This is a simple story about profit and reputation.
Reputation and profit. Businesses with strong brands are more profitable than businesses without.
It’s not just Apple. Although their whole “We only have 15% of global smart phone sales, but we make 79% of the available profit” makes their story an appealing one.
These are, more often than not, businesses which have invested in their brand – they know their story, they know who to tell it to, and they know how to tell it.
The wiggle room for business leaders who don’t understand the commercial power of brands, and are therefore reticent to invest in them, is the exceptions.
The exceptions often aren’t exceptions.
There are businesses with strong performance who “don’t do marketing”.
“Costco doesn’t do marketing.”
Actually, Costco does plenty of marketing. It just doesn’t do any advertising.
Their marketing is in the experience, the product, the distribution and a keen understanding of their core customers.
Costco’s brand story is value for money.
“Go Pro doesn’t do any marketing.”
Again, Go Pro does plenty of marketing. It doesn’t do any advertising.
In fact, Go Pro is so good at marketing, it has its own customers create their advertising for them – in the form of great adrenalin packed videos uploaded to a YouTube channel – a channel with 8.96million subscribers (people who actively engage with the brand’s messaging) and hosted by Go Pro.
Go Pro’s story is excitement.
(It could just as easily be “exciting memories” or “adventurous me” – but let’s go with excitement for the moment.)
People who say, “You don’t need marketing” usually mean “I’ve heard there are some successful companies have become successful without advertising.”
And, what is so often left off the back end of that statement is, “Companies who succeed without advertising almost always have something so unique or engaging or needed, and don’t need to advertise because they get all the word of mouth they need.”
“We don’t need a brand”
This is most often heard from sales and HR and the C-Suite.
For many people outside the marketing department, “brand” is – to quote Jack Nicholson’s Colonel Jessup – “just a word you bandy around at parties.”
They don’t see the need for brand because they don’t see the commercial power of brand. It’s hard to justify spending money on a three-year plan which doesn’t have a provable and immediate link to this year’s sales targets.
Let me help.
First up, don’t talk about brand.
Talk about reputation. Or “Our story”. Or “Why people should buy from us, and not our competition, and pay more for the experience.”
Establish the link between profit and reputation
In simplest terms, is your reputation worth more margin?
Sales don’t build reputation – even though individual salespeople might have good reputations.
HR don’t build reputation – although their actions contribute to it.
The better your reputation, the more margin you can make.
If your C-Suite isn’t interested in making a profit, you don’t need a brand.
If they’re interested in increasing margin, you need a brand.
It’s a simple story of more money in for less money spent. For years and years.
Funny how people seem to ignore that last bit.
Seems like a walk-off home run to me.
Still. It takes all kinds.
Then the hard part.
Accept the cold, hard market truth.
Establish the monumental lack of interest people have for your product.
As good as anyone’s reputation is, most people either haven’t heard about you, or they don’t care about you. Everyone has more important things to think about.
Like paying this month’s wages. Or worrying about their kids. Or arguing with a mate about whether Carlton can beat Melbourne this weekend.
People don’t care about your product.
They barely care about your industry.
It’s not something people like admitting.
But, once you do, there’s opportunity to be had.
Make people care.
People don’t care about products they don’t know about.
If you were buying anything and someone offered you a great deal on a product you didn’t know about, would you buy it? First up, how do you know it’s a deal?
You might be interested in buying a new car but would you be interested in buying a Spinoza?
That’s your opportunity.
Once you understand how little people care, you understand the need to make them care.
And the thing people care least about is facts.
Stay with me here people. I’m getting to the juicy bit about ROI.
(Ironically, the one fact you might care about.)
You need to tell it well to sell it well.
People won’t remember facts, but they will remember a good story.
Even short stories like, “Good on you Mum, Tip Top’s the one.”
(Quick. Name another bread brand from the 1980s.)
Tell a story they want to hear, and they’ll ask for facts.
They’ll look for proof points to explain why they bought your product.
But they’ll only buy your product if they like your story.
Here’s the bit about profit.
On average, the return on investment of building your brand story is estimated at around a multiple of 11. $11 for every $1 you spend. (Not my figures, plucked out of thin air. Research figures, plucked out of a seminal work by Les Binet and Peter Field.)
Here’s the trick about getting that kind of return.
You have to spend it on building a brand.
Not ads saying, “Buy now and get a 10% discount”.
Spend 60% of your marketing budget on brand awareness pieces. Brand activities which don’t have a direct link to an immediate bottom line. (Again, not me. Binet and Field, 2004.)
It seems odd, but a multiple of 11 seems worth the wait to me.
Your audience isn’t “everyone”.
Stealing from Mark Ritson’s great 2016 talk, Ford went from being an all things to all people car business (including land Rover, Aston Martin, Volvo and Mercury) with more sales than any other US car business and a $17,000,000,000 loss in 2006 to a “We sell Fords” business with fewer sales and a $17,000,000,000 profit in 2014.
Tell a brand story people want to listen to.
Think of how many shops sell organic food.
You can either stick to the facts – “We sell organic almonds” – or you can identify a section of the market and tell a bigger story about health and culture.
Which may be why Amazon bought Whole Foods for $14billion – which is a truck load of organic almonds.
Profit and reputation. Reputation and profit.
How much is your reputation worth?
Whether you call it your brand, your reputation or your story, the value is easy to see. And easy to measure.
How much does it cost to make the product?
How much is someone prepared to pay for the product?
Simple math kills business.
Simple math says you can increase margin by cutting costs.
Cutting costs is a short-term fix most often suggested by someone who wants to build their own reputation.
If the person who suggests this route isn’t going to be in your business for at least five years, and doesn’t have a plan for building sustainable margin from the new base they create from the cost-cutting, ask them what’s on the ceiling and sneak out the door while they stare at the light.