The Evidence Is In: Brand Matters

By Denis Riney, Principal Strategy, and Adrienne Albright, Senior Associate

It is rare to find a CEO these days who believes that brand has no value. Over the last 20 years, BrandZ, Brand Finance, and dozens of other data sources have confirmed that brands have real financial value that can be measured like any other asset. In fact, one study estimates that brands (as distinct from other intangible assets) account for 20% of the value of the S&P 500.

Although most corporate leaders accept this evidence as settled science, we still encounter skeptics who think that brand is a luxury not worthy of investment. In particular, the accounting profession (as represented in the United States by FASB) still does not believe that internally grown intangibles such as brand should be valued on the balance sheet. This is in spite of the fact that these intangibles represent a significant portion of total enterprise value.

In the face of such skepticism, we believe the C-suite should aggressively pursue opportunities to create brand value through methods like brand architecture and brand positioning. There is now a convincing body of research that proves that pursuing the right brand strategy can result in significant value creation.

Some of the most compelling data points we uncovered include the following:

• Strong B2B brands can deliver 20% price premium over weaker brands in the same category
• As much as 20% of all B2B purchase decisions are driven by brand
• Customer loyalty is 50% higher for B2B companies with a strong brand
• Strong brands can also save talent costs – weak brands can pay up to 10% more per hire
• The right brand architecture decision can deliver double the returns when compared to the alternatives
• The right branding decision in a merger can result in a shift in subsequent stock performance of over 30%

We have used this information to help our own clients make decisions about how to brand their organization following a merger, how to rationalize their complex brand portfolios, and how to better position their brands during market disruption.

Ready to learn more? We are covering some of the most important elements of brand strategy, starting with brand architecture, in a series on LinkedIn or send us an email to schedule a time to talk about your brand needs.

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