The Bottom Line: The Brand Is Your Most Valuable Asset
A strong brand is clearly defined and developed intentionally, using a consistent, memorable, authentic message to generate the right sort of attention from a specific audience. A brand — a unique mental picture of your business developed by each customer — can be positive or negative, and can be influenced by an unlimited number of external factors. If you are able to develop a strong, positive brand, you create all sorts of advantages for your business. The work that you do to develop a strong brand is an investment in your business, and it pays real-world returns.
So what are the effects of building a strong brand? Why do all the hard work of building one? The effects of a strong brand, listed below, demonstrate how a strong brand has a significant impact on a company’s financial standing. A strong, positive brand can:
- attract and retain customers
- encourage repeat business and referrals
- enable you to charge higher prices
- diminish the appeal of competitors
- attract and reassure potential investors
- improve access to capital and other resources
- enable business expansion
- increase sales of new products and services
- decrease the cost of mistakes
- secure stronger relationships with vendors and distributors
- attract and retain employees.
All of these effects are directly tied to the bottom line. In almost every modern market, customers have thousands of options to choose from. If we don’t like a business, it’s very easy to find someplace else to get what we want. A strong, positive brand — a strong mental image of your business — increases your ability to generate revenue and the odds of your long-term success.
Pick Me! Pick Me! Strong Brands Attract And Retain The Best Talent
People want to work for a great company. Employees at Nike have been known to permanently align themselves with the brand, tattooing the company logo on their skin. Google receives 3 million applications each year for only a few thousand positions — a ratio that virtually guarantees them access to the best of the best. Our jobs consume a vast portion of our waking lives, so it makes sense to spend that time with a company we love. We look for employers that care about our needs, our dreams and our happiness and, if we find them, we work very hard to keep those jobs.
Those brands that are attractive to employees reap solid financial rewards. They spend far less on recruitment and retention and the hires they do make tend to be highly qualified, since they have the largest pool of applicants to choose from. But for small business owners a single hire can represent a significant investment and that hire can have a significant impact on the success of the business. The smaller the business, the more attention must be paid to who is hired and how well that employee does his job.
Small business owners don’t have the national presence that makes it possible to attract millions of applicants, but there are still plenty of ways for them to attract talent and keep employees engaged. Most of the time, it all comes down to how much an employer cares about his employees.
Austin has long been known as the live music capital of the world. It’s a place where almost everyone, it seems, is in a band. Mike is developing a great business serving the needs of thousands of local musicians, and he knows that one of the best ways to develop a loyal customer base is to cultivate a staff of enthusiastic music lovers.
- Mike started hanging out at concerts and encouraging local musicians to apply for positions, rather than relying on want ads.
- He created a highly flexible work schedule to allow band members to take gigs whenever they got them.
- He encouraged his employees’ music careers by helping promote their bands. He hung their posters set out postcards and flyers at the front of the store.
- He wanted to give his employees extra exposure, so he created a program that allowed his employees to visit local junior high and high school music classes and give demonstrations of their musical prowess while teaching young students the value of music education.
- He videotaped his employees giving basic lessons on various instruments and uploaded those videos to YouTube. This led to offering in-store music classes where aspiring guitar and keyboard players could both try out the merchandise and learn from experienced musicians.
His employees are treated like the highly valued, talented musicians they are and — at least at Mike’s store — the rock stars they hope to be. Of course, word gets around and Mike’s brand is enhanced each time an employee talks about his job, improving the potential for future hires and future sales.
You Can Trust Me! Strong Brands Create Good Relationships
We would like to think that perceptions have little to do with our success — that the way we look, the way we act, and the way other people think won't determine whether or not we can get a loan, get a job, or find a new customer. But, unfortunately, it’s just not true. A study in 2004 demonstrated that prisoners were more likely to be paroled if those judging their cases had recently eaten lunch. It was not just the law or the years served or good behavior that contributed to the decision, it was also whether or not those doing the judging had full stomachs.
The way our businesses are perceived is not just the product of what we do and say — it also includes the assumptions our customers make about the world. We do not evaluate things objectively; our emotions play an enormous role in what we choose to buy and who we choose to engage with. But since that’s the way the world works, we have to deal with it. Since brands create emotions, including trust, it makes sense that when we develop a strong brand we will be more likely to get the results we want.
Entrepreneurs have to establish credit with vendors. They have to create good relationships with banks and loan officers. They have to attract and retain industrious employees. A good brand can help an entrepreneur do all of these things. But when trouble arises, a strong brand can be even more valuable because it strengthens these relationships and makes it possible to overcome problems.
ROB'S ROMANTIC BISTRO
Rob's romantic restaurant is expecting a large order of filet mignons from a supplier for Valentine’s Day, one of his biggest nights. Sandy, who supplies beef for his restaurant and several others in the area, receives a call and is told that, due to a shipping problem, she will only receive half the number of steaks she was expecting. She now has to call half her customers and tell them that they won’t be getting the steaks they ordered.
Which restaurants will she choose? She’s probably going to supply steaks to the customers she values the most — the ones who have built the strongest relationships. She may weigh which restaurants have paid their bills on time against those who are chronically late. She may think about which restaurants are still likely to be open a year later. All of these factors are part of the mental brand image she carries for each of these restaurants, and those brands are what she will use to make her decision.
Every person who interacts with your business — each customer, employee, and vendor, your banker, your lawyer and the guy that cleans your office — carries a perception of you and your business in their mind. This perception — which we call the brand — makes decisions possible. All of the mental images that we’ve developed for your business come into play each time we make a decision. A strong brand makes good relationships possible, and helps us make decisions about whether or not to help you succeed.
There’s More Of Me To Love: Strong Brands Make Expansion Possible
Products and services are usually branded, but the brand itself can become a product. Brands can become so valuable that they are bought and sold just like donuts, shoes and pencils. Whenever a brand owner decides to allow other people to open new locations of an existing business — to open a franchise — he is leveraging the power of his brand and employing the labor of other people to increase the value of that brand.
Using an existing brand to expand a company and enter new markets is nothing new, but the trend has accelerated in recent years and shows no sign of stopping. Anytime Fitness was founded in 2002 and, slightly more than 15 years later, has opened more than 3,000 franchised locations. Bricks 4 Kidz, a unique startup offering classes and events that teach children how to design and build structures with Legos, opened in 2008 and already boasts more than 600 locations. These entrepreneurs invested in their brands and leveraged that investment to expand their businesses in just a few years.
But you don’t have to have a large, national presence to utilize the power of your brand. A restaurant known for romantic dinner service can open a smaller location right next door that serves lunch, coffee and pastry, extracting more value from the existing brand and an existing, fully-equipped kitchen. A local lawn care business with a large, satisfied customer base can recruit an arborist and a landscape architect and expand into full-service landscaping. A high-end salon owner with a reputation for providing fashionable, cutting-edge cuts can open a new location near a university, offering more affordable services to a younger crowd. The power of the existing brand makes the success of these ventures more likely.
A brand is something you own, just like a piece of equipment or a building. The quality of your brand will either increase or decrease the bottom-line value of your business. If you take the time to craft a strong, positive brand it can be leveraged to generate significant profits. But, just like cheap equipment or a building always in need of repair, a negative brand will cost your company money and, quite possibly, kill the business.
I Will Survive! Strong Brands Overcome Difficulties
A local tire store sells thousands of name-brand tires, only to have them recalled for faults in the manufacture. A restaurant on the shore of a beautiful lake watches as that lake slowly dries up in a prolonged drought. Bad things happen to good businesses. A brand isn’t an insurance policy, but it can make a difference when the winds of fate blow in your direction. A well-built brand can provide some protection from the effects of negative events.
An inspirational example is Dot’s Place, a small, locally-owned restaurant in Austin. For many years Dot served delicious comfort food to grateful local patrons in ramshackle digs on the outskirts of town. Unfortunately, she had not kept up the premium payments on her fire insurance, and when the restaurant burned down in 2004 it looked like Dot was out of business. But, as reported at the time by the Austin Chronicle, “offers of money and other forms of assistance began pouring in even before the embers had cooled, as the hungry lunchtime crowd (usually 500 strong) drove up to find the charred remains.” Customers were devastated by the loss of the restaurant, and put on a benefit barbecue to raise funds and help Dot reopen.
How many business owners create this kind of impression on their customers? Can you think of a for-profit business in your area that you would raise money to support? It was not expensive advertising or a top-tier website that made this possible, it was a great offering that created a strong brand in the minds of her customers.
All of us suffer unexpected challenges. Entrepreneurs are certainly not exempt. But if you care deeply about your customers and express that through your offerings, customers will want to see you succeed, and that good will can help keep your business afloat in difficult times.
Make Them Disappear: Strong Brands Obscure The Competition
Choose three or four words that represent categories of products and services — words like “beer,” “doctor,” and “bar-be-que.” When you say the word “beer,” does a particular brand jump out in your mind? When you say the word “doctor,” do you immediately think of your primary care physician? Do you always think about a particular restaurant when someone says “Let’s get some bar-be-que”? These simple associations are precisely what brands strive to achieve.
The reason that large brewers spend so much money advertising is not to sell more beer — it’s to keep the competition out of your mind. Some brands have been so successful at this that the very name of the product or company has become synonymous with what they sell. People don’t say “hand me a facial tissue,” they say “give me a Kleenex.” We may “Xerox” something even when we use a different brand of copier. We “Google” a word or phrase instead of “search online” for what we want to know. The massive presence of these brands has significantly diminished the presence of their competitors in the public mind.
But it’s not just large organizations that achieve mental saturation, even though we’re most familiar with this dynamic in the context of national brands. You may have a family attorney that always springs to mind when you think of the word “attorney” and, even though he is not nationally known, he still moves all of the competition to the back of your mind, making it unlikely that you will ever hire anyone else to represent you in court. The same may be true for “grocery store,” “hair salon” or “coffee shop.” Each of these organizations has built a strong brand in your mind; they have made a large deposit in the mental brand bank, and receive interest by having you return to their business again and again.
The best way for small businesses to achieve this effect is by creating profound experiences. If you go to a typical grocery store and buy a loaf of bread, your experience is hardly memorable. But if you go to a locally-owned store and watch a baker remove a beautiful, crusty loaf of bread from a large stone oven, slice into it, slather a large piece with softened butter and hand you a warm sample of their new sourdough, the experience is far more memorable. The nature of profound experience is what encouraged Whole Foods to build large, in-store kiosks where chefs can prepare food right in front of shoppers, engaging the mind with sights, smells and tastes that compel shoppers to buy products that they might not have otherwise, and to spend more than they thought they would.
TARA’S TASTY TREATS
Candy can be bought almost anywhere, so Tara decided to find unique ways to present signature products that make grocery store candy feel pedestrian and unmemorable. Inspired by the bright colors and fantastic shapes of her candy, she began by clearing out a central area in her store, setting it up as a large display space. On a raised platform, she installed a rotating series of demonstrations, games and contests that provided plenty opportunities for customer interaction.
- Taffy pulling became a regular contest between her strongest customers, competing for “Tara’s Taffy Trophy” — a two-foot-tall sculpture made entirely from different flavors of the candy.
- In another contest, cotton candy was used to decorate the faces of volunteers, forming giant pink eyebrows and bright blue beards on those who didn’t mind getting a little sticky in the process.
- During the holidays a cutthroat gingerbread house decorating contest allowed Tara to promote all of the newest candy offerings while keeping customers returning to see how each of the magnificent candy mansions was progressing.
- Customers were able to keep tabs on new events through regular posts on the website and social media. The more outrageous the event, the more memorable it became.
Take Me Where You Want To Go: Strong Brands Benefit New Ventures
A strong, established brand decreases the risk associated with introducing new products and services. If a familiar store consistently chooses quality merchandise, you may be far more willing to try something new when it becomes available. A dedicated Costco shopper may be more willing to buy a new addition to the in-house Kirkland Signature line. When Apple introduces a new device, people who trust the brand may be far more willing to wait in line for several hour to become one of the first to own it. A brand with an established history of innovative, quality offerings can enhance or refine its brand with a great deal more confidence in the outcome.
Of course, Costco and Apple were not able to develop their brands overnight. It took years of hard work, lots of failures, and the willingness to not only admit those failures, but to stand up and try again. These efforts built a brand that inspired trust, and that trust now enables these brands to create new offerings. Small business owners can do the same.
EXPANSION: ROSEN & CRANTZ
Expanding the capabilities of a law office requires adding new partners with new skill sets. It also includes making sure that potential and existing clients understand how those new offerings can benefit them.
Attorneys Rosen & Crantz expanded their practice, previously focused on estate planning, into business law. They began the process by reaching out to existing clients that were also small business owners, and setting up meetings where they explained the new legal services. The provided an overview of client-specific opportunities to each one, demonstrating that integrating services for a business owner’s personal and professional affairs could increase profitability and decrease costs.
They also held a series of workshops for local entrepreneurs to explain the benefits of segregating and protecting personal and business assets, making sure to invite their existing clients. Although those clients were not asked to provide testimonials or endorsements, their attendance provided evidence of the relationships Rosen & Crantz had already developed. In this way, the firm was able to leverage trust built over time with existing clients while demonstrating expertise in a different field and attracting a larger pool of potential customers.
EXPANSION: BINA’S BEAUTY HAUS
When Bina’s Beauty Haus decided to expand into makeup consultation, Bina first went to her most dedicated customers and asked them to let her create a custom look that included both makeup and hairstyling. She also offered a free photo shoot and allowed the client-models to choose a few of their favorite pics for her website and a new point-of-sale display she installed in the salon. Several of her customers agreed, and she was able to leverage the strong brand she had developed with those customers into endorsements for a new offering.