Today, seven Lego sets are sold every second, but 10 years ago, Lego was in pieces.
The family-owned company had been heading closer to bankruptcy since 1999. In 2003, sales dropped globally by 29 percent. By January 2004, Lego announced a huge deficit, saying it was losing one million dollars a day.
The problem went much deeper than the balance sheet. Lego had forgotten its roots. Its products were moving further and further away from what people loved about the brand.
But then the unexpected happened. Lego’s owner and CEO, Kjeld Kirk Kristiansen—grandson of founder Ole Kirk Christiansen—stepped down and appointed Jorgen Vig Knudstorp as Lego’s new CEO. Knudstorp wasted no time in turning the company around.
Business owners and brand managers can learn valuable lessons from the Lego story. Knudstrop’s strategy boiled down to three core principles:
1. Really know your customers.
Lego may have been honored with the Best Toy of the Century award (twice), but it committed the biggest business blunder of them all: It completely lost touch with its core customers.
Sure, the company had done lots of research on play, but it had failed to reach the families and kids who use its products. As a result, Lego failed to keep pace with the changes in kids’ lives and began sliding into irrelevance.
When Lego’s analysts did get out there and talk to kids, they found the most meaningful play for children seemed to involve degrees of difficulty and skill acquisition—rather than a desire for instant gratification from toys.
That was only one insight that led to a new generation of Lego products that were more in tune with its customers.
No matter whether your organization or client is the world’s leading toy manufacturer, a small retailer or a business-to-business firm, you need to dig deep to understand your audience.
Do the research, which can be as simple as getting feedback from your existing customers. Then, dig deeper and use the insights to create an offer that they really want.
2. Be true to your roots.
Even though it has branched out into digital games, theme parks and movies, it is the core products—the Lego man and humble Lego bricks—that remain at the heart of the company.
When you buy Lego, you know exactly what you’re getting, which is more than can be said for other major toy companies. The level of quality and Lego’s brand message remains consistent.
The lesson here is simple: have a single strong message for your brand, and stick to it in all the channels that you use.
3. Trust your most loyal fans.
Knudstorp tried something different and a little bit daring; he handed over creative control to hardcore Lego fans.
One of the biggest problems Lego had was the fact that its top designers had the skills, but not the understanding, of Lego’s appeal. In 2006, the first designer recruitment workshop was held and a number of “Adult Fans of Lego” were taken on as Lego designers to help rethink the company’s products.
The results were kits that featured new parts and characters, but never veered from the distinctive and much-loved Lego feel. Moreover, the company became truly customer-centric.
Trust your most loyal customers. You don’t have to employ them like Lego did, but you should proactively get feedback from them. If they aren’t behind your product or service, it’s your job to find out why.
via Ryan Christie at PR Daily