The Connection between Brand and the Bottom Line
Long ago, Peter Drucker said, “Because the purpose of business is to create and keep a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
While no one would argue the value and ROI marketing provides, the value and ROI of an organization’s brand essence is far less tangible. Market research firm Millward Brown’s “BrandZ” report lists the 100 most valuable brand names based upon interviews with 150,000 consumers across five continents. The total value of these 100 top brands increased 12% from 2013 to 2014, to a whopping $2.9 trillion.
Find the Hidden Wealth
While most B2C companies understand the importance of investing in branding and a strong brand, B2B companies are less enthused. A 16-year study, detailed in "Hidden Wealth in B2B Brands," found that “billions of dollars are locked up in B2B brands, yet managers consistently skimp on brand building. That’s an expensive mistake.”
In an increasingly homogenous global market, your brand is one of the few ways to separate yourself from the pack. Brand essence—the heart and soul of your brand—expresses to prospects and customers what it is that sets your organization apart, how it shines, and allows you to communicate who you are loudly and proudly. Your brand is predicated upon that single most compelling need your consumer has, and how your brand fulfills that need. For Nike consumers that translates into “Nike: Authentic Athletic Performance,” or as their tagline more succulently puts it, “Just Do It.”
Brand Equity's Bottom Line Impact
So how does your brand impact sales? A strong brand communicates the core value proposition of your organization. When the brand essence is consistently reinforced—both internally, as the “brand mantra” that, according to Strategic Brand Management author Kevin Keller, “reinforces the role of brand essence in internal communication”—and externally, your brand, and bottom line, grow stronger.
A strong brand impacts, not only customer loyalty and sales, but market value as well. Attracting and retaining customers is easier when they perceive a brand to be prestigious or of exceptional quality—and a product with strong brand equity generally commands higher prices. Brand equity impacts sales volume as consumers are attracted to brands that promise great things. Brand equity also helps keep costs down—it costs less to retain a loyal customer base than it does to acquire new customers.
Brand also drives purchasing decisions. A McKinsey 2012 study of more than 700 executives found that B2B purchasing decisions were less value-driven and that suppliers’ brands—their value propositions—were key in their decision making. U.S. executives cited that 18% of a purchasing decision was influenced by brand, compared to 17% they attributed to the sales effort.
The Buck Begins Here!
The “Hidden Wealth in B2B Brands” study states that “every corporation reaps the value of brand equity in two ways: as revenue, when it drives customer purchases, and directly, as a rise in market capitalization.” They ranked the brand equity of 450 B2B companies across 47 industries and found that “the corporate brand is responsible for, on average, 7% of stock performance.”
According to McKinsey & Company, the total value of the world’s top ten brands has increased by more than 50 percent, from $433 billion (in 2010) to $650 billion (in 2014). In their findings, the researchers conclude that “strong brands consistently outperform the market average” and “beat the market.”
Now more than ever, a strong brand—driven by robust, real and relate-able brand messaging—is essential to healthy and profitable growth. For B2B organizations, especially those in less traditionally “branded” industries, there has never been a better time to invest in brand development and strategy to help fuel growth and innovation.
Our Boston-based B2B company, Grant Marketing, specializes in helping companies find their brand essence. We can help you turn your brand messaging into actionable strategies for strengthening customer loyalty, increasing sales, and improving the bottom line.