The Business of Brand Strategy
I was listening to this great podcast episode on Re:Thinking with Adam Grant called Jennifer Garner realizes her full potential.
It’s one of those rare moments when you don’t want the podcast to ever end. Don’t you love those moments?
There is one anecdote shared by Adam about a nurse who was so skilled at giving injections to kids that she earned the nickname “quick shot nurse.” Apparently, she was so fast at giving shots that she made the inevitable pain much more tolerable for kids, earning her the nickname.
She grew such a reputation that kids actually requested her all the time.
In other words, “quick shot Nurse” had created a valuable brand for herself — a brand with the greater perceived value of a quick, and therefore less painful shot experience.
Perhaps this won’t be totally surprising to many of you, since a 2021 report by McKinsey & Company revealed that brands with strong emotional connections with their customers achieve 30% higher customer acquisition rates and 60% higher customer retention rates.
This post intends to convince you that building a brand is one of the most important business decisions you can make for the growth of your company.
I know that we spend a lot of time and resources developing the brand logo, tagline, and website, but I think many people forget, that logos and taglines don’t create deep emotional connections.
To create and connect emotionally with potential customers we need much more than a well-designed website because brands are built in the hearts and minds of consumers.
Brands are the intangible emotions and responses associated with a given set of products or services. And when we do branding right, we build brand equity, which directly translates to higher revenues, lower costs, and competitive resilience.
The way I see it: Brand building is one of the most important and smartest financial decisions a founder can make.
Or as Professor Scott Galloway calls it: “Branding has probably been the greatest value creator in business for about 50 years.”
A Stanford study by Sean Bruich, titled: “Guide to Branding in the Age of Social Media.” published in 2018, found that on average, brands ranked in the top brand lists earn $311 billion more in annual revenues collectively than unranked brands in the same industries.
And in 2019, a study by Bain & Company found that brands with strong brand equity enjoyed price premiums of up to 20% compared to competitors.
How can we build strong brands?
Brand building occurs wherever your customer interacts with your brand — whether through advertising, during trade shows, or on social media.
It happens when customers open your packaging, visit your store, click on your website, or read user reviews.
Brand building also takes place when they use your warranty, call your customer service, or interact with members of your brand community.
Brand building happens all the time, everywhere, and all at once.
Strong brands are built through the intentional development of a set of beliefs and feelings that companies want people to have towards their organization — a concept known as brand strategy.
Developing and executing a clear strategic brand plan represents a significant opportunity for companies to drive growth and bottom-line impact. It acts as an invaluable guidepost that informs decisions and aligns organizations to build brand equity, directly translating to higher revenues, lower costs, and competitive resilience.
Companies with solid brand strategies benefit from cost-efficient marketing — leveraging word-of-mouth marketing, customer referrals, and organic brand awareness, all of which contribute to reduced marketing expenses.
Is brand strategy a good business?
A 2020 study by the London School of Economics found that companies with robust brand strategies outperformed the market by 20% over a five-year period.
This is because strong brands increase their perceived value, subsequently enhancing stakeholder value.
Consider these two companies: Patagonia and Dick’s Sporting goods.
Patagonia: Focuses on high-quality products, premium pricing, and a niche market, resulting in higher profit margins but limited market reach. Patagonia’s brand purpose is clearly defined, and well known, and guides every decision at every level of the organization.
Dick’s Sporting Goods: Targets a broader customer base with a wider product range and competitive pricing, leading to higher revenue but lower profit margins.
Patagonia holds a 70% market share in the premium outdoor apparel segment, catering to a niche audience with strong brand loyalty.
While Dick’s Sporting Goods holds a 17% market share in the broader sporting goods market, competing with a wider range of retailers and brands.***
Brand strategy is a compass.
A solid set of beliefs and emotions not only attracts external customers with similar values, creating affinity with your brand but also serves as an internal guide for behavior and capital allocation across the organization.
Oatly not only promotes Sustainability Consciousness and Well-Being to fans worldwide; internally, those values are upheld and promoted by every department and leader.
All of a sudden, being an authentic brand that aligns purpose and business has become the aspiration in Brand Strategy, also known as “purpose-driven brands.” Brands like Unilever, Dove, Ben & Jerry’s, Danone, Glossier, Warby Parker, Whole Foods, The Body Shop, Trader Joe’s, Eileen Fisher, Apple, TOMs, charity: water, and many more are great examples of this expanding business movement.
Advertising? It’s complicated.
Buying expensive media packages to blast your company’s logo all over town used to be the best way to create awareness and build your brand. However, it’s becoming increasingly challenging to stand out in today’s complex and saturated media universe.
Strong brands are now building their equity through innovative brand and customer experiences, where real brand value can be created.
Consider this: First-year marketing costs for new CPG brands average $45 million, compared to only $2 million for established brands.**
How to build a brand strategy?
As I always say, you don’t need expensive equipment or software to create a strong brand strategy.
All you need is the desire and commitment to follow these steps:
1)You need to start with a clearly defined purpose and values. Brands with a strong sense of purpose and values attract customers who share their beliefs, fostering loyalty and advocacy.
- Simplicity is key — boil the brand purpose down to a simple, clear message that can guide all decisions. Don’t let complexity dilute the brand. Scott Galloway argues that brands should focus on creating meaning and purpose beyond just selling products, utilizing storytelling and emotional connection to weave magic around their offerings.
- Purpose needs to be translated into a set of values and goals that guide communications, operations, and people and product development.
2) Tell a Compelling Brand Story: A well-crafted brand story connects with customers on an emotional level, making the brand relatable and memorable.
- Share the brand’s origins, the founder’s vision, and an authentic narrative that engages audiences.
- Emotional connection: Move beyond functional benefits to forge emotional bonds with customers.
- Be part of culture: Successful brands don’t just participate in culture; they actively shape it.\
- Alignment: To create a consistent narrative and succeed in a purpose-driven transformation, all functions and all members of the top team must cooperate closely.
Brands ranked highest for their brand storytelling return 228% more on marketing investment according to Forrester research.
And a consumer study by Lab42* showed 88% of consumers said storytelling helps them identify and relate to brands better.
3) Use a Consistent Brand Voice and Identity: Maintaining a consistent brand identity across all touchpoints, from product design to marketing communications, reinforces brand recognition and trust. Consistent words, visuals, and experiences that reinforce a unified brand story and recognition build trust.
- Build a Community: Create a community around the brand. Loyal brand fans become influential brand ambassadors and help build close relationships with their customers.
- Be authentic and transparent in all brand communications. Authenticity builds trust and credibility with consumers. The challenge for brand executives is to lead their organizations in the quest for authentic purpose. Björn Annwall, Volvo Cars Head of EMEA, recently shared: “If you want to be a purposeful brand, it is not about coming up with stories. It is about conveying stories about what you already do. If marketing ‘comes up’ with a ’purpose,’ it is by definition not purposeful, not ingrained, not authentic.”
4) Obsessed with Customer-Centricity: Understanding your target audience’s needs and desires is crucial for developing products, services, and messaging that resonate with them.
- Look at your brand experience across all touchpoints and consider the opportunities you have to deliver a superior experience to your competition.
- Make the customer the hero of your narrative. Your brand must mentor your customer to a better version of herself.
As I shared in my previous post “Why settle being a company when you could be a brand”:
The perception people have of your company is your brand.
This intangible value we call branding is one of the most important business assets of your company.
*Page 14 of the Brand Intimacy 2019 report, under the section “Stories Strengthen Bonds”.|
** Why Brand Building Is Important” by Allen Adamson
“The dollars needed to implant a new brand name in the consumer’s brain are staggering. First-year marketing budgets for a new cereal brand, for example, can run $50+ million. Compare this to the $2-$3 million per year established cereal brands require just to remain competitive and relevant.”
*** NPD Group: The NPD Group, a market research firm, estimated in 2021 that Patagonia held a “70% share of the U.S. premium outdoor apparel market for adults
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