrates attempts to do what Bernie claimed he did, namely generate predictable returns over long periods of time. Sooner or later all gambits fail, as market conditions change or people figure out what you are doing and replicate your strategy, and in doing so in large enough numbers, eventually take the wind out of it.
So how could Madoff fool so many people for so long? How could he thrive and get money from institutional investors when there is supposed to be controls, government oversight and due diligence?
This gets back to the brand of Bernie Madoff, built on his status as a pillar of the community, former NASDAQ chief, and philanthropist. Bernie was safe. Bernie was trusted. You are in good company when you invest with Bernie. Central to the scheme was the predictability and moderate rate of the returns. The returns were consistent but not so flashy as to really cause lots of scrutiny.
Predictability, steadfastness and reliability were baked into the Bernie Madoff brand, he took it to the bank and took his investors down in the process.
