6 Reasons Why Top Performing Companies Are Investing Big-Time Into Their Brand Strategy
February 12, 2019
It’s good practice for any business to be concerned with cutting costs, pinching pennies, and investing their money wisely. For virtually every small to medium-sized company that is interested in growth, the fact of the matter is that you only have a finite amount of cash to reinvest into your business. So the decision behind every investment should be made with good judgment.
As a branding agency, it shouldn’t surprise you that we believe a strategic brand is worth every penny.
But you shouldn’t take our word for it. Some of the top performing companies in the world are investing in their brand strategy, and it is paying off. Take this statistic for instance:
From 2007 to 2015, the average company in the S&P 500 showed a return of 49%. Yet at the same time, if you invested into a company with a strong brand value to enterprise value ratio of more than 30%, you could have generated a return greater than 94% over that same period. If you had invested in the top 10 companies with the highest BV/EV ratio, you could have experienced a 96% return on investment. – according to BrandFinance.
From Confusion to Clarity
One of the most common statements we hear from business owners who have gone through our brand strategy process is an overwhelming sense of clarity and confidence it has given them. In fact, in the middle of our strategy workshop, there’s often a lightbulb or “ah-ha” moment that occurs. We’ll see something click, and their eyes get wide and they’ll say something like, “YES! That’s exactly what we’ve been trying to communicate but never could!”
As it relates to your business, you may have a clear vision or story in your mind. It makes perfect sense to you, but no one else. No one on your team really understands why you do what do, why it matters, why you’re unique, and how to communicate that clearly and consistently to your customers. In fact, for many businesses, if you ask 10 different employees to tell you what the company is and what you do, you’ll likely get 10 different answers.
If your own staff can’t articulate your purpose with clarity, the chances your customers are clear on that are very low.
Competitors Are Everywhere
You probably know you have competitors – this isn’t news to you. But I guarantee you have way more competition than you think.
Every business has thousands and thousands of competitors.
You see, when it comes to how people spend their hard-earned money, there are nearly limitless options. People buy things for many reasons. Whether it’s something that will solve a problem, make their life easier, or make them feel good – there are thousands of products or services out there that will do all of those things.
The challenge is that you have to communicate to them that your product or service is worth the money. You have to make them see the value that you can provide, and why that should matter to them.
You have to make them see the value that you can provide, and why that should matter to them.
For instance, you may not immediately think that an event venue would be seen as a competitor to a flower shop, but when a bride and groom are planning their wedding with a limited budget these two different companies are now competing for a spot on their wedding day.
Avoid the Catastrophic “Field of Dreams” Strategy
Top performing companies understand that simply opening their doors and “trusting” that people will miraculously show up isn’t a business strategy. Unfortunately, we see this happen all the time.
We call this the “Field of Dreams” strategy.
Before you open your doors it’s important to have a very clear understanding of your business, your audience, and your position in the market. A brand strategy that is robust and comprehensive will give you all the important tools and insights you need to make sure you’re setting yourself up for success.
We see this especially true in the restaurant industry. Too many business owners believe that customers will just show up just because they have good food. What happens too often is they’ll open their doors, experience the “newcomers” rush of customers for the first 2-3 months, and then it tapers off pretty quick. The “newness” has worn off, new customers have stopped coming in, and past customers haven’t found a good reason to come back. Often less than a year later, their doors are closed.
A brand strategy gives you a plan and strategy to avoid this happening to your business.
Perceptions Are Reality, Whether You Like it or Not
From the very first moment someone interacts with your business, there are perceptions being created. They’ll perceive things like:
- You’re affordable or expensive
- You’re high-quality or low-quality
- You care about them or don’t care
- You’re an expert or you’re a novice
- You can help them or you can’t
You’ll usually only have a very brief moment to make a good first impression, and within the first few minutes of interacting with your business, someone has made all sorts of assumptions about who you are, what you do, and what you stand for. This will often happen without even a word said.
A brand strategy will give you a strategy to influence the perceptions that are being made, so you won’t be leaving it up to chance.
There’s Strength in Knowing Your Audience
If you owned a company that helped single people to find a date, it probably wouldn’t make sense to promote it at a wedding trade show. Likewise, if you sold commercial-grade refrigerator parts to businesses, it probably wouldn’t make sense to walk down the middle of a busy street and try selling your product to everyone you meet.
These are extreme examples, but the fact is that top performing companies don’t have time for wasting their marketing efforts on communicating in the wrong way, with the wrong people, in the wrong places.
Too many businesses are spinning their wheels with ineffective marketing and wasting a lot of money in the process.
There is a strength that comes with understanding your audience, what’s important to them, and how to get in front of them. When you understand these things, you’ll get much better results for every marketing dollar you spend.
There is a strength that comes with understanding your audience, what’s important to them, and how to get in front of them.
Top performing companies know this, and the sooner you have a brand strategy in place to help you accomplish this for your own business, the better.
Charge What You’re Worth
Top performing companies don’t need to compete on price alone. This is because they are able to communicate the value of what they provide, separate from the price they charge.
How many times have you heard, “I can go down the street and get the same product for $5 cheaper.” or, “Joe’s Auto Shop said they can fix the same part for $100 less.”
This is a bad place to be as a business. First, because it shows that your customer doesn’t perceive any value in your brand, they only care about the cost of the product or service. And secondly, it’s not sustainable. There is always going to be someone who can provide a service or product at a cheaper cost.
A brand strategy will give you the confidence to position your business as a better option outside of price alone.
A good example of a strong brand position could be an auto repair shop that has built a strong position as being the most knowledgeable in their industry.
Now when a customer is making their purchasing decision, they are often more willing to spend a premium amount for a premium service. Best of all, when this company delivers on the promises they make, they are building very strong brand loyalty. So even if there is a competitor that can do it for cheaper, their customers will always come back because they’ve positioned themselves as the most knowledgable in the industry – a clear choice.
The Bottom Line
When it is completely integrated into the fabric of your company a brand strategy will impact your culture, your systems, your management, your daily operations, and will provide more clarity and direction for your entire organization. Whether you’re evaluating new opportunities, deciding how to allocate your resources, or simply trying to drive better results for your bottom-line.
Top performing companies understand the value, and the reasons are clear and simple.
Partner at Longitude°
Jeremy is the author of Future Hospitality and Brand Strategist at Longitude°. As a member of the Education Committee for The Boutique & Lifestyle Leaders Association (BLLA) and a content contributor to Cornell University’s Hospitality Vision and Concept Design graduate program, he is a committed thought leader in hotel branding, concepting, and experience strategy.