Why is Branding Important?
Obviously, you have, or else you won’t be looking for the importance of branding for business, right?
Before diving deep into the benefits of branding, I need you to understand what is branding. Or else you will not be able to understand why it’s so crucial for a business to have a brand strategy in place.
Your brand is the first thought that comes in the mind of your customer and the emotion associated with it, whenever they hear your name or see your logo etc. If the first thought or emotion associated with your brand is positive, your business is going to perform well. If not, the chances are not so great for your small business or company.
How Can I Make a Brand That People Love?
To make a brand which inspires loyalty you need to define the “why” of your business. The reason why your business exists in the first place. Spoiler alert: It shouldn’t be making money because it comes secondary. The motive of every business out there is to make money but you shouldn’t do it by alienating your customers. But how can you find the “why” of your business??
You can start with what Simon Sinek (a renowned leadership expert) calls “Friends exercise”. Instead of asking your friends, try this exercise with your most loyal customers and you will have an answer.
Once you know WHY of your business, you just need to apply that to every aspect of your business. No matter if it’s your logo, company slogan, marketing messages, sales, customer service or your products, every aspect of your business should reflect your why. If you keep this practice going long enough, and you can create a brand that people love to buy do business with.
The Downfall and Revival of Starbucks
To give you a good idea about the importance of why and the core values of your business, I am going to share Starbucks’ story with you. Starbucks went public in 1997 and it was growing rapidly. CEO Howard Schultz stepped down from his post in 2000 when they had over 3500 stores worldwide. This continued to work till 2006 when the company had over 15000 stores.
During all this success, they started to ignore what made them this successful. And when the 2007-2008 financial crisis hit America, people opted to go to McDonalds for cheaper coffee. Howard Schultz came back as a CEO in 8th Jan 2008 and analyzed the severity of the situation. He understood that the reason for this downfall wasn’t the recession, instead, it was due to the fact they left their core values. They had never been into the coffee business, serving people; they were in the people business, serving coffee.
Then on 26th Feb 2008, Starbucks closed its stores for some hours to improve the coffee quality as well as to train their people to enhance their customer experience. This whole exercise created a backlash by the press and media but after reconnecting the company with its core values, Howard Schultz was able to turn things around successfully.
What If I Don’t Actively Build a Brand?
Well, most of the companies out there don’t do anything to actively build a solid brand. But that doesn’t mean people won’t associate anything with your business name. You will be just another company that doesn’t care about the customers and only care about money.
So, that means if you aren’t actively maintaining an image for your business, people might associate negative things and emotions with your business. And trust me, it never ends well for any business.
By deciding to take charge of building an image for your company, you will have more control. Isn’t it better that you take these things in your own hand and not leave it to chance?
If you are still not convinced a right branding strategy is needed for your small business or company, let me show you the advantages of branding in detail. Here are the 8 reasons why branding is important for your business?
Reason #1: Branding gets loyalty
If you know your company values and make a brand around that, you will attract all those people who share your beliefs. Your goal isn’t to get every customer in the market, it’s to get those customers who believe what you believe as a company.
These clients are the best as they are the most forgiving. They won’t care if your products have some flaws or a bit pricy than the other companies out there. They will keep coming back to do business with you again and again.
Companies usually calculate the Return on investment (ROI) of each marketing effort they do. But they fail to realize that the ROI of branding is through the roof as the lifetime value of a customer is so much high. Almost 70% of the companies admit that “It’s cheaper to retain a customer than to acquire a new customer”. So, with the right branding, you can put more focus on serving your loyal customers than putting all that money and effort into getting new customers to achieve your revenue targets. Wouldn’t you agree?
Reason #2: Your Brand will set you apart from the competition
Every single company is trying to get the attention of their customer and people are bombarded with hundreds of ads in a single day. No matter if people are using mobile, pc, watching television or walking on the road, ads are everywhere. This situation has caused people to learn to ignore pretty much every ad they see. So it’s getting difficult by each passing day to grab your client’s attention.
And why would anyone buy from you if they don’t even know you? In this fight for attention, only good branding will be able to catch the attention of people.
Let’s show you why. Although all of us are allergic to ads and promotions around us, but if you look closely, we still prefer some people and companies more than others. For example, I like Anthony Robbins and the passion he has for changing lives of others. So I don’t usually miss any video, any news or even any ad in which Tony Robbins is there. Even when he is selling any of his programs or books in a promotional video, I make sure to watch the whole video. Why?
Because I love the brand he has built around his name and the value he has given me all those years in a lot of forms. So when the time comes when I need to join a coaching program or read a self-help book, what do you think I will go for?
Tony Robbins or any other coach that I merely know after watching his ad? – I think it’s too obvious.
You can also look for such companies and personalities in your life that you like and admire. It’s all because they build a brand that resonates with your emotions and personality.
Reason #3: A Strong Brand Will Generate Referrals
In the brand building process, it is wise to target the early adopters in your industry and focus all your energies and resources to take care of those early adopters. This will not only help you understand the needs of your customers but it will also help you get customer loyalty.
You know it already, right?
But one thing most of you don’t fully understand is the importance of acquiring and inspiring brand loyalty in the early adopters. Let’s show it to you with an example.
Suppose you are planning to buy a car but you don’t have any idea about how to select a perfect car that caters to your needs. What would you do?
If I have to guess, you will go and talk to some friend or family member who is more into cars and buys new cars more often, right? Or if you need to buy a laptop for some office work, would you go to the same person?
You will look for someone in your social circle who is more of a techie. These people who buy new products on a regular basis and are enthusiasts toward a certain field are early adopters. If you are able to make a strong brand in minds on those early adopters, you are going to get a regular stream of referral customers. And the best thing, you don’t have to spend money to get those customers.
Reason #4: Great Branding Inspire Your Staff
No one can achieve great things and goals alone. We need people by our side if we need to reach a big goal. Especially when it comes to building a big business, you are going to need a lot of people that are committed and driven.
If you have a business already, you will be familiar with what I am trying to say. Hiring intelligent and competent people only won’t help. Why?
Because most of the employees do the minimum required work to save their jobs and you can’t build a big brand with this attitude. What you need is all your employees working in a single direction with the same goal in mind.
It’s too difficult to achieve if your sole purpose is to make money. However, if you have your values defined and you know the reason you are in business, it becomes easy. Your core values and beliefs will become part of your company culture that will ultimately be reflected in your products and services.
The right branding will help you inspire your employees and you will be able to get their loyalty. Those teams that are working swiftly to achieve a single goal will gain momentum. And once your company gains enough momentum, it’s nearly impossible to stop you from building a huge business.
Reason #5: Right Branding will Create Trust in The Market
In the world of business, trust is everything. If you don’t keep your promises, word will spread and people will stop doing business with you. It’s that simple!
However, if your brand is based on truth and honesty, people will slowly start to trust your brand. This will not only increase your revenue and get more customers but it will also increase the trust in the whole market.
As a result, you can attract more talent and inspire more loyalty. And if you ever need a loan or investment for a future project; banks, other companies, and investors will be ready to fund your company in the blink of an eye. I know it might seem farfetched to you right now but you will be surprised with the results.
Just imagine, how difficult is it for Jeff Bezos or Bill Gates to raise a few $Billions for their next company (if they don’t want to invest themselves). That’s probably gonna take then 3 to 4 phone calls to raise that kind of money. The reason being, they have proven their skills in the business and everyone trusts them. That perception and brand have become a part of their company as well as their personal brand.
Reason #6: It Will Increase the Net Worth of Your Company
Purpose of starting a company for most of the entrepreneurs is to sell the business later and get a huge payout. Entrepreneurs often fail to realize the importance of branding so all they focus on is profits and company growth. To understand how branding can increase the net worth of your company, you must have an idea of the valuation process.
I am not going to go in depth of the whole business valuation process and its methods. To give you an idea, all the assets, liabilities and future revenue and profits are considered while calculating the net worth of the company. But a good brand value will skyrocket the net worth of your company.
As the ex-CEO of Quacker said, “If this company were to split up, I would give you the property, plant, and equipment and I would take the brands and the trademarks and I would fare better than you.”
By this statement, you can understand the importance of building a brand even if you have an exit strategy in mind. All you have to do is pay some extra attention to crafting a brand and you will be able to increase your earnings significantly.
Reason #7: You can set your own terms if you are a renowned brand
Walmart is one of the largest retailers in the whole world. Their brand revolves around their low prices and they have been doing very well for themselves since their inception. Their mission is “To save people money so they can live better”. So, their mission enables them to negotiate prices with their suppliers as their brand depends on it. Because if they can’t get better prices from their suppliers, how are they supposed to provide low prices to their customers?
In the same way, if you make a big brand, all your suppliers will listen to your demands. You can even negotiate your own terms with them.
It’s simple, merchants and suppliers can’t afford to lose you if you are a big brand. They will do whatever it takes to keep working with you. This way you can enjoy higher profit margins by building a brand.
Reason #8: Branding Can Save You from a Financial Crisis
If you look at the history, whenever financial crises took a hit, a massive number of businesses and companies are forced to shut down. As a result, hundreds of thousands of people lose their job. In the midst of this anarchy, while every single person is trying to save money to survive, some businesses are spared.
And some of the companies thrive during the crisis. Ever wonder why?
Branding is the secret to their success in hard times. Even though they are not spending much on marketing at such times, it’s the branding that keeps them on the way to success.
During the great financial recession of 2007-2008, more than 170,000 small businesses were forced to shut down. Even a huge company like General Motors was on the brink of bankruptcy during that period.
On the other hand, apple not only managed to survive this crisis, but the company also flourished in this period. If you look at the graph, you can see apple’s net income almost doubling every single year during the crisis. That’s the power of Branding!