Listen To The Band
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Radical marketing, by its very nature, can be applied by organizations both large and small across a wide diversity of industries. It often finds a champion in the most unlikely places.
The Grateful Dead, for example, would seem a strange bedfellow in any collection of exemplary business organizations. A rock 'n' roll band, and a defunct one at that, seems hardly the place to find lessons in brand building and marketing.
Yet the Grateful Dead, over the course of a remarkable 30-year run as a rock icon, employed a raft of nontraditional methods to build a brand that endures and continues to grow more than four years after the group disbanded. The 1995 death of Jerry Garcia, the band's musical and spiritual leader, at the age of 53 marked the end of an era as well as of the band. But, if anything, the brand has actually thrived and grown stronger since Garcia's death, fueled by a broad and radical marketing plan by Grateful Dead Productions, the band's longtime corporate entity, and an insatiable desire on the part of Grateful Dead fans for the band to live on.
Because the lessons it offers are universal, as relevant to selling perfume or cars as they are to marketing music, the Grateful Dead is a radical marketer worthy of attention. The Grateful Dead, through a series of both serendipitous circumstances and conscious best-practice business decisions, built a model that flew in the face of conventional music industry wisdom. What emerged was a highly successful, easily recognizable brand with the cachet of a Harley-Davidson and a vast following of fans known as Deadheads, who were as devoted as a religious sect.
In many ways, the Dead is in an enviable position. A highly profitable, debt-free, privately held 34-year-old company like Grateful Dead Productions, still owned and run by the founders, is unusual in today's dynamic business environment. This fiscal serenity, along with the continuity of ownership and leadership, provides a prognosis for the future that is remarkably upbeat.
Sam Hill, co-founder of Helios Consulting Group, has almost 20 years of experience working on marketing issues. Business journalist Glenn Rifkin has written extensively for The New York Times and contributes to many business publications.
Keeping the Value Proposition
The remaining band members and their business advisors understand that the best brands can--and must--reinvent themselves, like Madonna or the NBA, and that they flourish where others might simply close up shop and go home. Big traditional marketers like Pepsi and McDonald's spend hundreds of millions of dollars refreshing their brands, keeping them from getting stale. The Grateful Dead lost its musical center and guiding genius with the death of Jerry Garcia, but the value proposition for its customers never waned. In fact, quite the opposite occurred as the remaining band members and their organization found a way to reinvent the brand and make it flourish.
From its nondescript, 32,000-square-foot headquarters in Novato, California, Grateful Dead Productions has become the L.L. Bean of rock music, sending out its combination fan magazine and catalog to more than 150,000 fans who can choose from among more than 500 Grateful Dead items, from golf balls to CDs, and from baby clothes to toothbrushes. Employees wearing the group's trademark tie-dyed T-shirts ship more than 1,000 packages a day, and merchandise sales reached more than $8 million in 1998. That's just a fraction of the $60 million that all Grateful Dead items generate each year for the band, the record companies and outside licensees. Grateful Dead Productions has revenues of more than $20 million from a combination of products that it makes and sells itself and from royalties it receives from licensed items.
The Grateful Dead represents the best of radical marketing because it focused on a single value proposition that was built on a devotion to a unique but consistent style of music and a carefully established, long-term relationship with its customers. Unlike successful traditional marketers like Procter & Gamble, the Grateful Dead never used massive advertising or promotion; they simply went deep into a niche market. And in so doing, they won praise from even the most traditional of marketers.
A Clear Mission
Like other great radical marketers, the Grateful Dead eschewed glitz and tricks and focused on a single element, a marketing hallmark that is far too often ignored by even the biggest organizations. In essence, the Dead's story is a case study of substance over form in the context of niche marketing.
From the day the band came together, the group had a clear sense of what its "product" should be and who its audience was. Even when the band members eventually started earning great sums of money and enjoying the lifestyle the money brought, they never put the money first and never let the bottom line dictate what went out the factory door. The music was always the driver and the catalyst for all decisions and strategies.
Despite the band's roots in the antimaterialistic, counterculture era of sex, drugs and rock 'n' roll, several members became astute businessmen, aware there was revenue being generated around their popularity. The band incorporated in 1973 and, with the band members as co-CEOs and the board of directors, became a serious business venture. Each band member has an equal share of the profits and an equal vote in approving all merchandising and business decisions. The first crucial move was to agree that if a band member left or died, his shares would be brought back into the organization so control remained central and [the remaining members] could carry out their mission without struggling with outsiders.
Indeed, the grungy, spontaneous image to some degree belies the genius of the band's business acumen. Decisions were made along the way--from instituting a ceiling on ticket prices to focusing on touring rather than recording--that flew in the face of conventional industry wisdom but had a profound impact on customer devotion and the extension of the brand.
Making the Visceral Connection
A brand, most marketers agree, is more than a product--it's a relationship with consumers. Great brands have a single, clear intuitively compelling message or symbol.
For the Grateful Dead, that message was embodied in the music and in the lifestyle and community that developed around the band's ceaseless desire to play that music live and improvisationally. In so doing, the band members owned the marketing function themselves. They never handed it off to a publicity firm or pushed it down into layers of a bureaucratic organization. By getting out with the customers more than any other rock band, the Dead created a visceral connection with their customer base and turned that connection into huge profits.
Like other radical marketers, the Dead started out with few resources and a modest plan. What they had was a product they believed in completely and a passion to share that product--the music--with an audience. The idea that thousands of rock bands come and go and few reach star status was never a concern for the Dead. They just wanted to play. And in so doing, they followed a set of key radical marketing rules that fueled their success.
- Love and respect the customer. Respect and love of the customer must be demonstrated consistently as a brand attribute through actions, not lip service. For example, when other rock 'n' roll legends like the Rolling Stones began to accept corporate sponsorship of their tours and raised ticket prices to astronomical levels, the Dead held the line, refused to cede control of their product in any way, and kept ticket prices at a ceiling of $30.
In 1983, to curtail ticket-scalping opportunities and to make sure all its fans had equal access to tickets, the band set up its own mail-order ticket service. Thus, students willing to sleep out on sidewalks would not be the only ones able to get tickets to concerts.
The focus extended to employees as well. At its zenith, Grateful Dead Productions had more than 80 full-time employees, including a vast road crew that stayed on the payroll even when a tour ended. When the financial rewards began to grow astronomically, the wealth was shared. Like other great radical marketers, the Dead understood the value of employees who shared the enthusiasm for the product and would in effect represent the company to the customers.
The crew earned six-figure salaries, and the Dead was the first rock band to offer generous profit-sharing, retirement and health plans. Well before daycare was a corporate issue, the Dead always had a secure children's play area backstage for the children of crew members and guests.
- Get face-to-face with customers. The Dead played countless live shows and turned the accepted record industry formula on its ear. Rather than record an album and mount a tour to promote the album while visiting radio stations and schmoozing with disc jockeys, the Dead took the opposite view. They simply played as long and as often as possible in front of live audiences. CEOs willing to spend four or more hours, day after day, with their customers are likely to spawn tremendous customer loyalty and devotion.
- Celebrate uncommon sense. What characterized Garcia and his bandmates, Bob Weir, Phil Lesh, Mickey Hart and Bill Kreutzmann, was the uniqueness of their product and their willingness to stick with the product against all conventional industry wisdom.
In essence, the Dead weren't selling music, they were selling a unique, spontaneous experience, a version of lifestyle marketing embodied by Harley-Davidson and Nike. Each concert was a unique event, with the same songs rarely repeated for weeks or even years. While common sense and music industry history dictated otherwise, the Dead never wavered in their commitment to their own long, strange trip.
Loyalty is inspired by strategic decisions that may go against accepted industry business practices but demonstrate respect for the customer. For example, in the 1980s, the Dead decided to buck conventional wisdom and allow fans to tape live performances. In an industry where bootleg records cost artists and record companies profits, such a decision was tantamount to heresy. But like other radical marketers, the Grateful Dead truly respected customers. Jerry Garcia said, "If we're done with the music, you can have it."
The band prevailed upon its fans to follow an honor system. They could keep or trade the tapes with fellow Deadheads, but they could not sell copyrighted material for profit. Hal Kant, the band's lawyer, says they spent a great deal of money tracking down and suing those who wouldn't honor the agreement. But the vast majority of Deadheads stood behind the band. In fact, with the advent of the Internet, a vast virtual community of tapers has emerged, with Deadheads reaching out electronically via hundreds of homespun Web sites to share the experience yet again.
But the tapes were just the beginning. The Dead, with the idiosyncratic nature of its shows, built a layer of mystery into its image. Serious Deadheads kept logs of each show, scribbling on notepads during the concert which songs were performed, in what order, and the quality of the performance. Each nuance, each note that Garcia missed or lyric he forgot, was logged in. Great bands inspire passion that may seem ludicrous to those on the outside. But fanatics, be they motorcycle enthusiasts, pet lovers or rock fans, become important evangelists for the brand. This can be manifested by a tattoo of a corporate logo, a stock investment or a prized tape collection.
The band's uncommon sense also led to sound strategic business decisions. Unlike most rock 'n' roll groups, the Dead never asked for big advances from concert promoters. Instead, [the members] took on the upfront risk themselves and received royalties that were double the industry average. This practice proved to be incredibly lucrative for the band in the long run.
And the Dead never left a promoter in the lurch. If a concert was canceled because of bad weather or a competing event kept the crowds down, the Dead would make it up to that promoter with another concert date.
- Create a community. Great bands create a sense of community and belonging, and few did that better than the Dead. A virtual nation of Dead fans incorporated the band into their lives in a way that corporate marketers can only dream about. And the Dead were savvy enough, even in their early days, to tap into this community. They became database marketing pioneers well before the concept grew in more traditional business settings.
Steve Brown, an enthusiastic Deadhead and one of the founders of Grateful Dead Records, recalled the creation of the first Deadhead database in the early 1970s. In Goin' Down the Road, Blair Jackson's 1992 book about the band, Brown recounted:
Around this time, we decided to plug in more directly to all the Deadheads. The "Dead Freaks Unite" campaign, introduced inside the Skull and RosesLP in 1971, had been a tremendous success--we'd built up a mailing list of 30,000 names. To reach even more people, we decided after the Wake of the Flood album to send a Grateful Dead Records promotion booth on our tour with the band. Our gambit worked: We signed up another 50,000 on the 1974 tours.
The most fervent Deadheads attended literally hundreds of Grateful Dead concerts over the years, following the band from venue to venue, sleeping out on cold sidewalks, buying tickets for dozens of shows on a given tour, gobbling up Dead merchandise, and spending countless hours comparing set lists and finding endless nuances in the songs that were chosen and the order in which they were played.
This love and devotion translated into lucrative financial rewards for the band and the small universe of satellite businesses that revolved around it. The Dead became one of the top-grossing bands in the world, averaging $50 million to $75 million in ticket sales each year as it toured major arenas around the country.
The band saw another marketing opportunity in this devotion and went so far as to create a vast database of shows and play lists it calls the Deadbase, which became available in print and on diskettes.
- Brand extension with integrity. Like other great radical marketers, the Grateful Dead inspired clever and innovative ways to extend its brand without damaging its integrity. In 1972, for example, the Grateful Dead became one of the first bands to create its own record label, a radical concept at the time, but a way to control quality and retain the spirit of the music they played. The Dead were also among the first bands to inspire vast merchandise sales, specifically T-shirts, posters and stickers of the band's varied logos.
The band members had always been loath to police their concert sites. For many years, they were content to let entrepreneurial fans reap the rewards, as long as copyrighted material was not being co-opted, and allow this marketplace to exist in the parking lots of its concert venues. But they were eventually convinced that they were giving away more than $250,000 worth of potential revenues with each concert. Rather than force everyone out of business, however, the group made a radical decision: Bring in the best and make them legitimate business partners.
Greg Burbank, for example, was a 21-year-old college dropout selling stickers and tie-dyed T-shirts in the parking lot of Grateful Dead concerts in the mid-1980s. One night, he and his partner got a tap on the shoulder from a Dead crew member, who asked them to come in and talk to representatives for the band. "Rather than suing us for trademark infringement, they brought us on board," Burbank remembers.
Today Liquid Blue, Burbank's company in Lincoln, Rhode Island, is one of the largest licensees of Grateful Dead merchandise in the country. The company sells around $4 million worth of Grateful Dead paraphernalia to retail outlets each year. "The Grateful Dead always put out quality products," says Burbank. "Their emphasis was always on putting on the best show and the best products. The band was uncompromising that the quality of the merchandise match the quality of the music."
Under Peter McQuaid's direction, Grateful Dead Merchandising has soared. Its quarterly catalog and fan newsletter not only bring the Dead's brand to hundreds of thousands of Deadheads but provide a regular, uninterrupted connection between the band and its customers. Although a few aging hippies have complained, most Deadheads see no conflict between the band's counterculture roots and the commercialism of its merchandising. The Dead found a way to sell without appearing to sell out.
"I Will Survive"
Like other great radical marketers, the Dead is simply reinventing itself. Grateful Dead Records is creating and distributing its own CDs; the Dead can offer these CDs at better prices and realize higher profits. The goodwill generated by the Dead and their organization has brought other musicians to them seeking the very expertise in brand development that the band has acquired over 30 years of dedicated hard work.
While he was still alive, Garcia, a noted artist, began extending his own personal brand by selling expensive ties adorned with his artwork. His ties became the most popular neckwear in the United States; even the president was reportedly seen wearing one. A successful new line of Grateful Dead ties not associated with the Jerry Garcia ties, along with other silk loungewear, shoes and boxer shorts, have hit the stores. "T-shirts will be important, but they won't be the backbone anymore," McQuaid says. "An older, more sophisticated market will emerge, and people in boardrooms will wear Grateful Dead ties that only other Deadheads will recognize. It will be subtle."
In this vein, McQuaid is planning to build the brand into a lifestyle product line for the retail market. He is hoping to sell products like an upscale, tie-dyed set of towels through retail outlets like Nordstrom. Without any reference to the Grateful Dead, these items have great cachet among the band's fans.
McQuaid adds that he is already looking offshore for additional marketing opportunities. Although the Dead toured mostly in the United States, the band has tremendous appeal overseas. "There is huge interest in Japan in the Dead," McQuaid says, "and we expect to find a big market there."
Burbank says that new products keep the Dead in a growth mode. He points out that long-defunct acts like Jimi Hendrix or the Doors continue to be among the most popular in merchandising circles. "Hendrix only toured for four or five years before he died," Burbank says. "The Grateful Dead have touched millions of people, and there are 14-year-old kids who now think the Dead are a cool thing. That train has been rolling for 30 years. It's not coming to an abrupt halt."
Grateful Dead Productions Inc., (800)225-3323, http://www.dead.net