Branding and ROI

As a business planning and marketing company we frequently get the question about measuring return on investment for branding. On the surface, it sounds like a relatively simple question and as such, one would expect it should receive a relatively simple answer. Unfortunately, no simple answer exists. The reason for that lies in the definition of Branding.

Branding re-defined

Now that you are scratching your head, let me explain. There is a general misconception about the very definition of “Brand”. The Dictionary of Business and Management defines a brand as: “a name, sign or symbol used to identify items or services of sellers and to differentiate them from goods of competitors.” Wikipedia defines brand as “a collection of images and ideas representing an economic producer; more specifically, it refers to the concrete symbols such as a name, logo, slogan, and design scheme.” We believe these to be classic but dated definitions.

The meaning of “Brand” has evolved significantly over the last decade or so to mean much more than a logo, symbol or design. Brand has evolved to represent your company in a much more holistic view. Today, your brand means the message you deliver. Brand is about the overall customer experience. Taking that point one step further; your brand is not what you say you are, your brand is what your clients say you are. Your brand is the reputation you build with your clients and potential clients on every contact; whether that contact be direct or indirect, intentional or unintentional.

Here is an example that many of you may associate with. Vonage, a leading supplier of broadband telephone service, position themselves as feature rich, easy to do business with and cost effective. That is what they say they are… that is their brand. On the other hand, the Better Business Bureau reports 8,155 complaints about this company in the last 36 months with the majority being billing, service and refund issues. Firstly, consider what percentage of actual complaints get escalated formally with the Better Business Bureau, then, to the question of brand, ask yourself what a Vonage client is likely saying about them. Although Vonage’s marketing and logo and graphics are exceptional, how strong is their brand?

The question of ROI

Instead of asking to define ROI on branding expenditures, we should reframe the question and ask how branding affects the value of a business. The answer to that question is simple. Branding represents the value of your business. Your value proposition is your brand. Brand is a multiplier that contributes to your balance sheet positively if your brand is positive, and negatively if your brand is negative. The stronger your brand resonates with your target clients as being unique and valuable, the larger the multiplier on your bottom line. Unfortunately, as with the above example, the converse is also true as Vonage continues unnecessarily to operate at a loss.

Exceptional logos, images and tag lines should be considered as investments in infrastructure. On their own, they produce no return on investment. They can help position awareness and intention but they alone do not create sales or retain clients. That is why there is no ROI on the creation of these.

For instance, a dozen firms of roughly the same size with roughly the same service offering could spend $20,000 on branding and each achieve significantly different results.

The result they achieve will depend on:

• their awareness of their business priorities,
• their business plan and marketing strategy,
• their ability to solidify action plans,
• their ability to track, report and implement,
• and lastly, the “multiplier” of their brand.

Here is another key point. A branding exercise never ends. Branding is not a project or a one-time campaign. Branding enables and supports current and future business capabilities. Your brand message needs to resonate at every touch point – from what the piece looks like to the tone of the message to the exuberance or professionalism of your service people to the service offering itself.

For the beancounters:

If you started reading this article in the hopes of finding a worksheet to help you build a business case around the return on a specific branding initiative, I apologise if I’ve misled you. Here is a bit of help for the analytical reader. Consider Branding expenditures as expenditures in infrastructure as you would for technology. The technology, in and of itself will not add value to the bottom line. It is the implementation of the technology into current or future processes that will produce value.

For example: if you intent to spend $15,000 to “re-brand” your business, include the costs or integrating that brand into the heart of you business. That means including the cost of integrating the brand message in your organization in a long-term sustainable way. That might (and probably should) include changing the way you do things. For the sake of keeping the numbers simple, let’s assume that is another $15,000. Only then, can you estimate the impact of the exercise. Building a business case on the hard costs of “branding” alone is a sure way to have nothing to measure and as a result a sure way to fail. On the other hand, when you build the branding exercise in an integrated, sustainable and long term implementation, the returns should reproduce themselves year after year with no additional cost. The returns will have become part of who you are and how you do business. You will reap the rewards through ongoing differentiated value you add to your target clients.

One final note:

Brand is like trust. Think of trust as a bucket that you fill for your ideal clients one drop at a time. At every touch point, you add another drop of trust. The trust bucket can take 10 to 15 years to completely fill. We all know that this same trust bucket takes only a moment, one incident, to spill. The same is true for your brand. Build it slowly and consistently, drop by drop. Eliminate everything from your organization that conflicts with your brand – less you risk spilling the bucket.



Comments are closed.