A guide for those considering investing in branding, so that you turn it into business success that is ROI positive.
YOUTUBE LIVESTREAM: https://youtu.be/ZdlQW_YqAfw
SPOTIFY PODCAST EP: https://spoti.fi/392wp6x
APPLE PODCAST EP: https://apple.co/3GBg30Z
There are many things that make branding worth it and what I mean by branding is developing a brand strategy and/or a brand identity. To get a handle on what a brand identity includes you can take a look at the Services page on my site - or for more context, check out the last article I published about using your brand identity effectively.
Now a brand to me is a captivating moment of connection with a consumer and developing that connection is as much an overnight task as it is a lifelong endeavour. However, knowing what it’s worth can vary. It may take a week for millions of dollars to slap you across the face or it could take years as a result of developing or refreshing your branding.
What makes a brand successful can be summed up nicely with this little word-finder concept I came across while doing a random search about branding the other day (shown above). As you can see, ‘BRAND’ can be found when you combine an Objective, Advertising, Marketing, Identity and Product. I don’t know who first came up with this but it’s pretty close to being on the money. If Team and Consumer could fit in there, it’d be perfect but I guess you could argue that Consumer could be part of Objective. As in, the objective is to connect with a target consumer.
Now I bring up the consumer because knowing if branding is worth it comes down to knowing the value it delivers to consumers. Knowing the value of what you offer is extremely undervalued. I’ll let you go back and read that sentence again. What it means is that we’re not clearly understanding our value enough to be able to effectively communicate that value beyond what it is we offer and its features. It might even be believing that just because you offer the best product or have the cheapest product, that people will then buy it. But I guess you could say, “why does it matter if we don’t understand our underlying value?”
Well, let me pose it to you in two ways to show that it does.
Consumer Benefits = Value
The first is consumer benefits. What will your consumer benefit from buying or buying into what it is you have to offer? This is where you can compare what your offering will do for your customer when you analyse where it sits on Maslow’s Hierarchy of needs (graph shown below).
Because there can be some tangible value underlying in your typical consumer’s decision making that influences whether or not they buy based on their needs and the benefits your offering delivers them. For most brands, this can rely on a few factors including awareness of your brand and availability of your offering at the time of need for this to play out effectively. However, this ability to satiate their needs means you can tap into that when you communicate with your consumers so that they think of your brand at the time they need what you have to offer. Which ultimately gets baked into what consumers remember your brand for.
Value for you
While those things are important and it’s not to say they should be overlooked, the brand value I’m more interested in when it comes to addressing the question of “Is branding worth it?” is related to the value you’re going to get as a client of mine. Or for your clients if you’re a fellow creative in the brand space like I am.
So the second way I want to pose why brand value matters to answer this question can be broken down into 5 key points where the impact of branding can be demonstrated when it comes to ROI and revenue in the short and long term:
(press the arrows to collapse each point - as they're quite extensive)
1. When you want consumers to discover you
Whether they were looking for you or not, branding, combined with effective marketing and advertising is how your brand is first discovered. The term for this is brand awareness. Now attribution for the reason a customer had first become aware of you can be tricky to pinpoint and it can take up to 7 points of contact with your brand before a consumer buys. But let me give you one example of how branding can make a valuable impact. Typically the job of marketing and advertising is to generate awareness based on price, placement, product and promotion of your brand and its offering to the right consumer. However, without an identity, how does anyone recognise you to tell you apart from others in a sea of competition? So the first example is this experience you may have had. Have you’ve ever been down the shopping aisles of a supermarket and the colour of a product you’ve never seen before catches your eye on the shelf because it is vastly different to those around it? This is a ‘captivating moment of connection’, as small as it may seem. You might not need it now, but you’re now aware of it and it has planted a seed of value that forms one point of attribution which can add up to a purchase. If it’s combined with an attractive price, a standout message that further captivates your attention and meets your likely needs/wants at the time of purchase…BOOM! Message received, it’s in your shopping cart. You now have that packet of chips (or crisps if you’re British) in your hand because you had a hankering for a snack, it was listed as 1/2 price and the packaging colour combined has just compelled you to purchase it.
And this is a typical scenario that plays out time and time again for a lot of brands. We get recognised by colour, then imagery, then type and then a message about what the hell we’re offering, which could be anything from stockings, to a soft drink, to business coaching, to home removalists. The big question though is what is that worth to your brand in the short term or long term? My guess is a lot and you’ll see why in the next few points.
2. When you want a consumer to pick you instead of someone else.
Having a consumer pick your brand over others can have a great impact in the short term or it could take patience to see the value return on the investment in developing a brand and the value of your brand over time. In the short term, I typically want to see my clients gain at least a 2x return on their investment within the first 12 months.
But more ambitiously, I set my criteria for taking on clients with one of those criteria in particular stating that the clients I work with have the potential of seeing a 10x return on their investment with me when developing or refreshing their branding in the first 1–2 years. Let alone the many years after that which could exponentially equate to an even higher ROI.
A prime example of this is the Nike ‘swoosh’ logo that was designed by Carolyn Davidson in 1971 for $35(USD). It’s now recognised as the most valuable logo, valued at over $30Billion(USD). As for me, I can’t say I’ve designed a $30Billion logo that I know of, but that’ll come down to my client’s future success to influence the greatness of the brand they’ve taken and run with. However, let me give you an example of how I understand the value of what my offering can deliver.
Now remembering my criteria of making a 10x ROI for my clients, let’s say a new customer chooses my Real Estate client over a competitor to sell their $1million home. My client stands to make a 2% commission on every sale which equates to $20,000. In that scenario, I’ve delivered a 2x ROI from just one customer if my client had invested in my standard $10,000 brand identity package.
If five more customers with $1million homes choose my client over a competitor in a year, they’ve made a 10x ROI and I really think that’s achievable and realistic for a Real Estate agent. Which then doesn’t count for the subsequent years their brand identity helps influence future customers choosing their brand over others.
Now I’m not going to pretend that your branding is the only reason consumers are going to choose you. Because I know you’re probably thinking, “How will I know that the catalyst for a consumer choosing me over others because of my branding?” All you need to do is a small bit of research. Ask them “Why did you choose us?”. If it relates back to any part of the brand identity or strategy you’ve developed, especially if it’s a different answer than what you used to get from the same question, you’ll know branding was worth it.
3. When you want consumers to keep coming back
Branding is as much about helping you create awareness and having them choose you over others as it is about keeping them around to come back time and time again. If your brand attracted them, what is going to keep them coming back AND tell others about you? Where this becomes valuable is when you measure two different metrics. One is your Customer Acquisition Cost (CAC - how much it costs you to acquire one customer) and the other is consumer Life Time Value (LTV - how much you stand to make from the average life-spend of a consumer on your offering). In the short term, your LTV is most likely going to be equal to or lower than your CAC, but over time if your LTV ratio is more than 2x your CAC you’re creating value. In other words, if you’re making more money from repeat business than it costs you to acquire new business, you’re winning. But how does branding help make that happen? For starters, repeat business relies on availability. Meaning it’s convenience of your offering being physically available when needed (if it’s on the shelf, or you have the capacity to take on the work) and it being mentally available or ‘top of mind’ when a consumer is in need of something you offer. If it’s not, your brand is likely to be forgotten as there are likely plenty of alternatives in your market. The second part to it is referrals. No matter if you have a service, a product or you are a personal brand, referrals are gold when it comes to brand awareness and repeat business. For the key reason that it’s the word of others they know, not yours, that is recommending what you have to offer. Even testimonials and reviews made by people who new consumers don’t even know are trusted more than our own words as the custodians of our brand. Even if we are the experts in what we offer. The kicker here is that the more times a consumer purchases, the more likely they are to refer you to someone else.
The correlating factor is the experience others have already had with your brand. If it’s positive your brand is well recommended. Make no mistake, your identity can hinge on the word of others and what their perception is of your brand to make a purchase themselves, but it also can be defined by “what people say about you when you’re not in the room”. Which is a classic quote by Amazon founder, Jeff Bezos. How does this relate to LTV and CAC? Acquiring a customer can cost 5x more than retaining a consumer and an existing consumer is 9x more likely to buy again than a first-time consumer. This means it’ll cost you less because referrals cost you nothing, your brand is creating LTV and with a lower CAC you can focus your budget spend on retention marketing instead. To bring it back to your brand identity. If it influences a great brand experience when combined with what is offered, its value lies in the consumer lifetime value of repeat business that is created from a memorable brand experience. An experience they will remember when they see your colours, your logo and any other distinct brand assets you have that consumers can recognise you from.
4. When you want consumers to happily pay a higher price
This point, in particular, is a part of branding that I’m conflicted with but also realistic about when it comes to branding influencing price and there are two parts to it. The first is aligning identity with the value delivered. Now if you ever see a Rolls Royce car, from the inside out it screams two things: quality and expensive and the two are not mutually exclusive. Its high quality makes it expensive and the expensive parts and man-hours of craftsmanship make it high quality. This lives up to the psychological expectation of a higher price means greater quality. For any brand, I have no problem with it if it delivers on its communicated expectations with a price that is higher when compared to others. This also applies to the way you present your brand. For many businesses I work with, they have a valuable offering but it’s not being communicated as such with an identity that doesn’t give their consumers the confidence in their offering right off the bat to be seen as valuable as they really are. Or they may not be charging at a level that matches the value of their offering. This is where branding comes in to save the day which will give both you and your consumers confidence in your brand. Now the other part of branding and pricing that I said I was conflicted with, is making an impact on consumers to believe an offering is worth more than it is when compared to other market offerings. Sure price is subjective and many consumers buy for more than price. Where status, association, nostalgia, loyalty, scarcity and even reputation can influence pricing and our reasoning for being happy to pay for a higher price. But for me, when it’s branding that justifies its price tag, even when it’s no different to its direct competitor that simply isn’t as attractive, I’m a little grey on it. Even though it’s in your favour and I want you to succeed. Now you can see the conflict. So if I could compare this to anything, you could say it’s like buying a book by its cover when the inside is nothing more special than the other boring looking books next to it - you're just being sold on the dust jacket or maybe just the author's name. But this is the power of branding, so use it wisely.
The most telling example of this is when you look at paracetamol on shelves in Australian retail settings. Panadol is the leading brand that has developed a dominant market share based on high brand awareness, easy recognition, shelf presence and price. However, the product’s active ingredient is no different to its direct shelf competitor which might be Panamax or Hedanol (Aldi’s knockoff version shown above), other than it typically is the most expensive product by up to 3x more. Why? Branding. A recognisable and known name, logo, green and red colours and attractive packaging...even though Aldi tries to mimic Panadol, Aldi play on price which aligns with their brand experience for what their customers know them for.
To illustrate the point further, shelves of Panadol were stripped bare in some supermarkets across Australia during the Omicron outbreak. All because the Government told its citizens to have paracetamol (and some media outlets saying Panadol) on hand to relieve any symptoms the variant could present with and of course, panic buying ensued. So this photo (above) was captured at a Chemist Warehouse pharmacy in Melbourne, Victoria where no Panadol products can be seen in their usual place, but just to the left of the empty shelves is Panamax (white and orange box). A paracetamol product that is one third the price. Yes, you could argue that the product experience isn’t as palatable given they are bigger pills that are harder for some to swallow. Or that Panamax might have just been re-stocked before the photo was taken. But if it was indeed the case that the photo appears as obvious as it seems, the power of branding is front and centre. If not for the glaring difference in price that consumers are happy to pay for when Panadol has done its job effectively when it comes to branding, marketing and advertising to its consumers. The difference is worth its weight in gold when it’s worth more than the product it’s selling.
5. When you need to attract a team to make the first 4 points possible
This is probably going to be the most overlooked point about the value your branding can deliver and that is its value when it comes to hiring a great team to represent your brand.
Firstly, ask yourself these questions:
- Would you want to work for a drab looking business that hasn’t updated its website since 2002?
- Would you want to work for people who can’t easily articulate what they actually do or for who, as it would give you the confidence to understand what your role would be working towards?
- Would you want to work for a team that you don’t align with their values or team culture that supports your growth as much as your ideas and input in the business will be valued? Because it’s questions like these that define what your brand becomes internally. It’s a big part of your brand identity that is overlooked and under-utilised, especially on a day-to-day basis. As it gives you the ability to ensure you can attract and retain a great team of people that understand what the brand is and is there to achieve so they can embrace the company culture your brand identity develops. While also guiding you and your team to be able to communicate with your consumers in an on-brand experience that is consistent, no matter who it is in your team to make each of those points I’ve already listed possible. My last article dived into this more if you want to get a better sense of how to use your brand identity internally. But at face value, if your brand looks the part, sounds the part and is a brand that captivates the attention and interest of a potential employee the same way it does a consumer, you’re going to attract and retain great talent who create the value and the return on investment you deserve as a result of utilising your branding effectively.
All roads lead to Brand Equity
To develop a brand strategy that directs your decision making. To name your brand appropriately so people recognise it and don’t forget it. To develop a suitable brand identity people can be captivated by and connect with. To develop relevant and engaging brand touchpoints that develop memorable experiences consumers want to share and come back for more. This is the value that shows why developing a brand is worth the investment.
All this value amounts to what is known as brand equity. Which can be described as "When you take away the product or service you offer, what are you left with?" in most cases it's a strong brand identity and distinctive assets/touchpoints that define your brand and the experience consumers have with it. And what I’ve shown you in this article is a mix of two brand equity models.
Professor David Aaker’s Brand Equity model, which looks like this:
And Keller’s Customer-Based Brand Equity (CBBE) Model that marketing professor Kevin Lane Keller published in his marketing textbook Strategic Brand Management which looks like this:
Keller’s model is a little less self-explanatory so I’ll share this example I found of how it can be used in the context when applied to Nike:
In essence, brand equity is, in addition to revenue and profit, that happy result your brand can achieve when it makes an impact on your consumers and your team to influence decisions.
Which is worth something, subjective to how it plays out for your brand.
It could be big or small depending on your business.
It could be the level of importance you place on it.
It could be the value a consumer places on it when they associate themselves with your brand to form their own identity. Some call this brand loyalty when we hear people say “I only shop at this store”, “I only drink that drink”, or “I always wear that brand of clothes”.
So is branding worth it?
When you’re in business development mode and you consider branding as an option to grow your business effectively, if your understanding of branding has now gone way beyond what you first knew of it as simply designing a pretty logo. To now being seen as an investment that can make a measurable impact on your business, your team and consumers. It becomes 100%, Yes!