Pouring It On
To compete with UPS and FedEx, DHL underwent a corporate makeover, with new colors, new commercials, and 17,000 newly painted trucks.
(Business 2.0) – Greg Miller called his giant vat of yellow paint "the stew pot." As the Americas fleet director for shipping company DHL, Miller was tapped to complete a once-in-a-lifetime assignment: repainting thousands of delivery trucks in the span of just a few months. That's where the stew pot came into play. To maintain color quality, Miller ordered a huge tank of custom-mixed yellow paint from a factory in Virginia and then doled out portions to paint shops around the country.
That vat of yellow paint became the focal point of Deutsche Post World Net's ambitious strategy to establish its DHL subsidiary as a major-league player in the $60 billion U.S. package-shipping business--an industry that's conspicuously dominated by FedEx and UPS, which together command 78 percent of the overnight-delivery market. "We had to break through in the mind before we broke through in the market," explains Dick Metzler, DHL Americas executive VP for marketing and the architect of the company's rebranding effort. "So we painted America yellow."
That's not just hyperbole. To roll out its new look, DHL had to repaint more than 17,000 trucks. It also splashed its new yellow-and-red identity across 20,000 worker uniforms, 467 service centers, 16,000 drop boxes, and more than 275 million pieces of paper--the packaging, envelopes, and air bills used by DHL's employees and clients--in time to coincide with the launch of an ad campaign intended to reintroduce the company to potential customers.
The $150 million effort has already given DHL a big boost. Brand awareness among consumers has nearly doubled, as has U.S. revenue growth. "DHL has done a great job of presenting itself as a viable alternative," says Robert Passikoff, president of New York-based consultancy Brand Keys. "They've screamed from the rooftops, 'We're here, and we ain't scared of the other two.'"
Target: North America
The string of Mergers and Acquisitions that culminated in DHL's corporate makeover got under way in Germany in 2002, after Deutsche Post, the world's largest airfreight carrier, purchased San Francisco-based DHL. The move bolstered DHL's strong international presence, but the company's share of the U.S. market--the world's largest, with more than 18 million packages shipped each day--remained modest.
So, in 2003, DHL paid $1.05 billion for the ground operations of Airborne, a Seattle-based overnight shipper known for handling complex orders for clients like Microsoft and General Motors. The merger added some 15,000 trucks and vans to DHL's fleet and gave the expanded firm an estimated 7 percent share of the overall U.S. shipping market.
But it's hard to grow in a competitive industry when you're almost invisible. DHL considered several colors for its new identity, but the yellow used by Deutsche Post was the inside favorite. "People called it innovative, positive, energetic, arresting--all the attributes we were looking for," Metzler recalls. That clinched it, and for extra impact the logo was given a bright-red accent--a nod to the color formerly used by DHL.
Branding pros give the new look a thumbs-up. "Fuji is green. IBM is blue. Yellow is aggressive and eye-catching," says Steven Smith, creative director at Massachusetts-based BrandEquity International. "It's smart for DHL to position itself this way."
Rolling out the new identity without disrupting the flow of business was a bigger challenge. To maximize impact, DHL began by repainting trucks based in major cities such as New York and Chicago. As the effort spread nationwide, 60 percent of the task was outsourced to the Maaco chain of auto paint shops, with local body shops doing the rest. Repainting vehicles is laborious: Each truck had to be stripped and then coated with yellow paint doled out from the vat in Virginia. On average, it took three days to complete each vehicle--with much of the work done on weekends.
Other aspects of DHL's makeover likewise involved farmed-out work and rigid schedules. To rebrand more than 400 offices and shipping centers, DHL hired architectural sign vendors. To create street-level awareness, 16,000 yellow-and-red drop boxes were installed in locations determined by research into DHL's customer base, population densities, and growth rates of small business (a niche the company hopes to exploit).
Timing was especially critical, because the public rollout of DHL's new identity was set to coincide with the launch of a $110 million marketing push. "The idea was that you'd see the TV commercial, then look outside and see the yellow DHL truck," Metzler explains.
The TV ads began running last June, moving into heavy rotation during the Summer Olympics. Subsequent spots, produced by Ogilvy & Mather, depicted frustrated FedEx and UPS drivers constantly bumping into DHL. The message: "Competition. Bad for them. Great for you."
A yellow-heavy print and outdoor campaign continued the upstart theme, while animated ads appeared on high-traffic websites like CNN.com and MSNBC.com. "It all came together to create the impression that we were everywhere," Metzler says. Indeed, DHL found that its advertising awareness--a measure of how well viewers recall specific campaigns--jumped to 66 percent, six times its precampaign figure and higher even than that of market leader FedEx.
The challenge now is to channel this higher profile into the bottom line. In addition to the doubling of its U.S. revenue growth, DHL's U.S. shipment volume has climbed by roughly 3 percent. More fundamentally, DHL's new identity has positioned the company for growth in the years ahead, particularly among large corporate clients. "The people who hire us no longer have to explain to their CFOs and lawyers who we are," Metzler says.
Naturally, FedEx and UPS are playing it cool. "We're not worried," FedEx spokesman Jesse Bunn says with the confidence of someone whose employer just posted a near quadrupling of quarterly profits. "Our service speaks louder than any claims made in advertising," says UPS spokeswoman Susan Rosenberg.
"You don't build a business like this overnight," warns S&P Equities analyst Jim Corridore. DHL clearly has a way to go: The U.S. operation doesn't expect to break even until 2006. But making a splash today should make that goal easier to reach tomorrow. "If you do it right," Metzler says, "awareness leads to consideration, which leads to trial, which leads to loyalty. That's what this is all about." That, and a lot of yellow paint.
The Price of a Point
DHL's new look has contributed to a 1 percent rise in market share, worth about $600 million in revenue per year.
DHL's spending on its North American identity rollout $40M
Cost of the marketing campaign to support the new identity $110M
U.S. shipping market share
Sources: DHL; SJ Consulting Group