Why Is Brand Strategy Valuable?

Do you ever need to convince clients of the value of brand strategy?

Are you wondering whether it's worth adding brand strategy to your skillset?

It helps to have some hard proof on why brand strategy is worth investing in.

Fortunately, there's a lot of research available now to help.  What it shows is:

1. Brands account for up to 50% of the value of a business - so it pays to know what yours is about.
2. Strong brands generate superior shareholder returns. 
3. Brand strategy helps increase revenue by increasing perceived value.

The answers to the questions in a strong brand strategy have been shown to:

4. Help businesses outperform competition.
5. Increase sales – and make it easier and more motivating for salespeople to sell.
6. Improve talent acquisition and retention.  
7. Attract investors and shareholders.
8. Improve business transformation efforts.
9. Improve customer acquisition costs.
10. Enable brands to command a price premium. 

Read on for all the detail…

Why Brand Strategy Is Important

1. Brands can account for up to 50% of the value of a business - so it pays to know what they’re about

Let’s start with the bottom line. On almost every company balance sheet, the value of intangible assets far outweighs the tangible.  

In categories like software, retail, technology and consumer services and goods, the value of intangible assets range from 65 to 85% of total company value. 

There are 3 things that account for intangible assets – intellectual property, contracts and brands.

A breakdown of the intangible assets of the 13,000 largest publicly traded companies in the world showed that brands can account for up to 40% of the value of a business. 

An analysis by the Marketing Accountability Standards Board (MASB) shows that brands contribute on average 19.5%, and in many cases well over 50% of enterprise value, when the impact of brand on firm cash flow, profits and firm value are properly measured.  

So surely you want to be clear on the foundation from which to build up to 50% of your enterprise value?  You can't really afford not to.

When you dig deeper into analysis on ‘strong brands’  - the figures get even more compelling.

2. Strong brands generate superior shareholder returns

Over the 25 years that Kantar have been tracking brands in their annual BRANDZ study, the world’s strongest brands have far outperformed stock market benchmarks. 

Source: BRANDZ 2022 report

Interbrand have also been tracking the world’s strongest brands for over 30 years. The average value of their top 100 brands topped US$3 trillion in 2022.

“This year sees the fastest rate of brand value growth ever recorded, demonstrating the growing contribution a company’s brand has in driving its economic success. While financial markets have shown significant swings over the last few years, the value of the world’s strongest brands have steadily increased driving customer choice, loyalty and margins.”

Interbrand - Brands As Acts of Leadership: 2022 Best Brands Report

3. Brand strategy helps increase revenue

Scott Galloway’s 3 line framework shows that there are 3 major levers any company can play with to increase revenue without having to create new products or services:

1. Cost of goods

2. Price

3. Perceived value

When customers evaluate a product or service, they weigh its perceived value against the asking price.

HBR - The Elements of Value

Brands directly impact revenue by driving perceived value.

Perceived value is not about money. It's about how a brand is relevant, meaningful, differentiated and appealing to the people a business needs to influence – customers AND employees.  

Brand strategy, and all the business decisions, marketing tactics and identity work that follows, is all about identifying, then increasing, the perceived value of a product or service. 

Doing this, enables businesses to charge a price premium and attract more customers.

It's why Airbnb redefined their brand strategy from being about cheap places to stay, to the idea of belonging.

Not only did this trigger a refresh of the brand identity, but more significantly, helped them refocus and weather the 2020 pandemic – as they lay out in their letter filed with the United States Securities and Exchange Commission as part of Airbnb’s Initial Public Offering in 2020.

On its first day of trading at the end of 2020, Airbnb’s share price more than doubled the $68 per share price set for its IPO the day before, giving it a market cap of about $86.5 billion, well beyond that of travel giants Booking.com and Expedia.

Redefining perceived value was the kick-start of Nike’s rise to fame and fortune. In 1988 they realised that they were limiting their growth by talking only to elite athletes.  The brief that led to the infamous slogan, 'Just Do It', read:

“We need to grow this brand beyond its purist core…We have to stop talking just to ourselves. It’s time to widen the access point. We need to capture a more complete spectrum of the rewards for sports and fitness.”  
A New Brand World, 8 Principles for Achieving Brand Leadership in the 21st Century, Scott Bedbury

For Pampers it meant getting out of the weeds of product features to create a a bigger benefit and platform for the brand.

In 1997 they redid their brand strategy, moving away from talking just about dryness, and focusing instead on becoming ‘moms’ partner in every stage of their babies’ development.’ From being P&Gs poorest performer in terms of profitability and market share growth, they grew $1billion year on year with this more valuable brand strategy. 

The brand strategy and branding process identifies the associations and image a company wants to build to influence the perceived value of their product, service or organisation. Companies leverage branding to raise perceived value. The greater the perceived value, the greater the potential revenue.

So in general – investing in brand strategy can have a direct impact on revenue growth and the bottom line. 

Moreover, specific elements within the brand strategy have been proven to impact business performance.

There are four questions every brand needs to answer in their brand strategy and three lenses you need to look through to answer them well.

Being clear on the answers to your core brand strategy questions is the first step in influencing the bottom line.

Having a meaningful answer to WHY you exist, WHAT you do, WHO you are and HOW you do things... helps in the following ways:

4. Brand strategy helps businesses outperform competition

• Research from Harvard Business Review in association with EY found that companies that operate with a clear and driving sense of purpose, beyond the goal of just making money, outperformed the S&P 500 by a factor of 10.
• Deloitte insight shows that purpose-driven companies witness higher market share gains and grow three times faster on average than their competitors, all while achieving higher workforce and customer satisfaction. 

5. Brand strategy helps improve talent acquisition, employee engagement and motivation

• According to a recent LinkedIn study, 80% of talent leaders agree that the brand has a significant impact on their ability to hire great talent. 
• Mercer's Global Talent Trends Studyof over 7,600 business executives, HR leaders and employees found employees crave a sense of purpose. The study showed employees feel more professionally and personally fulfilled when their company has a strong sense of purpose. 
• McKinsey put some stats against this: 89% of employees at all levels say that they want purpose in their lives. 70% said that their sense of purpose is largely defined by work, in Help Your Employees Find Purpose or Watch Them Leave, 
• 80% of employees felt more engaged when their work was consistent with the core values and mission of their organization (IBM)
• In a pwc study, 'Putting Purpose To Work', among 1500+ employees and 500 business leaders in over 39 industries, 83% of employees said having a sense of purpose gives them meaning in their day-to-day work.
• Modern Survey found that employees who say their organizational values are “known and understood” are 51 times more likely to be fully engaged than an employee who responds that their organization does not have values that are known and understood.
• In an HBR EY sponsored study, 'The Business Case For Purpose', 89% of executives surveyed said organizations with shared purpose will have greater employee satisfaction.
• Millennials who have a strong connection to the purpose of their organization are 5.3 times more likely to stay, according to research compiled by Peter Fisk. 

In Greg McKeown’s study of more than 500 people’s experiences across 1000 teams, documented in Essentialism, he found "a consistent reality":

6. Brand strategy increases sales – making it easier and more motivating for the salesforce

• Kantar's study shows that brands with strong clarity contribute 70% more to sales. 
  
• Dr. Valerie Good’s research, ‘Motivating Salespeople Toward Greater Productivity‘ (which earned her the 2019 Taylor Research Award) revealed that salespeople with a sense of purpose beyond money put in more effort over time and are more adaptable than salespeople focused solely on internal targets and quotas.

7. Brand strategy can help attract investors and shareholders

• Investors and shareholders seem to be paying increasing attention to companies that are effective at linking strategy to purpose. The Strategic Investor Initiative, in a collaboration with KKS Advisors, analyzed 20 CEO presentations on long-term strategic plans. They found that when CEOs did well at communicating corporate purpose, stock prices and trade volume rose in the following days. 
• A 2021 paper on Purpose Drives Profit showed that the information that executives identify as most wanted by investors has also shifted over time, with a significant increase in interest in corporate purpose – more than doubling in 3 years. 

 8. Brand strategy improves business transformation efforts

• In a 2015 HBR study, 84% of executives agreed that their business transformation efforts will have greater success if integrated with purpose, and 84% agreed that an organization that has shared purpose will be more successful in transformation efforts. 
• Deloitte Insights 2020 Global Marketing Trends Report also found that purpose-driven companies report 30% higher levels of innovation.
• A Harvard Business Review study reported that purpose-driven companies benefitted from greater global expansion (66% compared with 48%), more product launches (56% compared with 33%) and success in major transformation efforts (52% compared with 16%).

9. Brand strategy helps improve customer acquisition costs

• A study by Rokt, highlighted in this HBR article, '4 Factors Separating the Top Marketers From the Rest of the Pack', identified that a strong brand outperforms weaker ones by 3:1 in terms of customer acquisition costs. As they highlight,
  

  "Choosing one product over another is ultimately powered by the consumer’s emotional relationship with the brand. We see companies with strong brands outperform weaker brands in the same industry by 3:1 in terms of customer acquisition costs (CAC). 

10. Brand strategy helps brands to command a price premium

 All of the above enables brands to charge more for their product or service.

• According to Kantar, consumers are consistently willing to pay more for brands they regard as Meaningfully Different. Among people who are primarily brand-driven (they choose a brand first, then look for the best price), consumers are content to pay, on average, 37% more than for other brands. Even among price-driven consumers, there’s still a willingness to pay 14% more for brands with strong Meaningful Difference.
• A study of 220 consumer products by the Marketing Science Institute (MSI) found that a superior brand preference or reputation commanded price premiums of 26% on average, even when brand quality is the same.

“If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.” Warren Buffet

How brand strategy can help your business

If you’re considering whether to add brand strategy to your skills, consider that list above. There are not many other skills that have the potential to have such an impact on so many levers of business growth.

Learning brand strategy can also help YOU:

1. Stand apart from your competition. Sadly, copywriters and designers fees are being squeezed all the time. Add this skill to increase your value, and be involved at an earlier point in the process, to naturally lead on to your other talents.
2. Widen your network of clients and opportunities. Brand strategy touches all aspects of the business so it’s typically led by the CMO, CEO and CHRO. This broadens your opportunities to sell on your other skills across the business, and, if you're a marketer within the business leading brand strategy, helps to raise your profile with the C-suite.
3. Increase the fees you charge. Strategy is a valued skill and, rightly or wrongly, is one that enables you to charge higher day rates compared to design or copywriting.
4. Decrease the juggle of multiple clients. A typical brand strategy process can take around 25 days of your time. So longer projects, fewer gaps, less need to juggle multiple clients, charging a higher rate…the list of benefits goes on and on!

And businesses need your help.

Gartner’s Annual CMO State of Marketing Budget and Strategy report shows that going back to basics on brand – brand building and rebranding –  is a key priority for global CMOs this year. 

And most are not capable of handling this in-house (58% report not having the in-house capabilities they need to deliver on their goals) .

Yet the budgets are there.  The average CMO has 9.5% of company revenue to spend on marketing this year. (And the desire for brand strategy often comes straight from the CEO – which aways gets budgeting priority!)

“Yes, but…brand strategy is really complicated.”

NOPE.  The models, jargon and frameworks out there can make it FEEL complicated.

And most of the brand strategy courses out there just give you other models and frameworks to consider but don’t give you the step-by-step process and ALL the practical tools you need to actually DO the job.  So you’re left still doubting that you can sell and run a brand strategy project for a client.

That’s why I created Brand Strategy Academy. To fully equip you with the clarity, tools and confidence you need to do brand strategy for any client.    It includes a tried and tested model based on my 24 years, 70+ brand strategy projects: of course. 

But also:

• Pricing, proposal, process templates. 
• Customer and employee research and workshop templates.  
• 40+ examples from the world’s most valuable brands.
• Step-by-step case studies.
• Live Q&A sessions.
• Advanced masterclasses - and so much more!

For less than a typical brand strategist’s day-rate, it’s such an easy thing to invest in that will pay back MANY times over.

Are you ready to make a significant impact on your business and your clients'?
Join my next cohort here!