Silicon Valley often talks about “brand” in a confusing way. I tweeted as much in response to CircleUp CEO Ryan Caldbeck when he brought up this issue last week:
The confusion often lies in the distinction between the visual elements of a company’s product, which is part of its branding, and something else that feels ineffable, which we call “brand.”
What is a “brand”?
For me, a brand is a set of four promises you make to your customer:
- To deliver a safe and effective product or service,
- At a fair price,
- Through a convenient channel,
- With salient marketing that explains how the product should be used most effectively.
If a company delivers on these four promises consistently over time, it builds what we call “brand equity.” Just as companies build financial equity through stockholders’ belief in the consistency of their future cash flows, companies build brand equity through the consistent delivery of brand promises. If a company instead fails to fulfill its promises on one of these dimensions, its brand equity may be impaired.
Collective belief around these promises produces a powerful network effect. Customers who purchase a company’s product and believe the promise of a brand tend to communicate their belief to others. We use Net Promotor Score as a measure of brand equity because it measures that very tendency of a customer to recommend a product to others. Because referability is inextricably linked to brand equity, more customers at a high NPS tends to lead to continued word-of-mouth growth. That’s why companies with high NPS scores tend to remain market share leaders.
Brand is an effect, not a cause.
Instead of focusing too heavily on the visual elements of branding, entrepreneurs should build a company that consistently delivers on these four brand promises. From that good work, they will harvest a great brand that has the potential to build significant equity over time with customers. Artful branding can enhance a great brand, but should not be forced to stand on its own.
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