How branding makes money and why conversions are only part of the story.
By Colin Cather
Okay, let’s deal with the sales bit straight off. We all – all of us in business – love revenue. It means more money in the till. Communicating the benefits of your brand will generate revenue if those benefits are distinctive, and/or the way you communicate them is distinctive and meaningful for people. If your audience think – and feel – that they really prefer your brand. The whole funnel thing starts to apply: awareness, consideration, intent, purchase, advocate, loyalty. Boom. Reach, likes, prompted and unprompted recall, salience… yes, yes, yes please. Here come the customers. Kerching.
Where you’ll count the £ signs: on the top line of your P&L.
Command a premium price point
Hang on. Sales volumes are looking great, topline is hockey-sticking like billy-oh. Where’s the margin?
If you want to charge more than your competitors, you have to add more features and functions, right?
Wrong. How come apple iPod wasn’t the best mp3 player, but it kicked everyone’s ass? Branding.
How come we don’t all just wait for Which? magazine to tell us which toaster to buy? Branding.
And – if you’ve chosen to compete on lowest price, you’d better have lowest costs. Branding can help there, too. Where you’ll count the £ signs: on the bottom line of your P&L.
The cost of hiring and retaining your team. The cost of leasing premises. The cost of marketing. A meaningful brand can find all of these are lower because people will come to you, they want to hang out with you, to work for you – because they want to borrow some of what you’ve got.
And then there’s the cost of slow decision-making. Of uncertainty. Of risk-aversion. Branding builds internal confidence. You don’t have to ask yourself – ‘Do we do that?’ ‘Is that right for us?’ Knowing who you are gives confidence. And confidence makes costs lower.
Where you’ll count the £ signs: on the bottom line of your P&L.
Gu adds Fru. Tyrrell’s go from crisps to popcorn. Google goes from search to devices. North Face (could) go into holidays.
Where you will count the £ signs: on the top line of your (group) P&L, and on the Balance Sheet.
Asset Value / Multiplier
Yes, the balance sheet. All that scope for extension. Going bigger and deeper and wider. It’s because your brand means something bigger than the sum of the parts. That’s why it has an (intangible) asset value on the balance sheet. That’s why when someone acquires your business, or you’re raising capital, you get to see it in real (tangible) money.
Where you’ll count the £ signs: on the Balance Sheet.
All good news. Tricky for the measurement debate, though. But important. Because every discussion on how to measure the effectiveness of brand communications (rightly) says we should attribute our branding and communications activities to business results, and then (wrongly) assumes that businesses are solely trying to achieve sales conversions.
Colin Cather is the creative director at Bottle. After years at Unilever and then creating and developing his own foodie-sweets brand – Burnt Sugar – from Borough Market to big retail, he now develops strategy and ideas for to deliver distinctiveness, purpose and momentum for clients’ brands. He started life as an Army Officer but left when he discovered that there wasn’t a Royal Regiment of Marketeers.