BRAND ROI:
IT GOES BEYOND THE BOTTOM-LINE


by Caitlyn Mach

There is a great deal of ambiguity connecting Business Branding to “Return on Investment” (ROI). To most executives, Brand-ROI resembles spending X-dollars on brand initiatives and receiving a greater number in return. This is the paradigm Brand-ROI lives in. There are numerous factors to quantify Brand-ROI, but it’s difficult to measure every one let alone tracking the expense to profit ratios that 90% of companies don’t measure. But to truly understand Brand-ROI requires opening our minds more than our spreadsheets

ROI investment measurement show up financially, culturally, relationally, emotionally and beyond.

Within the facets of Brand-ROI, brand-equity at sale is usually thought of most. How will a great brand affect the big check day or the ring of the bell on Wall Street? To answer that, look no further than Coke vs. Pepsi. Both produce soft drinks. Yet if both companies were asset equal, doing the same volume and profitability, and both companies were being sold, Coke’s brand would yield greater value and be the obvious choice for present and future equity value. The good news? This brand equity principle holds true all the way down to the small business. Stronger brand equity equals greater ROI.

One of the less obvious brand value points is something called “Credibility-ROI.” When a representative from a well-branded company contacts a prospect, and a representative from a lesser known company contacts the same prospect, who has the path of least resistance, whose job is easier, and generally, who does the prospect take more seriously?” The truth is presenting is easier, phone work is easier, closing deals and getting referrals are all easier armed with a world-class brand reputation. People want to do business with brand-leaders. It makes them feel better and they’ll often pay more for it… creating additional ROI.

How about employee performance or Employee-ROI? It’s often overlooked that employees working for companies respected in their industries deliver better performance. They take more pride in their work, take their job more seriously and their drive for promotion has them working harder, longer and more efficiently. Add to that, the tenures of employment are known to increase when brand advocacy is present in the culture minimizing costly firing and rehiring. The result? Better service and quality control securing greater long-term client loyalty and alliance relationships. Any ROI here? Massive!

Do companies with stronger brands attract better talent? The best companies attract the best talent. It’s proven. In fact, well-branded companies don’t have to seek talent, brilliant talent knocks at their doors daily. Is there such a thing as Talent-ROI? Mention the name Jack Welsh to General Electric shareholders, and Richard Branson to Virgin shareholders, and you’ll have your answer. Ironically Talent-ROI lives on even after the talent has left the brand. In some way and you know it’s true. Steve Jobs, although RIP is still delivering ROI into the Apple brand, and will be for some time.

Will better brands attract stronger, smarter investors and board members… those with valuable contacts who bring more business potential to the table? Do more investment dollars create possibility for greater ROI? Absolutely.

What about Vendor-ROI? Let’s say Nike or a lesser-name shoe company were placing a first time order for shoelaces and the dollar amounts of the transaction were the same for both. However, the Shoelace Manufacturer due to production constraints could only deliver one order. Who would get the Shoelaces, get better service and ultimately be the priority? Nike! Also consider that companies that have branded themselves into larger entities buy more, often get better pricing and secure more favorable terms, sometimes without even asking. Plenty of ROI here.

There’s also something called Emotional-ROI; the feelings and emotional well-being of each employee and their passion drive excellence into the company culture. A well-tuned culture is considered to be a vital asset of any business, any size, and people value feeling in some cases, more than money.

The net value of Brand-ROI is that it goes far beyond the bottom-line into areas of a company that wind up directly back into a notably better bottom-line. With strategic and consistent brand building, ROI will show up in many areas of your organization… or your competitors depending on your commitment to be a great brand.

 


Caitlyn Mach is an investment associate for KBS. Caitlyn is responsible for commercial properties in Texas.