In economic terms, disintermediation means to cut the middleman out. For example, consumers buying stocks directly through E-trade or Scottrade is a disintermediation of stock brokers. As a result, the intermediary loses business.
I’m going to extend/tweak the scope of disintermediation to cover branding.
Brand disintermediation is the art of cutting your brand out of the middle even though you may still be earning income in the short-term. In effect, these 3rd parties are stealing your customers while you watch (often because you gave them permission).
Here are three companies that are doing an excellent job at taking brand loyalty away.
Example #1
Gogo, which provides in-flight Internet, markets directly to airline passengers. When I surf the Internet on Delta, for example, I login and pay through a Gogo service portal. I am then marketed to by Gogo.
Delta loses the branding opportunity and recognition for offering in-flight Internet. In other words, Gogo cuts Delta’s brand out of the middle. The passenger is Gogo’s customer and not Delta’s – a missed opportunity since my brand loyalty is now with Gogo, not Delta.
Conversely, Southwest uses Row44’s in-flight Internet service but uses a white-labeled or branded portal. Meaning, the passengers’ experience is always with Southwest.
Example #2
An even better example is Mint.com – the online provider of personal financial management software. Mint’s job is to make you switch financial service providers.
Here’s how.
Mint makes money when users sign-up for new credit cards, open new bank accounts or brokerage accounts, or obtain new loans through an offer on Mint.com.
In other words, while I’m using Mint.com to track how I spend money at Acme Bank, I see ads for accounts at Piggy Bank. I then sign-up for a new account at Piggy Bank and leave Acme Bank.
Mint caused Acme Bank to lose a customer not because of the ads, but because I use Mint to check my bank accounts, to track my expenses, etc. The user experience is with Mint, not Acme.
So who do I trust? Mint.
That’s why banks such as USAA offer an in-house solution for online money management that even allows you to connect other bank accounts. The USAA team understands that Mint wants and encourages bank customers to switch banks.
Example #3
Last, Groupon takes the face of your business away. Think about it.
Yes, local businesses hope that I’ll buy their Groupon, love the service and come back, but ultimately, Groupon is my service provider. I go to Groupon looking for my next date night.
I have a friend who buys a lot of Groupon deals and he usually says something such as, “I’ve got a great Groupon for a sushi place. Want to check it out?”
He doesn’t say, “Hey, I’ve got a great coupon for Happy Sumo Sushi. Want to check it out?”
(Read how Daily Deal sites also teach your customers to undervalue your business)
The point is…
Although a business partner may seemingly be extending your reach or service offering, you might actually be giving them the keys to your brand and saying, “No really, take my customers and keep them yourself or sell them to someone else. I don’t mind.”
In other words, you are allowing a 3rd party to use your business and customers to build its brand following (possibly at your expense).
Be careful not to be short-sighted.