It's All About The Experience

One of the most challenging conversations you will ever have is to explain the power of brand and branding expenditures in a small business context. Most of us find the notion of "brand" hard to define, though we know a superior brand when we see one. How does a strong brand make a company better off? To answer this question, we list six common ways a strong brand can improve profits.

1. A strong brand helps to increase sales. Which products are easier to find, branded or off-brand products? Walk through any store looking for a particular kind of product. Which product are you drawn to? The branded one, of course. Customers are more likely to buy if they can easily find the products they need from a recognizable brand. This behavior occurs because customers prefer convenience over other factors, such as price.
2. A strong brand helps to attract new customers. A strong brand can increase sales by facilitating positive word-of-mouth. It is easier to tell friends and family about a branded product than an off-brand one. We can remember the names of branded products. When customers have a good experience with a brand, they spread the word. This word-of-mouth can be extremely powerful in increasing sales by making people aware of the brand and its products or services. Consumers value word-of-mouth referrals more than other information about a product or service. A strong brand makes the referral process more manageable by making your brand a "known quantity."
3. A strong brand drives customer loyalty. Customers loyal to a brand are more likely to continue buying that brand. Brand-loyal behavior continues even when other options are available. Companies develop customer loyalty by providing excellent customer service or high-quality products that solve consumers' problems. Brand loyalty also gives companies a mulligan; we tend to be more forgiving of products or services that fail to fill our needs when they have strong brands. For example, let's take the simple case of a new waiter who messes up your order in a restaurant you love. You are far more likely to forgive this one slip than at a restaurant you are trying for the first time. That response is in part due to the brand of the restaurant you love.
4. A strong brand can help increase a product's perceived value. Strong brands achieve higher perceived value by making their product or service appear more exclusive, higher quality, trustworthy, searchable, or memorable. This perception of value, in turn, can help with point-of-sale conversions and increase sales.
5. A strong brand reduces marketing costs. Customer loyalty, greater awareness, a better definition of customer preference, and higher customer lifetime values are all reasons a strong brand reduces marketing costs (or makes the same marketing spend more effective).
6.  A strong brand helps companies connect emotionally with customers. When customers feel emotionally attached to a brand, we are more likely to purchase its products, even when cheaper alternatives exist. Marketers can create an emotional connection by aligning the brand with the customer's values. Consider Suburu's evocative 'Subaru is Love' commercials, for example. Marketers carefully research their target market to align with customers' values—studying customer demographics and interests - so they know how to tug at our heartstrings. Then, they make life better for those customers by ensuring their products or services solve a problem their target market cares about. (One example is automotive longevity and safety in Subaru's case.) In advertising, marketers use language that resonates with their target market and is authentic and transparent. Customers are more likely to trust and respect a brand if it is genuine and honest!

Brand equity, the corporate staple measurement of brand strength, is an acknowledged measure of the value of a brand. Brand equity considers many of the abovementioned variables: customer loyalty, name recognition, customer awareness, and market share. However, name recognition and customer awareness are often difficult to measure in a small business context. This challenge is prevalent in small businesses with no market research budget. 

What to do? Instead, take a baby step. Consider concrete actions you can take to learn what your customers think of your brand, then work to improve it by working through the list above. We'll share ideas on ways to enhance brand equity in upcoming posts.

Happy brand building!

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