Brand. It’s a five-letter word that carries a truckload of implications. More than just a name or a logo, it’s a beacon that signals to the world what your business is all about. But here’s the kicker: your brand can also be your secret weapon when it comes to valuing your business for sale – or your business’s kryptonite.
But isn’t your brand just your logo and your tagline? Nope. Your brand is the living, breathing soul of your business. It’s how you’re seen to the outside world and it can have a colossal impact on your company’s sale price. Your brand is a potent combination of your vision, values, positioning, value proposition, language, and customer experience. It contains the north star that guides every single thing your business does. And yes, it has the power to supercharge the value of your company, or if mismanaged, send it crashing into the doldrums.
So grab yourself a cuppa, lean back in your chair, and let’s take a journey together through the world of brand value. By the end of this, you’ll know exactly why your brand is the big kahuna (or how it can be) and the five steps you can take to make it shine brighter than Luna park on a Saturday night.
First things first. Your brand is not a nice-to-have
There’s a common misconception that a company’s brand is a ‘soft’ asset, a nice to have. And of course, as a brand strategist I’m naturally going to disagree.
But instead of getting on my soapboxy high horse, I’m going to let the numbers do the talking here.
A study by The Economist Intelligence Unit (EIU) found that on average, companies attributed 18% of their revenue to their brand, with some attributing as much as 30%
(Source: The Economist Intelligence Unit)
Interbrand’s annual “Best Global Brands” report, assigned a value of $323.6 billion to Apple’s brand, alone (just the brand!!). At the time Apple’s brand represented 52% of the company’s market capitalization.
The Journal of Marketing Research published a study revealing that consumers were willing to pay up to 9% more for strong brands.
The same study also found that strong brands influenced stock performance, driving up to 20% of the company’s stock price
(Source: Journal of Marketing Research).
See what I mean? Keen to read on?
Why Your Brand deserves a spot on your business’s balance sheet
Alright, let’s start with why your brand matters so much.
You might be thinking, “My product / service is excellent and our customers love us. Isn’t that enough?” Well, imagine this: Two companies produce identical widgets. They’re the same in quality, same in function, and same in price. One of them, let’s call them Company A, has a brand that’s as inspiring as lukewarm, milky tea (sorry if that’s your thing). The other, Company B, has a brand that resonates with customers, inspires trust and loyalty, and oozes energy and authenticity. Now, ask yourself, which company do you reckon will command a higher sale price? Spoiler alert: It’s Company B!
Why? Because a strong brand mitigates risk for the buyer. They’re not just buying a product; they’re buying a promise, a reputation, and a loyal customer base. And these intangibles, my friend, add significant monetary value to your business.
Take a look at a cautionary tale from the world of fashion. Poor old Abercrombie & Fitch (remember them?), once the darling of the teen retail scene, saw their brand value plummet due to a poor brand strategy that alienated their core customer base. It led to a loss of nearly $15.6 million. They exited quietly from the Australian market in March 2015.
Compare this to Burberry, which underwent a dramatic rebrand in the early 2000s. Transforming themselves from dowdy to fashionista must-have, they increased their brand value by 86% over just ten years.
Five Steps to Boost Your Brand Value
Now that we’re clear on the value of your brand let’s talk about five steps you can take to increase the value of your brand.
Step 1: Clarify Your Brand Positioning
Your brand positioning is how people describe your company when you’re not in the room. It’s the shorthand code that captures what you do and how you do it – done well, it can set you apart in the marketplace like a pair of David Bowie’s platform boots. And if you want it to work its magic, it must be as clear as heck.
Your positioning should be simple enough that your granny could explain it, yet meaningful enough to make your customers feel like they’re part of something bigger. And remember, your positioning isn’t just what you say about your business; it’s about what your customers believe about you.
Step 2: Create a Robust Value Proposition
Your value proposition is your brand’s promise: all the ways that your brand can make your customer’s lives better, happier, easier, and so on. It’s a secret sauce, and if you nail it, it can have customers flocking to you like seagulls after a freshly-fried hot chip.
Step 3: Define your Language
Language matters, folks – so much. How you talk about your brand can either engage your customers or send them running for the hills. Your brand language needs to be consistent across all touchpoints, true to your brand personality and resonate with your target audience. It also needs to be clear enough that anyone – team members, clients, stakeholders, friends and family – can clearly, quickly and confidently describe your organisation to another person.
Step 4: Check your visual identity reflects who you are and what you stand for
Visual identity serves as the visual ‘language’ that your brand uses to communicate with your audience. It’s not just your logo—it’s your colours, fonts, imagery, and all the aesthetic elements that represent your brand. A compelling visual identity can create a memorable impression and foster a deeper connection with your audience. It must be consistently applied across all touchpoints to uphold your brand promise and credibility.
An authentic visual identity that aligns with your brand’s values and appeals to your target audience can propel your company’s growth. Check out Airbnb as an example. In 2014, they launched a new logo and visual identity to reflect their mission of fostering a sense of belonging. Post-rebranding, the company’s listings soared from 550,000 to over 3 million in just three years, and their valuation rose from $10 billion in 2014 to $31 billion in 2017. They successfully transformed their visual identity to mirror their ethos of community and connection, which resonated with their global audience and boosted their growth significantly.
Your visual identity is not an area to cut corners. It’s an investment that, done right, can provide a handsome return.
Step 5: Deliver An Experience That Reflects Your Brand
Your brand is a promise. And your teams and customer experience are living proof of whether your organisation is keeping that promise or not. Your brand promise and the actual experience you provide must be two peas in a pod. Any discrepancy between your brand promise and your customer experience will leave your customers feeling cheated and can be like kryptonite to a business’s reputation. Your employees are the living embodiment of your brand. If they’re living, breathing and enacting your brand promise, your customers will feel it and love you for it.
The ripple effects of a stellar brand
A brand is not merely a logo or tagline; it’s an asset that directly contributes to a company’s financial health. It can influence customer preference, command a price premium, and drive customer loyalty, all of which directly lead to increased cash flow. What’s more, a powerful brand can increase the predictability and longevity of cash flow by reducing the risk of customer defection.
Your brand’s ability to generate sustainable cash flow has the potential to add significantly to your company’s value. And a strong brand will also play a role in recruiting and retaining talent.
Check out Uber’s journey (if you’ll pardon the pun-tastic!): In 2016, Uber went through a significant rebrand. They changed their logo and visual identity to emphasise safety, simplicity and human connection. This rebranding, coupled with a shift in brand strategy, saw their bookings increase from $20 billion in 2016 to $50 billion in 2018 – that’s a 250% increase in two years!
This remarkable growth can be attributed to a well-considered rebrand that resonated with consumers, transforming the Uber brand from something a little bit seedy into a symbol of a modern, on-demand economy.
So, in essence, the ability of a brand to enhance cash flow is not just a theory – it’s a reality demonstrated by many successful companies around the globe. Done right, a strong brand is a cash-generating machine.
So there you have it. Your brand isn’t just a logo or tagline; it’s the lifeblood of your business, and it can have a colossal impact on your company’s sale price. Nurture it, care for it, and let it guide everything you do, and you’ll be well on your way to increasing the value of your company. But, mishandle it, and you could be in for a bumpy ride.