Build Company Value By Building a Brand

Just what is proper branding worth to a new company or startup? Is it really all that important? Is it just a name, and if so, why not use the employee suggestion box and simply give the winner a free lunch or a day off? (It wouldn’t be the first time!)

Branding Adds Value to the Bottom Line

In fact, a lot of time and research has gone into defining the exact monetary value a good brand name delivers to the bottom line. According to one study, a strong brand allowed for a 7% higher pricing premium (compared to an unbranded product) and over 35% in greater market capitalization. To help visualize this, imagine if a McDonald’s franchisee took down their golden arches and replaced the sign with “Quality Burgers.” There’s a reason for the phrase “brand equity” just as their is for home equity or any other type of asset.  Financial value is a great perk, but the benefits of branding go beyond the balance sheet.

According to one study, a strong brand allowed for a 7% higher pricing premium (compared to an unbranded product) and over 35% in greater market capitalization.

The Silent Salesperson

Brilliant brand names point the way. They inform, direct and create expectations that “pre-sell” and predispose a customer to buy. They imply a certain quality, promise or attribute that will be met in the experience. BestBuy implies reasonable pricing, as does Priceline (attribute based names). Other brand names evoke an image, such as Amazon, with its wide diversity of goods and breadth of services.

Branding As A Management Tool

Great branding comprises the cornerstone with which a company aligns itself. It’s the invisible guide that instructs managers, staff, employees, vendors, and customers concerning how to act and react in any given situation. If done properly, a good branding strategy (executed throughout an entire corporation), will lessen the burden on management by intuitively directing the actions of all involved. In other words, a strong brand identity gives rise to a cohesive corporate culture, which directs each member to behave in accordance with its implied mandate. In essence, the company begins to guide itself in a very zen-like fashion. The mission statement is instilled vs. enforced, and the process becomes smoother, easier and self-reinforcing.

A strong brand identity gives rise to a cohesive corporate culture.

The Key Is Consistency

The basis of brilliant branding hinges on congruency. It’s finding the common thread, or pivot point, that exists in an organization and then defining that quality in as simple and natural terms as possible. Congruency creates alignment; which in turn increases the power of attraction. Rather than coercing clients to buy products and services through expensive advertising, customers will gravitate toward them because they are intuitively named, defined and presented. With a “brand mentality” your company will come to represent a desirable experience with a reliable outcome. (And that pays dividends!)

More profit. Greater congruency. Smoother sailing.

That’s what’s in a well-conceived and properly executed brand. So before you pull the winner from the fish bowl, give some consideration to the bigger picture. How can you incorporate your vision and direction into your company name, tag line and marketing materials, so that you don’t just build a generic business but a profitable brand.

Has your brand added value to your business? If so, how? Were you able to price higher? Sell the business for more than the norm? Create a brand extension? Feel free to share your thoughts and insights!

About the author: With over twenty five years of company naming and branding expertise, Tungsten founder Phil Davis is a marketing and advertising veteran, having personally named over 250 companies, products and services worldwide. As a sought after branding expert, Phil has been quoted in The Wall Street Journal, Inc.com, Businessweek, Entrepreneur, and Newsday.