This article originally appeared in B2B Marketing.
For too long, companies have struggled to place a dollar value on their brands. A new methodology for ascertaining brand value is required—and attainable.
Today, few marketers would question that there is value in possessing a strong brand. The strength and valuation of iconic companies such as Apple and Coca-Cola are evidence of the importance of brand as part of a company’s offering. But assessing the dollar value of brand—as well as the return on investing in brand—has remained elusive. From generating greater customer loyalty to increasing employee innovation or ultimately bringing in more revenue, the power of brand is strong.
Despite these benefits, its value is frequently disputed and often misunderstood by many c-suite executives. That’s not because assessing brand value is impossible. It’s because traditional models attempting to assign a dollar value to brand simply do not reflect the buying scenarios customers face when choosing between brands, or they do not appropriately assess the importance of brand against other factors in the purchase decision—such as product features and pricing.
As the idea of brand moves from words and pictures to the totality of a customer’s experience, making brand ROI tangible is critical for CMOs. Not only does a fact-based approach and monetary value help in prioritizing new brand initiatives, it clarifies branding strategies to a c-suite that does not inherently understand brand contribution, in the same manner it may understand ‘sales’ or ‘R&D’. In a world where everything is measurable, accurately assessing brand contribution is now a necessity.
To test the value of brand in B2B financial services, a category where its impact is often overlooked, we surveyed more than 200 respondents, consisting of institutional and corporate decision makers – CFOs, treasurers, and heads of finance and asset management executives on their perceptions of and preference for brands in the space, enabling us to derive the role brand plays in their buying decision. The report found that brand plays a significant role in winning business, representing nearly one-third of how business is won. Based on the total category revenue, this finding is consistent across each industry category:
- For investment banking, brand contribution to new business wins totaled 26%.
- For corporate and commercial banking, brand contribution to new business wins totaled 28%.
- For asset management, brand contribution to new business totaled 30%.
Additionally, there is a relationship between brand contribution and simplicity; institutions that provide simpler experiences are capturing more revenue from their brand than those that do not. As a brand’s simplicity score increases, so, too, does brand contribution: Investment Banking (26% brand contribution — 825 simplicity score), corporate and commercial banking (28% brand contribution — 833 simplicity score) and asset management (30% brand contribution — 930 simplicity score).
There’s no question that CMOs today are up to their necks in data about their companies and their markets. The challenge for many is understanding how to use it effectively to drive real change at their organizations. By looking at the entire competitive landscape, we can identify where an organization leads and lags relative to the competition in terms of brand perception, price and product offering.
Traditional brand valuation methods conflate reasons for a brand’s success. By isolating those who choose a product because it is the only one they are familiar with (exclusive familiarity) from those who actually buy based on brand attributes (perception), CMOs can understand how their brand truly compares to others in the market. Exclusive familiarity can skew perceptions of brand strength. It can be the result of shoppers’ limited considerations, not brand success. In many cases, it’s a risk factor as those who buy due to exclusive familiarity can easily be swayed once a competitor comes into their field of vision.
CMOs can model the impact of improving various aspects of brand perceptions, such as trust, in addition to attaching more tangible measures to these attributes. They can now measure the impact of even the most incremental improvements to these attributes to predict real outcomes, allowing them to understand where they will get the most return on investment — and the most cost-effective way to achieve results.
Ultimately, our methodology enables marketers to put a true dollar value on brand. It does not prioritize branding initiatives over other investments — rather, it informs integrated strategies to maximize ROI for a company; helps determine the best go-to-market strategy for products and services; and paints an accurate picture of where the brand sits in its current market. By testing price, offering and brand alongside each other, we can determine the most effective strategy to drive revenue and set accurate KPIs that account for all areas of the business.
Marketers understand that true brand value is more than a lump sum — strong brands not only garner more revenue, they increase customer loyalty and employee innovation. But there is no question that in a world where everything seems measurable, placing an accurate dollar value on brand is a critical point of validation. By getting to the heart of where brands are made and sustained — in customer perceptions—we are now able to do just that and provide CMOs with the tangible data they need justify their investments and understand their return.
Brian Rafferty is Global Director of our Business Insights + Analytics practice.