Where does the return on investment come from for branding? It’s a question we get frequently, and not always an easy one for companies to answer. We believe the formula for calculating marketing investment is driven by 10 top-level factors (or as we like to say the Power of 10). Our philosophy is based on compounding factors and incremental lift in all categories. Even a small lift in each factor as little as 2-4 percent has a geometric affect on subsequent factors and the bottom line profitability.
The factors to measuring brand ROI include:
- Increasing the quantity of leads
- Increasing the quality of leads
- Increasing the size of the deal or basket (number of units sold)
- Increasing the price point (the perceived value of the product or service)
- Increasing the close/win ratio
- Increasing repeat customer business
while at the same time
- Reducing the cost per acquisition and close
- Reducing the sales cycle
- Reducing customer attrition
- And reducing employee attrition (bet you weren’t expecting that one)
Branding, when done properly, impacts each of these factors. Advertising and marketing tactics on the other hand often only focus just a few of these factors. Focusing on just a few of these factors does not generate a geometric return on investment and company growth.
Lets discuss a few of these factors starting with increasing the quantity of leads. Simply filling a sales pipeline with more leads does not guarantee more sales. In fact, this factor by can have a negative effect on the bottom line. Sales departments may be distracted chasing unqualified leads, which can increase sales cycles on qualified candidates, and typically drives up the over all cost of acquisition.
Conversely, screening leads can have a negative impact on the number of leads. Raising the quality of leads can be accomplished by improving the target universes, focusing the message points, narrowing the marketing channels, and improving the brand proposition, to name a few tactics.
Qualified buyers tend to buy more services and products, which increases the deal size and or basket when properly motivated with the right incentives. Bundled offerings, bulk unit offerings, valued-added service packages, cross-selling services, all work to up sell the prospect.
Driving price is achieved through increasing perceived differentiators: faster product delivery, enhanced reputation, product design and visual appeal, and a host of other methods. Countless market tests have proven strong brands command higher price points, which can be influenced by increased demand and wait list or back orders. Naturally, wait list and delayed starts can cost you sales as well, but generally speaking the hottest products or services can command more patience from the market and people will often pay more to move to the front of the line while supply is limited. The integrated approach and relational influences are the power behind branding.
on an integrated brand strategy
At this point in the conversation you have probably grasp the relationship between many of these factors, and have begun to understand why focusing on just a few can yield less than optimal results. Focusing on an integrated brand strategy will develop geometric returns, even with only modest lifts in any individual factor.
Far to often we are asked to provide a silver bullet: something that will turn around the bottom line. Something that will drive sales quickly. We find that while there are short-term fixes, a carefully planned and strategic position to brand management is the only one, true solution to achieve maximum impact. So if you’re looking for a strong return on your investment, consider a program focused on your brand leveraging the Power of 10.
Comments are welcome, especially if you’d like me to expand on any of the points in the Power of 10 and their impact on the bottom line.
Securing funding, working out product development/service offering issues, honing business plan strategies, and wearing multiple hats is a lot to juggle – which means branding, unfortunately, often gets pushed to the bottom of the priority list. But establishing the right brand position right out of gate is the key to early success for any business.
Branding clearly communicates what your company does, tells customers what they can expect from your products and services, and how what you have to offer is different from your competitors.
A strong brand creates an emotional bond with customers. When a brand really “connects,” it not only creates a barrier for competitor entry, but also develops a premium situation where consumers perceive a higher product value.
What are the first steps in developing and implementing a brand strategy?
1. Assess your position in the marketplace. Do people know what your company stands for? Are your products and services relevant? What is the current market opportunity?
2. Develop the tools you need, starting with a marketing plan that outlines goals and objectives and the tactics needed to achieve them.
3. Pay attention to first impressions. Create a visual “toolkit,” including a logo, a two to three word tagline that succinctly captures your positioning statement, stationery and marketing materials designed to convey a consistent look at feel.
By putting branding at the top of your priority list, you’ll establish credibility, speed up the sales cycle, and win over the hearts and minds of customers. This approach creates a bond with new customers that is solid and can eventually become unbreakable.