branding ROI
Brand Strategy

The ROI of Brand Strategy: How Investing in Brand Builds Business

CMOs and Marketing Directors face intense competition for attention, and digital clutter dominates. A solid brand strategy is crucial for reaching and keeping customers. While the word ‘brand’ may bring to mind logos and taglines, its significance goes beyond those—it profoundly affects a company’s financial results.

A recent study by Nielsen found that 62 percent of new products introduced to the market failed within the first year. The reason? Lack of brand differentiation.

Gauging the ROI of a brand strategy is vital for business leaders. A successful strategy can significantly alter a business’s course. In this post, we’ll explore the value of brand strategy in contemporary business and considerations for tracking ROI.

Understanding Brand Strategy

Brand strategy is a long-term plan essential for reaching specific business goals. It merges the company’s objectives into a unified identity designed to connect with consumers. In the following sections, we’ll look at creating and implementing a brand strategy that is impactful and measurable.

Definition and Core Elements of Brand Strategy

Defining a brand strategy extends beyond visual or verbal identity. It encompasses the brand’s core values and traits and its commitment to customers. Core elements typically encompass brand positioning, messaging, voice, and identity, all supported by a comprehensive understanding of the target market and competitive landscape.

The Role of Brand Strategy in Business Growth

An effective brand strategy serves as the roadmap to business growth. It differentiates your offerings from competitors, builds emotional connections with your audience, and influences purchasing decisions. It also unites internal teams around a core mission, encouraging innovation and refining customer experience. A well-defined brand strategy can increase customer loyalty, higher price points, and improve profitability.

Dove’s “Real Beauty” campaign provides a powerful example of how a brand can build connections. By shifting their focus from selling beauty products to championing self-esteem and body positivity, Dove struck a deep emotional chord with their female audience. The strategy increased brand loyalty, growing Dove’s revenue by 10 percent in the campaign’s first year.

The Tangible and Intangible ROI of Brand Strategy

Brand strategies make a measurable financial impact. They also provide companies with intangible benefits that are difficult to quantify. Recognizing this dual nature of ROI is vital to evaluating branding initiatives.

Financial Metrics: Increased Revenue, Cost Savings

Brand strategy is a key revenue driver. The Dove example above shows that the financial impacts are tangible. From premium pricing influenced by brand perception to enhanced customer acquisition and improved brand loyalty, a brand strategy can reduce customer churn. Companies can also expect cost savings. Strong brands often benefit from lower marketing expenses because acquisition costs are lower.

Brand Equity and Customer Loyalty

Brand equity represents the collective perception of a brand among its consumers. Assessing the value of brand equity can positively impact the bottom line. Increased customer loyalty and referrals are examples. A dedicated customer base is significant because they return for more and act as brand advocates.

Competitive Advantage and Market Share

A robust brand strategy can alter the course in your favor, pushing you ahead of rivals and gaining market share. It enables your company to withstand price fluctuations, market volatility, and competitors’ imitative marketing tactics. Market leadership’s intangible yet invaluable advantage often originates from a strong brand strategy.

Case Studies and Examples

Case studies can highlight the tangible and intangible ROI of brand strategy. They demonstrate how companies have successfully implemented branding initiatives to increase sales, improve market share, and gain loyal customers.

Mailchimp’s quirky, approachable brand personality stands out in the often dry world of B2B marketing software. Their playful tone, humorous illustrations, and mascot, “Freddie,” made them memorable. This strategy has helped Mailchimp build strong customer loyalty and positive word-of-mouth and drive growth within its niche.

Toms Shoes is a well-documented example of a brand that launched a successful strategy with tangible results. The company was founded in 2006 by Blake Mycoskie, who was inspired to start it after a trip to Argentina. While there, he saw extreme poverty, poor health conditions, and children walking without shoes.

The company’s unique selling proposition was based on a simple yet powerful message: “One for One.” Toms would donate a pair to a needy child for every pair of shoes sold. This brand strategy was woven into the company’s mission and business model. It appealed to consumers’ growing interest in social responsibility and desire to make a positive impact with their purchases. The message’s simplicity and directness made it easy for customers to understand and support the cause.

As a result of this brand strategy, Toms Shoes experienced rapid growth in sales and made a philanthropic impact. By 2013, Toms had donated over 10 million pairs of new shoes to needy children.

Measuring ROI on a Brand Strategy

Assessing the impact of a brand strategy involves watching and measuring its effectiveness in building brand awareness, enhancing brand perception, promoting customer loyalty, and driving financial gain. Here’s how to evaluate these aspects:

Brand Awareness: Assessing customer and potential customer recognition and brand recall. This involves surveys, social media tracking, and analyzing search volume data to gauge brand search frequency.

Brand Perception: Assessing public perception of the brand involves gathering feedback from customer surveys, social media sentiment analysis, and review platforms to evaluate opinions on the brand’s reputation, values, and personality.

Customer Engagement: Monitor customer interactions with the brand across multiple channels. Key evaluation metrics include website traffic, social media engagement metrics (likes, shares, and comments), email open rates, click-through rates, and participation in brand events or promotions.

Customer Loyalty Analysis: Assessing customer likelihood of continued brand product or service usage. Key metrics encompass repeat purchase rates, customer retention rates, and Net Promoter Score (NPS) for brand advocacy likelihood.

Financial Performance: Evaluate the brand strategy’s impact on the company’s financial results. This involves examining sales growth, market share, price premium (the ability to charge more than competitors), and the overall return on investment (ROI) from branding initiatives.

Competitive Positioning: Evaluate the brand’s standing in relation to competitors within the market. This includes conducting market research, analyzing competitors, and tracking changes in market share.

Marketing Effectiveness: Analyze the performance of specific marketing campaigns and initiatives within the brand strategy. Use metrics such as campaign ROI, conversion rates, and cost per acquisition to gauge the contribution of these efforts to the brand’s objectives.

Conclusion

To truly understand the success of a brand strategy, it is important to evaluate its impact through various measures. Monitoring customer engagement, loyalty, financial performance, competitive positioning, and marketing effectiveness can give companies valuable insights into the success of their brand strategy.

However, it can be challenging to sort through all the data. If you need help, email me personally at chris@brandauditors.com or visit our website at brandauditors.com.

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