Branding ROI – 21 High-Value Returns on Investment in Branding

Branding was once thought of as a nice-to-do part of marketing. A company might do some brand marketing if they had enough budget for it. But today, there is no question that brands are valuable business assets, and that branding is an essential component of marketing. In fact, it is the foundation for everything else!In today’s world, when so many products and services have been commoditized, having a compelling brand is more important than ever. A successful brand connects with its audience and strongly influences their buying decisions. That is why name-brand products sell for more than store brands. Strong brands lead to additional sales and revenue the company would otherwise never get, both in the B-to-C and B-to-B worlds.Branding is an investment in the company’s future, and it is an investment with a high return. While consumer brands are the ones that get the most attention, the importance of branding in the B-to-B world cannot be underestimated. And, it is just as important to small companies as it is to the Fortune 500, whether they provide services, sell products, or both.Quantifiable Branding ROI It is even possible to put a dollar value on a brand. Franz Fleischli, a managing director of the valuation and appraisals firm The Mentor Group, states, “While the perception may have been that the value of a brand is difficult to quantify, there is clear confirmation that brands have real value in that more and more lenders are willing to lend against them based upon our valuations.”Business Week publishes an annual ranking of the 100 most valuable global brands, compiled by Interbrand Corp. Their approach to calculating the value of the brands they rate is this: first, they calculate what portion of a company’s revenues can be credited directly to the brand rather than to tangibles. Then they project earnings and sales out five years based on analysts’ figures and subtract the value of other intangibles such as patents. Using those calculations they rank the value of global brands. Their top 5 for 2009, by the way, were C0ca-C0la, IBM, Microsoft, GE, and Nokia, in that order.Not everyone is going to do such in-depth calculations, but there are at least two other directly quantifiable returns on branding investment that are much simpler:

Name-brand price advantage – Branding can increase the perceived value of a product or service, and that translates into higher prices and margins. Take, for example, the difference between the retail price of a six-pack of Coke and the store brand. That difference is easily computed and is part of the calculations of the brand’s valuation.

Higher Company Valuation – Investors in public companies tend to value well-branded companies higher. According to an article in CFO Magazine , “Corporate brand plays a real role in stock performance” of approximately 5 to 7 percent.
Not Everything That Counts Can Be Counted Many of the benefits a company gets from its branding investment are less tangible… but very real nonetheless. While these benefits may be difficult to quantify, they do contribute to the calculable returns above. As Einstein said, “Not everything that can be counted counts, and not everything that counts can be counted.”Here are 18 additional benefits well-branded companies, products, and services enjoy, even if they are more difficult to directly quantify:

Top of mind – The best ROI a brand can enjoy comes from owning the top-of-mind position. People think first of the brand that most resonates with them. Unless another brand presents a compelling reason to buy instead, the first one gets the business.

Familiarity – When people contemplate purchasing a product or service, known brands make the selection easier, even if they don’t occupy the top-of-mind position. We all like to deal with people and things that are familiar to us. And, with so much choice in most areas, familiar brands can shortcut the decision process.

Trust – Having a trusted name (a known brand) is critically important for many types of businesses, especially, perhaps, financial services, legal services, security-related businesses, mission-critical technologies, and medicine, to name a few. With a trusted name brand, a company is in the running. Without it, it’s not.

New product/service opportunity – A company can often expand its offerings under its brand umbrella. This extends the feeling of familiarity and trust toward the new product or service, making it easier to sell. (One has to beware of the pitfalls of line extension, though!)

Emotional connection – People make buying decisions emotionally, then justify them rationally (everyone but you, of course). If people feel a positive emotional connection to a brand, they are MUCH more likely to buy the product or service.

Decreased price sensitivity and higher margins – People happily pay a premium for designer labels, prestige names, and leading brands.

Being in the running – A company without a known brand may never even be considered as an option when people are trying to decide what product or service to choose.

Reduced sales cycle – If a company’s or product’s brand is unknown, its sales people have to establish a trusting relationship with prospects before they will buy. The recognized brand is well down the curve already.

Increased inbound inquiries – The number of inbound inquiries increases, requiring less lead generation.

Loyalty – As John Kenneth Galbraith said, “Faced with the choice between changing one’s mind and proving there is no reason to do so, almost everyone gets busy on the proof.” Brands we connect with give us reason to be loyal and not change our minds.

CYA advantage – As the old saying goes, “Nobody ever got fired for choosing IBM.” Choosing the known brand is safer, even when it is more expensive.

More ink – Brand-name companies and products get more coverage in the press and more attention from analysts. This effect multiplies, because each exposure increases the brand awareness.

Decrease in lost opportunity cost – With a weak brand, there is a very real lost opportunity cost that the company will never really know about: business they never have a chance at.

Forgiveness – If we buy a brand-X product and it doesn’t work well or correctly, we immediately label that now-known brand as one that equates to poor quality. On the other hand, if we buy a product whose brand name we equate with good quality and the product has a problem, we tend to feel that we just got a bad one. (This forgiveness is extremely limited though. Additional bad experiences change our perception of the brand, and very quickly.)

Attract better employees – Job seekers are also attracted to well-known brands; leading-brand companies get their pick of the litter. Companies with weaker brands have to spend more on recruiting.

Increased employee morale – Employees like being part of a winning team. They also connect emotionally with brands, and enjoy being associated with a top brand. This can also lead to…

Reduced employee turnover and reduced recruiting, hiring and training expense.

And, finally,

The do-they-make-it advantage – When people are looking for something and are not sure who makes it, they often consider which of the brands known to them might. They will then investigate, for example, visiting the company’s Web site, to see if it does, in fact, provide that product or service. This can result in additional sales and revenue the company would otherwise not have received.
As you can see, branding is an essential investment that pays real returns.But what does it take to establish a strong, compelling brand? As a recent Business Week Top 100 Brands article states, “The names [in our ranking] that gained the most in value focus ruthlessly on every detail of their brands, honing simple, cohesive identities that are consistent in every product, in every market around the world, and in every contact with consumers.” That is a great lesson for companies of all sizes that want to grow and prosper.

Commercial Real Estate Agents

Let’s face it – you cannot intelligently buy commercial real estate properties without the help of an expert. Hiring a commercial real estate agent is your best bet against losing thousands of dollars you’ll likely spend, when you make costly mistakes or miss out on solid, commercial real estate investing opportunities. That is why finding and hiring a commercial real estate agent should be your first and most crucial step – it can make or break your commercial real estate venture.Benefits of hiring commercial real estate agentsProfessional commercial real estate agents or broker companies give you access to the best commercial real estate information available. They provide you with information about the latest sales price data, vacancy and absorption rates and comparative tax and labor costs to help you make informed decisions.Experienced commercial real estate brokers can also help explain to you the present market lease trends, the current demographics, and they will give you a straightforward competitive analysis of different commercial properties that fit your purpose and budget. Professional commercial real estate agents or broker companies give you all this information so that you can anticipate opportunities, gain a competitive advantage and implement the best possible real estate approach.If you plan to build commercial real estate, an agent can help you determine the best location using scientific local market data and a keen knowledge of the economic trends that affect the commercial real estate market. These agents are specially trained to handle very large transactions – millions upon millions of dollars. Their purpose is to find investments that will not only increase in value, but also give the investor a good revenue stream.Never try to invest in commercial real estate property without consulting a commercial real estate agent. He or she will have the right training to impart helpful research, advisory and transaction services to you so that your commercial real estate venture goes smoothly.

Investing 101: Before You Start Investing Money

Doesn’t it make sense to learn to invest (some basics) before you start investing money for real? Maybe a course called investing 101 or personal investing would be helpful. Here this retired financial planner relates a story, and then points the new investor in the right direction so he or she does not start investing uninformed.In the dean’s office of one of the largest universities in America, I recently asked if they offered investing 101, personal investing, or any finance course where the student could learn to invest. “After all, we all need to start investing money someday, and it is much to one’s advantage to be informed vs. uninformed, isn’t it?” That was my response when told, “no, or at least I can’t find one” by the dean. I was informed that they had well over 50,000 current students enrolled and offered THOUSANDS of courses in the various colleges throughout the university. But he could find no course under the heading of personal investing or investing 101, and he was in charge of the curriculum.We spent about an hour together searching and were both laughing out loud at what WAS offered. How about a course in “the art of falling down”? It’s offered. Investing 101? Which college in the university would offer such a course? “The athletic department is real big here; maybe they could help”, I suggested. After all, professional football players make big money. They need to learn to invest money (in case their career is short) and should start investing early. I knew a few players when I was a financial planner, but like most folks they tend to procrastinate when the money is flowing in. They’re too busy earning it, and don’t have the time to learn to invest.The truth of the matter is that I don’t find it funny that it’s difficult to find a down-to earth practical course that most people could truly benefit from, because as a new investor you need to learn to invest money before you start investing for retirement or any other financial goal. As a new investor you may not be able to find a financial planner you can work with or afford. Even if you found one, do you really want to start investing money with him or her without first getting your feet wet in the basics of personal investing? Let’s start at the beginning.Before you get into financial concepts like asset allocation and strategy, you should first learn the very basics: investment characteristics. How can you compare various alternatives to determine which best suit your needs, financial goals and comfort level? In other words, you need to decide what you are really looking for. And you need a list of factors to consider before you start investing money. For example, do you have a long term goal like retirement, and are you willing to accept a moderate level of risk? If so, there are numerous investment alternatives to consider, and you can also get tax breaks.On the other hand, if you have a shorter term financial goal and might need access to your money at a moment’s notice, that’s a totally different picture. You need to match your financial wants and needs to the various alternatives that have characteristics best suited to your personal investing goals. There is no single best choice for every financial goal. It’s a matter of give and take. I have a list of 5 factors you must consider and a few other things you should consider before making a decision. This is basic investing 101. Whether you are a new investor or you’ve been at it for a while and have never really taken the time to learn to invest – you should learn the basics.This is the first in a series of investing 101 articles I plan to write. In my next article I plan to put my list of characteristics you need to consider before you start investing money in black and white. Don’t feel bad if you are an uniformed new investor (or a want to-be). Do something and learn to invest starting with the basics.Once you have a handle on a few basic financial concepts you can start investing with confidence. Once you learn to invest you can reach your financial goals. If you think I’m trying to build your confidence, you are right. Stay tuned to investing 101 as we get back to basics. No offense to anyone at one of THE largest universities in the country, but there’s a void out there and I plan to fill it.