A brand is a brand is a brand.

Very often we hear B2B advertisers say: “Branding is for consumer products—B2B is all about relationships and people, not products because most of the B2B category is made up of commodity products and services anyway.” And we say: “Not so, a brand is a brand is a brand.” It is just as important for B2B customers and prospects to know what brand of manufacturer or supplier, or distributor, or professional services provider you are as it is for the kid choosing a pair of basketball shoes. Since the definition of a brand is, “a claim of distinction,” branding is all about differentiating your company and products from your competitors. And if done well, buyers will pay a premium price for that distinction. It’s a proven fact that purchasers perceive brand name products to be of a higher quality and more reliable—worth more!

B2Ber’s have historically relied almost solely on direct sales (relationships) to move product. Sales reps get an area, some sales aids and off they go calling on prospects. To increase sales they must bump their competitors out by developing a personal bond, expand their area or, (ghastly) offer concessions or specials to make deals. But the smart ones are sending their sales people out with more than sell sheets and an expense account—they’re arming them with a unique, deliverable claim of distinction.

Scenario.

John Smith gets an appointment with the Home Depot or Lowe’s garden center buyer and introduces himself:

“Hi, I’m John Smith, sales representative from Everyday Nurseries. Doing business with us is going to be real joy. Why? Because we promise, and consistently deliver greater garden center success. We do it with the newest, most innovative marketing, merchandising and product support and a level of service that is second to none. Add to that our vast resources and logistical strength, and your garden center will become the bright spot it was intended to be—not only for your customers, but your profit picture as well. Only Everyday Nurseries can grow your garden center business beyond your expectations - Guaranteed!”

Wow, what a claim of distinction. What a sales presentation—it’s all about Everyday’s brand of nursery. This presentation is a reiteration of the nursery’s unique selling points:

• We have a formula for retail success
• Customer service is second to none
• We are innovative
• We are industry leaders
• We have greater logistical strength than our competitors

Most of Everyday’s competitors would go in, spread out sell sheets, talk about their quality products, what kind of support they provide, offer a price list and invite the prospect to dinner—not a word about what brand of nursery they are.

Well if I’m a buyer, I’m going to be a lot more interested in a vendor who has built their company around growing my garden center’s success than one with just low prices and an appetite. And I’m probably more likely to develop a long lasting relationship if Everyday delivers on their brand’s unique selling points.

So how do we do brand development for B2B advertisers? Exactly the way it’s done for Starbucks, Gap or Nikon—discover the brands claim of distinction.

We call our brand discovery process “Turning the Telescope.™” This is a minimum half-day session at our office or other off-site location. We recruit attendees from marketing, brand managers, sales, operations, field personnel, and the president or CEO. The process starts with listing facts by examining the company, its history, origins of business, markets served, the founders, traditions, innovations, values, ethics, customers, the people, and culture. In this first stage, we uncover literally hundreds of facts. Then, through a series of three stages, we eliminate the non-unique characteristics, extrapolate potential truths, and finally, distill the remaining information until we have a prioritized list of three to five absolutely unique and deliverable selling points. From this, we establish the foundation for a proprietary brand franchise and a unique claim of distinction.

So, Nike, Perrier, or Joe’s Ball Bearing Works…it doesn’t matter. Because a brand is a brand is a brand.

The brand: It’s every company’s most valuable asset.

In an economy like we’ve experienced lately, some advertisers turn to price reductions as a defense. For the short sighted it’s a short term solution. It can also be their brand’s long-term demise. You see, there are numerous reasons to brand, not the least of which is value. First, the notion that brand name products fetch higher prices is true, even in hard times. An article a few years ago in The Los Angeles Times quoted a Sr. VP, account guy at BBDO as saying that the number one brand has a 10% price premium over the number two—40% over the store or generic brand. As well, companies with a strong brand image are more valuable.

Executives at Coke were quoted in Fortune Magazine as saying that if Coke was obliterated off the face of the earth, every stick and brick were destroyed, Coke could go to the bank and borrow literally billions of dollars, based purely on the value of its brand. Further more, companies with good brand recognition attract the best employees. Imagine graduating from engineering school and having two offers – one from Joe’s Toilet and Ballcock Works and another from Moen. Which job are you going to take – maybe even for less money? Right, Moen. Our point here is that if you have a strong brand you can reduce prices for short periods and still regain your position.

(Nobody thinks Neiman Marcus is going out of business when it has a sale.) The less notable brand, however, may quickly become a commodity.

OK, it’s easy for Coke and Moen to demand higher prices and better shelf space; after all, they’ve had decades to establish themselves. But what about the smaller business-to-business advertiser? Nothing is different. A brand is a brand. Its value is something that all advertising agencies are expected to grow. We tell every prospect “we will make you famous for your advertising.” If we fail, their products are susceptible to becoming commodities because that is what all resellers want them to be. Here’s a perfect example: a manufacturer of premium pruning tools decided they wanted to sell through the big box channels. (Lowe’s, Home Depot, etc.) They present their line presentation and after a review, they are accepted. Great! Then they learn how little shelf space they’ll be given, with no headers or merchandising because the big box dictates the packaging and the price they’ll pay. But wait, says the tool manufacturer, we’re a well-known brand in the professional tools category—all the landscapers know us. “So what,” says the big box, this is retail and you’re a commodity here—and your only measurement of value is price.

Ouch!

Next in for their presentation are Scott’s, the well-known seed and fertilizer company. Scott’s says to the big box: we’ll need more shelf space because we’re pushing a new seed. And we have new shelf talkers and signage and we’ll need end-caps, too, for our promotions. Oh, and here’s our pricing strategy. The big box says: You got it! Why? Because everyone knows you cannot be a home improvement store without Miracle Grow on the shelf – that’s the value of the Scott’s brand.

So where does an advertiser start to build a brand name? At the beginning. The definition of a brand is “A claim of distinction.” So start with a discovery process to unearth your unique distinctions. We call our proven process “Turning the Telescope™.” It is what it is—a long, hard look inward. We search the company’s history, its founders, people, products, culture, innovations and so on until we’ve distilled everything down to what we call the Brand Franchise—the three to five unique selling points that no one else has. We’ve started sessions with the client telling us “Good luck, there’s no better example of a commodity than us.” Then, several hours later, we leave with the discovery of a great brand – it happens every time. And not for just big guys. Car dealers, health clubs, public golf courses, homebuilders, local banks, colleges, architects, law firms, widget manufacturers, you name it, everyone has a unique essence just waiting to be discovered.

Once the discovery is made, we begin the branding process. We advertise and promote the brand’s newly discovered and deliverable distinction – constantly and consistently. And we rarely ask them to spend more. But every dollar is spent communicating that distinction. Before long, the buyer at the big box says, “Yes, we’re aware of your brand of widget. If it is really everything we’ve heard it is, we’ll make room for you.”

Bingo!

Value.

Is Brand Juice Worth the Squeezing?

Let’s Talk ROI.

These days, it seems that any business recommendation provokes the same response: “What’s the return on investment?” And—where brand issues are concerned— the question is often met with uncomfortable silence or a snide remark about “our outdated logo.”

In fact, it IS difficult to account for the return on brand development costs. Which makes it much easier to find the budget for lead generation, or direct marketing, or even (could it be possible?) traditional advertising. Because even though we think we know that “half the money is wasted” on those things, we don’t know which half. And at the end of the day, we may have a few more leads, sales, or awareness, all of which may eventually make the cash register ring. But what’s most comforting to marketing folks is that we can measure the costs and results, so we can justify the expense.

But brand development, what’s that about? Don’t know how to manage it, measure it, or fit it into the marketing budget? “Take dollars out of my lead generation program and put it into brand development? Why don’t I just get in line at the unemployment office right now?”

Okay, take a deep breath and repeat after us: “Brand development is not a marketing initiative; it is a corporate initiative.” Your brand is not an advertising campaign or a lead generation tactic. It can—and should—and will—energize those efforts, but it is not “a marketing thing.” IT IS THE ESSENCE OF YOUR COMPANY. It’s reflected in your structure, your operations, in everything your company does. It’s whatever your customers and prospects think of when they hear your company’s name or see your outdated logo. And your brand—unlike leads—HAS REAL CASH VALUE.

How much?

Well, if you work for Maytag, your company brand is worth about 97% of your company’s total value. (That’s right, 97%!) If you work for Dell, about 92%. Where do those numbers come from? They represent the value of those companies’ intangible assets: the difference between their market cap (total value) and their book value (tangible assets). They’re the cash value of those companies’ perceived ability to fulfill customers’ expectations into the future. They are the value of those companies’ brands. We’ll call them “Brand Value.” And, yes, they are worth a huge portion of the companies’ total value. In fact, the Brand Value for the average Fortune 500 company in 2005 was 69% of the total value.

How can something intangible be worth so much?

Well consider this: at one time Chevrolet marketed the Prism, a car absolutely identical to the Toyota Corolla in nearly every way. The only material difference between the two cars when they left the factory was the nameplate. But there the similarities ended. Toyota charged $650 more for the Corolla than Chevy did for the Prism and most years, while they were competing, Toyota sold about 250,000 Corollas to Chevy’s 65,000 Prisms.

Here’s another difference: Chevy doesn’t sell the Prism anymore. But the Corolla? You’ll either be driving in one or behind one on the way home from work tonight. Why? Because everyone knows Toyota’s brand is about building absolutely reliable small-midsize cars, at affordable prices, while Chevy is known for, well, what is it today? American manufacturing? Trucks? Dollar for dollar, you can bet Toyota saw more ROI on its Corolla advertising than Chevy did on its Prism advertising.

Toyota’s ability to leverage their brand in this tactical way, and the promise that they can do it again and again and extend it across other products, is what makes their brand more valuable than any of their auto plants (which are depreciating assets anyway). Anyone can make a car, but only Toyota can make a Toyota. (Can you say the same thing about your brand?)

But how do I measure the ROI on my brand?

First of all, let us say that obsessing about every penny of ROI is not the best way to go about developing a brand. Well-developed brands pay out in many ways over time: in stronger sales, higher margins, more focused operations, and more effective marketing, just for starters. There’s plenty of return to be gained here. But because most of these secondary effects will be measured within the context of regular investments in marketing, sales, etc., they shouldn’t really be “double counted” as return on the brand development investment itself.

Those are returns on operating income anyway. And as we’ve seen, a brand is an asset, albeit an intangible one. So the return on the brand development investment is measured not in operating income, but in the improvement in the value of the brand as an asset—the Brand Value.

The fact that the brand development investment results in return on the increased value of an intangible asset makes it difficult to measure in absolute dollars. But that doesn’t mean it’s impossible to measure. The key is indexing the components of your brand and combining them into a single Brand Index, then recalculating at intervals. By calculating the difference between before and after, you’ll get a good take on brand development ROI.

So how much Brand ROI should I expect?

Let’s say your company revenues are $10 million. Using the average Fortune 500 listings, the intangible asset value (brand value, reputation, human capital, patents, momentum, awareness, etc.) would be $6.9 million or 69% of the total revenue. After conducting a Brand Insight Assessment (BIA), we determine that the company Brand Value Index is 40 (on a 100-point scale).

After one year of discovery, brand essence development, and internal and external brand adoption—all supported and driven by senior management—we conduct another BIA and determine that the Brand Value Index is now 50 points…a 25% improvement over the original benchmark.

Our marketing investment for the past 12 months has been $200,000—(fairly typical and realistic for an effective campaign to make a difference). That 25% improvement, calculated against the intangible value of $6.9 million, adds an additional $1.725 million to our intangible value. Now let’s do the ROI math: ($1,725,000 - $200,000) divided by $200,000…

It’s a gaudy 762.5%!

What’s all this mean? Our $200,000 investment has increased our Brand Value by a little over 17%!! Most companies would do this every day if they could.

Now you could argue that converting an index of an intangible asset into cash is more theoretical than bankable. And we would agree…to a point. Because the fact that well-developed brands drive company earnings is not theoretical. We all see it every day, just like we saw it in the Corolla/Prism example. Which is why for most companies—certainly for the most successful companies—their unique brand forms the greatest part of their value. You can choose different ways to measure progress. But the principle is clear: the money you spend to leverage—and grow—your most valuable asset is a prudent investment, indeed.