Good branding is a company-wide effort that takes time, energy, and resources. We’ve all seen the end result of a new corporate re-brand or product launch. Critics love to weigh in on whether the art direction was good or bad. Consumers feel instinctively repelled or attracted to it, even if they don’t know why.
Branding can be quite polarizing.
And the reality is, it’s not easy. And it’s not cheap.
So why do it?
What is the actual value of branding your product, service, and company? Does it really impact the customer experience? Will it impact the bottom line?
Each time someone asks us if branding is a valuable effort, we always answer with a resounding, “YES.”
There are so many benefits of branding. But it can be difficult to measure the actual value of branding with numbers and dollar signs. Marketing and advertising both focus on specific, targeted campaigns with a clear beginning and end. There are set points to measure your return on investment. Meanwhile, the branding is more of an evolution and it’s value is realized over time.
The truth is, a lot of branding results companies see are indirect. But that doesn’t mean they are small. A strong brand, built intentionally to resonate with a specific target audience, creates a huge impact. It touches every part of the customer experience. And it can have a knock-on effect on your pricing power, sales cycles, customer retention, and acquisition costs.
Apple continues to attract a long line of loyal customers for every product release. People plan to buy their new iPhone before they even know what the features will be.
Airbnb used to be a risky website budget travelers used to stay with strangers. But in 2014 rebranded with a focus on belonging, storytelling, and being a lifestyle brand. They updated their visual language, improved their UX, and launched local experiences. Now, it’s a household name all around the world.
While both companies can site new product sales or pre- and post-rebrand revenue numbers, branding wasn’t the sole thing responsible. Equally true, these numbers aren’t the only thing their branding strategy impacts.
Let’s keep unpacking.
What do we mean when we talk about the value of branding?
There are two primary reports for measuring a business: profit and loss vs. balance sheet.
- The P&L statement compares income and expenses and makes a simple subtraction of the two to determine profit.
- The balance sheet compares assets and liabilities and uses equity to force them to balance.
Here’s an interesting fact that might change your perspective about measuring brand value:
Marketing is on your profit and loss statement.
Branding is on your balance sheet.
Branding and marketing have different end goals. Successful marketing is measured by finding the return on investment from a set time period. Successful branding is about building value over the long term.
Your marketing efforts show up in your profit and loss. There is a direct through-line from what the effort cost to how much business was generated. You follow it, crunch the numbers, and see if you made a profit.
But the value of branding is more abstract. It’s located on your balance sheet. Rather than thinking about it as a simple income versus expense calculation, you should think of your brand as an asset. One that grows and changes. Interestingly, it can also be bought and sold. You’ll see this often in mergers and acquisitions. Strong brands command higher prices.
The same is true for the timeline of returns: marketing is short-term, and the value of branding is long-term.
Marketing creates sales in the moment, but branding builds longevity and loyalty.
In short, branding builds brand equity.
As you can see, both branding and marketing have value, but it’s different. For most companies, who want to measure the value of branding, a perspective change is required. They must shift their focus and sight toward long-term value rather than short-term gains.
What is brand equity?
Brand value could also be called brand equity. It’s the accumulated value of a company’s brand assets, both financially and strategically.
In practice, brand equity is the overall market strength of a brand.
What is your brand worth in the marketplace? High-value brands are memorable and authentic, and inspire loyalty in their customers. Brand value is a huge asset – it’s how you keep customers coming back in an ever-changing marketplace, even when you have a myriad of competitors and external factors impacting buying decisions.
When your brand is valuable, consumers trust you. And purchase decisions follow that trust.
Think about Coca-Cola. The value of the Coca-Cola brand is most likely equal to, if not exceeding, the value of all the physical assets of the company (like warehouses, factories, offices, personnel, etc). If the success of the company relied solely on producing great soda, any newcomer to the space would have a fighting chance of rising to the top of the market.
But we all know that’s not true.
Now imagine if Coca-Cola sold its brand.
The company that bought them would instantly have a giant foothold in the market. And that’s not because Coke is delicious, it’s because people know the brand.
It goes to show that the power– the value– of the company isn’t just in its production capacity. It’s in the strength of their mindshare.
Different places to see the value of your branding in action
So the value of branding actually isn’t all abstract. It’s just different than we a lot of people originally think.
At Flux, we don’t just do branding. We want everyone we work with to deeply understand the true value of taking on a branding or rebranding effort.
We truly believe that the value of branding is seen and felt in concrete, measurable ways by the people that interact with your company every day. And that starts internally.
Supercharged sales teams
A great brand introduces your company for you. It can even do the heavy lifting before your sales or advertising team even get into the “room.”
It doesn’t matter if this is in-person or online. Having a successful brand means spending less time explaining to consumers who you are, what you do, and why you matter. Instead, you can get straight into how you can provide value and solve problems.
- Consumers use a bold brand as shorthand, so your sales team doesn’t have to introduce everything about you in every sale.
- People feel a connection to authentic concepts and to the special offering you provide. That connection forges loyalty, which rises above features and benefits.
- Branding can been very emotional, and consumers often make decisions based on feelings.
- When people have already formed a positive impression of your brand through your website, social presence, or reputation, they’re warmer leads. Your sales team will have an easier time closing these deals and getting new business.
In short, a well-recognized brand identity is a credibility shortcut when it comes to sales.
Boosted marketing results
Though the results may be measure differently, branding actually works with your marketing. It’s both the foundation and the fuel that makes every marketing campaign work harder.
Without a strong brand identity, marketing efforts can feel scattered. Each campaign can feel like starting from scratch. That’s how teams waste time and budget on tactics that don’t convert or create lasting impact. With branding, marketing often makes more sense.
- Marketing feels more cohesive with a strong brand – like a continuation of a story or different chapters of the same book.
- With a solid brand, marketing and branding work in a symbiotic relationship, each reinforcing the other.
- Your branding efforts create a loyal consumer base, while your marketing efforts strengthen your brand identity by getting your message out to the right people.
Loyal employees and brand fans
The impact of branding on your internal team is not to be overlooked. And if you’re merging or aquiring another company, it’s downright crucial to your success and employee retention rates.
- Your brand develops a sense of spirit among the people who stand behind them.
- Spirited organizations are highly effective because the hearts and souls of the employees, investors, and contractors are committed to their success.
- Attracting and retaining talented employees is easier when you have a great brand because your visibility and position within your industry are clear.
- With the right people in the right roles who care about your company, the business will run better– and generate more profit.
This equation is simple: happier people are more effective people.
5 Key takeaways to help change your perspective
The Sun Rose: Branding Example
Here are five truths that every successful company (and certainly every successful brand) should adopt:
Brand equity is on the balance sheet
Executives tend to look for ROI on branding initiatives as a way to determine budget levels. But remember that equity isn’t found on your P&L; it’s on the Balance Sheet.
Brand value is an asset, so consider the budget as an investment. Any conversations with an executive team about ROI should be centered on long-term results and how your brand will be contributing to the valuation of the organization.
Brand value is often greater than book value
In many cases, the value of a great brand can eclipse the value of a company’s tangible assets.
Brands like Coke and Google drive valuations far higher than the sum of their facilities and inventory. Taking an investor’s approach to branding opens up the opportunity for high rates of return.
Branding decreases customer acquisition costs
Branding does increase revenue by making your sales, marketing, and hiring more effective. And that effectiveness can be measured in costs of acquisition (CAC).
It’s simple. People buy from who they know and trust.
As we mentioned above, when people already know who you are, what you stand for, and why you matter, they need less convincing to take action. That means fewer ads, less nurturing, and shorter sales cycles. Instead of spending money just to explain your value, your brand equity does that for you.
Brand value is largely emotional
It’s simple. People buy from who they know and trust.
The degree to which your customers form an emotional connection with your company has huge ramifications for your longevity in the marketplace and ability to capture mindshare.
It is through branding that customers form an emotional bond with your company, elevating the interaction from a simple transaction to something much more meaningful. That’s what gets them to return, choosing you over a competitor.
This also translates to strong brand loyalty even when your offerings change and your business naturally evolves over the years.
Branding is a strategic investment
Branding is an essential element of your strategic plan, requiring an integrated consideration from leadership.
Attempting to assemble piecemeal funding from the marketing department alone is like leveraging investing for retirement with loose change.
With a solid understanding of the value of branding, it’s clear why you need to allot funding and energy to such a critical initiative. It’s an all-encompassing process that reverberates internally and externally through your company over time.
The results for companies with strong brand equity speak for themselves. If you’re dedicated to building long-term value in your company, it’s important to keep an eye on your brand.
If you’re ready to build value in your company through branding, we’re ready to help. As a top branding agency in Los Angeles, we’ve helped hundreds of companies across industries sharpen their position and clarify their place in the market.
Branding aligns your team and connects your customers. And the value of that cannot be overstated.